Editorial 1 : A good augury
Introduction: The India Meteorological Department (IMD) has forecast a “most likely to be above normal” southwest monsoon this year. Rainfall over the country during June-September is expected to be 106 percent of the “normal” long period average for this four-month season.
The factor behind the “above normal” rain
- The optimism is based on most global climate models indicating a weakening of the current El Niño conditions to “neutral” in the first half of the monsoon and then developing into a La Niña during the second half.
What is El Nino and La Nina?
- El Nino and La Nina are two opposing climate trends that deviate from the normal conditions and normally run nine to twelve months, but can often extend.
- These events occur every two to seven years on average (El Nino is more frequent than La Nina), but not on a regular basis and together are referred to as the El Nino-Southern Oscillation (ENSO) cycle by scientists.
- El Nino is typically known as the warm phase (a band of warmer water spreading from west to east in the equatorial Pacific Ocean) and La Nina is identified as the cold phase (a band of cooler water spreads east-west) of ENSO.
- Both El Nino and La Nina can have global effects on weather, wildfires, ecosystems and economics.
Benefits of a good monsoon year
- A good monsoon, assuming the IMD’s forecast is borne out, is welcome on many counts.
- To start with, growth. While India’s overall gross value-added growth has gone up from 6.7 per cent in 2022-23 to 6.9 per cent in 2023-24, the same for agriculture has slowed from 4.7 per cent to 0.7 per cent.
- Given that the farm sector employs nearly 46 per cent of the country’s workforce, a second consecutive not-so-good monsoon can turn out to be a major drag on already stressed rural incomes and consumption.
- Secondly, the monsoon matters for availability of drinking water (think Bengaluru) and reservoir levels for hydel power generation.
- The third impact is on sentiment. For the government taking over in June after the Lok Sabha elections, a good monsoon would be manna from heaven — providing just the right start.
A good monsoon will help to control food inflation
- For both the government and the Reserve Bank of India, retain food inflation is an immediate concern.
- At 8.5 per cent year-on-year in March, it was higher than the 4.9 per cent increase in the general consumer price index.
- With government wheat stocks, at 7.5 million tonnes on April 1, depleting to a 16-year-low for this date and subpar production in most rabi crops, food inflation may remain sticky.
- That practically rules out any policy interest rate cuts.
- The government’s options are limited: It has done both right (slashing import tariffs on pulses and edible oils) and wrong (banning/curbing exports of wheat, rice, sugar and onions, besides imposing stocking limits).
Conclusion: A lot hinges on monsoon and a bumper kharif harvest about six months from now. Government must abolish 40 per cent import duty on wheat.
Editorial 2 : An alternative path
Introduction: India emerged as the bright spot amid a weak global outlook. With a 7.5 percent growth estimate, India is one of the fastest growing significant economy. India’s growth story provides a development model to be followed by many developing countries.
Analysis of India’s growth path
- India’s development path is demonstrating the impacts of public and private sector initiative, innovation, and resilience that could be replicated in other countries.
- As we seek to learn what works and scale it up, India offers practical development knowledge at the federal, state, and local levels.
- We see India as a development sandbox for testing real-world solutions that can be tailored and scaled through South-South knowledge exchange.
- It can be demonstrated by emphasizing three examples: The energy transition, digital public infrastructure, and female empowerment.
1. Energy Transition
- There is still a long way to go, but India has made important progress on the energy transition, with renewable energy making up 42 per cent of its total power generation capacity.
- India is currently the world’s fourth largest renewables market and home to 3 per cent of the global solar manufacturing capabilities.
- Over the past five years, India has invested close to $10 billion every year into renewables and ranks among the world’s five emerging and middle-income economies with large scale public investment in renewable energy.
- The country has also supported the adoption of EVs and the production of green hydrogen.
- Investors thus rightly see India’s clean energy shift as a big opportunity.
- And the World Bank has been able to contribute with investments of about $1 billion in solar parks and rooftop solar in the country having leveraged 40 times that amount in commercial investment.
- India is now poised for the next phase of its energy transition which will require addressing the intermittency of renewable energy sources through investments in transmission and storage, promoting the large-scale and rapid electrification of transportation, and catalysing investments in technologies that will foster industrial decarbonisation.
2. Digital public infrastructure (DPI)
- With its digital public infrastructure (DPI) initiative, India has pioneered the use of technology for inclusion.
- With a digitally verifiable proof of identity, millions of people can now access social safety net payments, open bank accounts, and receive government services without the need to stand in queues, negotiate with public officials, and fill out paper forms.
- The use of digital payments has also reduced delays in the payment of maternal health conditional cash transfers by 43 per cent.
- In many states, micro-entrepreneurs are working in a cashless environment and using digital networks to serve a wider market, access finance, and expand their businesses.
- While affordable connectivity remains a key constraint, digital innovation is transforming entire rural communities from online health consultations and remote learning to e-commerce and fin-tech.
- India offers valuable lessons on how countries can make use of the digital economy for growth, inclusion, and poverty reduction and the World Bank is sharing the lessons of India’s DPI journey with other countries.
3. Female empowerment
- Although India’s female labour force participation is behind other countries, an encouraging sign is that this could be changing.
- India is providing many policy support to women like working women hostels, cheap credits, handholding support.
- Combined with improved access to finance, such initiatives have helped boost the female labour force in industry to 43 per cent of the national total.
- The National Rural Livelihoods Mission, supported by the World Bank, has empowered millions of rural women by organising them into self-help groups.
- More than $4 billion in commercial credit has been mobilised to support women-led cooperatives and rural enterprises.
- If India can take these experiences to scale, it could raise its female labour force participation to the developing country average of 50 per cent — adding a full percentage point to the country’s potential growth rate and lifting up a generation of Indian women and girls.
Conclusion: Investment in energy transition, digital public infrastructure, and female empowerment is taking the country towards a green and sustainable future. With the world’s largest population and an aspiration to reach high-income county status by 2047, India will continue to write important chapters in the book on global development.