How El Niño could damage India’s economy | Explained
The emergence of El Niño patterns poses a significant risk to the Indian economy by potentially disrupting critical monsoon rainfall. This climate phenomenon threatens to weaken agricultural productivity and dampen broader national growth prospects.
A deficiency in monsoon rainfall caused by El Niño can damage the Indian economy through three primary channels. First, it directly reduces agricultural output, which lowers the sector's overall contribution to the national Gross Domestic Product.
Second, poor crop yields lead to a significant drop in rural income. This decline in purchasing power among the rural population creates a negative ripple effect, denting aggregate demand for consumer goods and services across the country.
Finally, the shortfall in food production threatens to push up essential commodity prices. This surge in food inflation can compel the central bank to maintain higher interest rates, further impacting economic expansion. Source: The Hindu
