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EFFECT OF MONSOON ON AGRICULTURE SECTOR AND HENCE ON INDIAN ECONOMY

In India, agriculture provides around 70% of employment either directly or indirectly. This is the major reason for the economic growth of India to depend on Monsoon season. Monsoon season has a direct impact on agricultural sector, which has an impact on industrial sector as well, particularly for FMCG companies which depends on agricultural and rural market. EFFECT OF LESS RAIN Due to shortage of rainfall, the agricultural production decreases. As the production decreases ,the supply of the crops decreases. Thus the supply curve shifts towards left.

In such case the price of essential crops like wheat , rice, etc increases. In that case the demand will depend on the income of the individual. If the income of the individual is high he will buy irrespective of the increase in price. While the person with low income will shift to inferior goods. Hence for rural people the monsoon has elastic effect while for urban the effect is inelastic

For a person from urban population, the demand is inelastic. As shown in the figure due to change in price from p1 to p2, The change in quantity is very low.

For rural people, the demand in elastic. As shown in figure due to small shift in price the quantity reduces greatly Less rainfall mostly affects the purchasing power of rural population and contract demand for products and

THE EFFECT ON ECONOMY DUE TO EFFECT ON AGRICULTURE

As the monsoon e ects the ag cu tu e it a so e ects the Indian economy. If the monsoon is good it boosts up the economy of the country and he ps in maintaining GDP gro th. But if monsoon rains get de ayed e en by 15 days as was the case last year in 2009 it became a cause of worry for the go ernment to maintain GDP growth. The share of agriculture to the gross domestic product (GDP) has contributes a huge chunk to the GDP, making it a very important sector for India's growth. The performance of this sector is very crucial to the Indian economy not only with regard to GDP but also as a huge chunk of the Indian population is dependant on agriculture Monsoon which directly impact agriculture is an important segment of the economy because of the following reasons: It produces about a quarter of the GDP. Provides raw materials for a fifth of the industry. Generate demand for industrial goods. Nearly 40 per cent of the manufactured consumer goods are sold in rural areas.

dropped from 25

in 2002 to 17

currently. Yet, agriculture

60

of the population depends on agriculture for livelihood.

For e,g let us take the example of cotton plant. If the cotton plant growth is good then, the product i.e cotton can be use both as direct good and industrial raw material. Thus the growth of industry greatly depends on agricultural. Moreover individual growth also mostly depends on agriculture. So it can be conclude that our GROSS DOMESTIC PRODUCT(GDP) depend on agriculture.

For the growth of the cotton we will require the man power i.e it will provide employement. Along with this the industry that use agricultural products as raw material will also employ workers for their industry. In monsoon season, due to lack of rain, the production of crops decreases. Thus the farmers will be unemployed or party unemployed. Along with this the industry depending on agriculture for raw material will also be affected. Due to decrease in raw material the man power required will also be less. Hence this will also leads to unemployement.

Thus the consequences of decrease in agricultural production due to less rainfall can be summarized as: y y y Decreased G.D.P Decreased industrial growth Unemployement

The timely arrival of the monsoon and sufficient rains are thus key for India's economic growth because farmers' success depends heavily on the monsoon rains. As agriculture is such an important part of Indian economy, the effect of monsoon on agriculture greatly affects the economy