Mumbai: Hours after the official forecast suggested "below normal" monsoon this year, domestic rating agency Crisil Wednesday said a second straight year of weak rains will dent its 7.9 percent GDP growth estimate by 0.50 percent.
"According to our calculations, a deficient monsoon, if it comes true, will shave off 0.50 percent from our GDP forecast of 7.9 percent for fiscal 2016," it said in a note.
A weak monsoon will decrease the efficacy of India's irrigation ecosystem and hit the agricultural output and farmers adversely, it said, adding that this is over and above the adverse impact of the unseasonal rains of last month which affected the crops.
The Indian Meteorological Department (IMD) today said the country is likely to witness a "below normal" monsoon this season because of the El Nino phenomenon.
Union Minister for Earth Sciences Harsh Vardhan said the monsoon would be 93 percent of the Long Period Average.
According to the IMD parameters, below 90 percent is defined as deficient, 90-96 percent is considered as below normal, 96-104 percent as normal and above it as excess.
Crisil said given the weak investment climate, tepid export growth and fragile consumption, a normal monsoon is crucial to push the economic growth this year.
It said agriculture will grow 3 percent this fiscal, after the low base of 1.1 percent in FY15.
It also pointed out that the first forecast released today is gloomier in tone than the IMD's first forecast of last year, which turned out to be a bad year.
The agency, however, noted that the private Skymet Weather Services has forecast rainfall at 102 percent of the long period average, but the climate researchers are predicting enhanced possibility of El Nino playing out in 2015, which Skymet has not factored in.
"The El Nino condition, which typically occurs at irregular intervals of three to five years, weakens the Asian monsoon, often causing drought in north-west and central India and heavy rainfall (or even floods) in north-east," it said.
Crisil added that this will be the second year of El-Nino playing out and if it does so, the impact on agricultural output will be greater.
