Moneycontrol Pro Panorama | Raining on the economy's parade

Wednesday’s report, along with producer price data the following day, will offer Federal Reserve officials a final look at inflation and the impact of higher tariffs before they gather for a June 17-18 policy meeting.

Dear Reader,

A good monsoon is vital for India’s economy. Excess and torrential rains, on the other hand, do more harm than good. They slow down economic activity by crop loss in rural areas, flooding, and by confining people indoors, which crimps consumption and travel. They lead to production loss and infrastructure damage.

The agriculture sector, which is dependent on monsoon for Kharif crop season, can see a good start, thanks to the early arrival of the monsoon rains. Even so, spatial distribution of these rains is vital. Long dry spells or extreme rains tend to disturb agriculture activity. Farmers have skipped agrochemical sprays during such instances in the past.

Anecdotal evidence already indicates damage to the Rabi crop harvest and to the vegetable crop. Early rains and humid conditions also cause pest infestation in mango orchards, a popular summer fruit.

On the industry side, prolonged rains slow housing and road construction activity. They disturb coal production and reduce renewable power generation. Travel and tourism are curtailed. Tracking the subdued construction activity, cement prices tend to soften during monsoon months.

Ice cream and soft drink manufacturers are already flinching at the early arrival of monsoon rains and a prospect of a short summer season. Sales of ACs and other cooling products such as refrigerators are lagging expectations. Demand for electricity cooled this year.

Consumer focused companies are already suffering from soft urban demand. Passenger car manufacturers expect subdued demand in FY26. Volume growth in the popular segments of alcohol beverage companies remains constrained. An improvement in household income levels is vital to a recovery in consumption, points out a report from Motilal Oswal Financial Services.

What's more, a long monsoon season can stoke infections. That may increase demand for anti-infective and acute therapy drugs, but is hardly desirable.

Investors need to be mindful of the adverse effects of harsh weather events on the economy and on household incomes. 

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R Sree Ram Moneycontrol Pro