NCDEX to launch 2 non-tradable rainfall-based indices on Wednesday

National Commodity and Derivatives Exchange has said it will launch two rainfall-based indices on Wednesday, which will track the systematic rainfall movement in the country.

For the two indices - Indian Monsoon Index (Cumulative Monsoon Index) and Indian Rain Index (Monthly Cumulative Rainfall Index) - NCDEX has partnered with Skymet Weather Services, which will provide data on the weather movement in the country, the firm said in a statement on Tuesday.

The two indices will only be representative in nature for rainfall in the country and will not be available for trading.

"In India, the fate of agriculture largely hangs on the performance of monsoon and the related uncertainty hurts not only the agrarian community but businesses as around 60 percent of consumers live in the rural areas.

"The monsoon-based indices, being launched by us, will provide the accurate and reliable rainfall data by Skymet through its massive pan-India network of Automatic Weather Stations, which will be a great help for the agriculture value chain and can be used as a hedging tool to mitigate their risks," NCDEX MD and CEO Vijay Kumar said.

The two indices will cover rainfall on pan-India basis using rainfall data collection centres.

This would track rainfall on the basis of deviation from normal (deficit or surplus) for which yearly cumulative and monthly statistics are available.

The data update would be on a daily basis and these indices will be useful for a broad range of economic sectors such as energy, agriculture, insurance, banking, construction, entertainment, leisure, travel, retail among others.

"Agriculture contributes significantly to Indian economy contributing 14 percent to the country's GDP and 80 percent of small and marginalised farmers largely depend on the monsoon rains.

"Southwest monsoon in India is a four-month-long affair from June till September and more than 75 percent of India's annual rainfall occurs during this period itself," Skymet Weather Services MD and Founder Jatin Singh said.