Keep calm and carry on
From his perspective as a psychology researcher, Philip Tetlock watched political advisors on the left and the right make bizarre rationalizations about their wrong predictions at the time of the rise of Gorbachev in the 1980s and the eventual collapse of the Soviet Union. Liberals were sure that Reagan was a dangerous idiot; conservatives were sure that the USSR was permanent. None of these predictions turned out to be true in hindsight. The whole exercise struck Tetlock as what used to be called an “<g data-gr-id="40">outcome-irrelevant</g> learning structure.” No feedback, no correction. The Indian media has been abuzz with expert predictions about how the oncoming monsoon will be the death knell for a convalescing Indian economy. And as usual if they are proven wrong they will come up with fantastic proximate factors which they will attribute as the reasons their predictions were way off the mark. There are various reasons to be skeptical of this doomsday deficient monsoon induced drought scenario.
This will be the second year in a row that India will have a poor monsoon. But the impact of this climatic vagary will depend on the <g data-gr-id="38">macro-economic</g> situation of the economy. Going by last year’s economic trends, owing to the dip in crude oil prices, the Indian economy was saved from the onslaught of food price inflation. The situation this year, however, is perhaps not radically different from last year but there have been marginal improvements. The rise in prices of essential commodities post a poor <g data-gr-id="39">drought</g> can potentially trigger food price inflation. But according to Finance Minister Arun Jaitley’s recent communique, which seeks to allay fears over predictions of deficient monsoon, any conclusion reached on the basis of current inflation of an impending distress situation will be a “far-fetched” one. Perhaps what Jaitley was trying to argue was that there is a large degree of recency bias in such forecasts by the so-called analysts and experts.
The rain patterns of the past two months ago saw a spate of farmer suicides and a lot of hyperbole in the media. Plenty of television coverage was devoted to depicting the impact of erratic weather on the larger community of farmers and their lives. Taking a cue from that situation and assessing the present situation further, the government announced a tentative and lucid plan to sell off 15 million tonnes of cereals to soften the impact of food price inflation and reduce the huge cost of FCI’s stocks. This is particularly beneficial in the wake of an expected inflation in food, and measures to counter that have been taken to mitigate its impact. In this manner, shielding the first impact of drought, people are ensured the food that will not be lost to any large scaled standard deviations in the climate.
Even if drought strikes, farmers, the people in this complex equation that usually suffer that the most, will soon have some respite with an impending announcement for the minimum support price (MSP) for key crops. Sufficient buffer stocks of pulses are also lying ready in Food corporation of India godowns in case of a dramatic exigency. The kind of wanton speculation that has been pervading the public discourse around this issue seems misplaced to the discerning eye. True, the situation does have a significant impact on the Indian economy but to predict how that impact will turn out is jumping to drastic conclusions well before events have played out.