Wednesday, August 12, 2009

Monsoons and the Indian Market

Monsoons is a reality of Indian market, a good proportion of the growth of the Indian economy is still dependent on how adequate the rainfall is across the country. But as with many other things we tend to take the monsoons for granted and it is only when we have a drought hanging over the country that we start talking and discussing about it as is apparent from the recent news items on weak rains and impact on FMCG revival, impact on the stock market ,and the FM lowering the economy's growth to 6 plus from 7%.

The linkage of good monsoons and Indian market is because of another reality which we keep ignoring and about which I have written about earlier also, it is the rural market. link to my earlier posts on rural marketing.

The rural economy is heavily dependent on monsoons and many companies are dependent directly for their sales from the rural markets (more than 50% for FMCG and durables), and with an inadequate monsoons the rural consumption falls and so does their overall sales. There are many more whose sales are indirectly dependent...

And the urban consumers is dependent on the farmer for his of pulses and cereals..... as some one told us that the farmer is a better marketer than his urban counter part as we depend more him for our daily needs than he does on us!!!!! And with sowing down by 20% the prices are bound to climb higher in the coming days with toor dal touching the feared 100/- mark.... the impact would be more pronounced on the monthly budget soon.

The sad part is that we tend to draw up plans to combat the impact of bad monsoons the year we have a problem and when the rains are back to normal the next year we forget and go on with life. This year it is seen as more important as a weak monsoons might extend the slowdown...

Another write-up in NY times of the same issue, link



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