Along with heat stresses, the growing possibility of an El Nino condition may need a policy response, hit fiscal buffer
Since 1950, there have been 26 global El Nino years and 15 Indian drought years. However, the association between the two climatic phenomena appears to have strengthened since the 1980s, with an even stronger co-relation in the last 20 years.
Image: Prashant Waydande / Reuters
Scorching temperatures are likely to burn a hole in the pockets of Indian consumers this year as a cycle of heat waves, the early onset of summer and abnormal rainfall threaten to increase food prices, create short-term spikes in power prices and overall derail rural economy recovery. These climate risks and abnormalities may consequently need a policy response, thereby hitting key interest rates and toppling an already limping economy. Experts warn that heat stresses along with the growing possibility of an El Nino condition may not only impact inflation but also severely hit the fiscal buffer of the country.
“We are once again witnessing an early onset of summer with February temperatures being the warmest in nearly 122 years. This could possibly shrivel wheat grain, akin to last year. Despite traction in Rabi sowing continuing to surpass comparable levels from a year ago all through the season to end 3.5 percent higher, there could be downside to wheat output pegged at 112.2 metric tonne as per the second advance estimates of the government. On the price front, any shortfall in output is likely to keep price pressures seen in cereals inflation over the last one year somewhat persistent,” says Yuvika Singhal, economist, QuantEco Research.