The Indian Met Department has indicated a large gap between normal rainfall and the actual rainfall so far this year. A drought-like situation seems to be developing especially in Northern India, with a shortfall in rain ranging between 57 to 76%. This is not good news since India is largely an agrarian economy and in light of the rising commodity prices over the past year we can now look forward to more demand and supply constraints.

In this context, I came across a thought-provoking article in the Indian Express a few weeks ago, by Mihir Sharma, titled Monsoon Matters. He touches upon the fact that perhaps we are responsible for this reducing rainfall situation. He does not mean global warming though this is also a legitimate concern. What he means to say is that human habitation in varying climates has caused a change in weather patterns. For example, the area around Delhi was originally a semi-desert wasteland, but with human occupation and habitation patterns following the need to shelter from sweltering heat, we can now see greenery and cultivation where there was none previously. These sort of subtle changes have accumulated throughout the country, thus affecting moisture and humidity levels which are responsible for ushering in monsoon rains. In the process we have created a situation where rain no longer falls where it should and causes flooding and other miseries where it previously did not exist.

This has a direct effect on the economy too. Not only that Indian economy is largely based on agriculture, but also that a lot of dream projects the UPA has been putting forth is likely to see a lot of obstacles and hindrances since their focus is on rural rehabilitation. The author feels that we need to change the way we are going about things a bit, rather than hiding our heads in the sand like ostriches.

An interesting read. The right people need to take a look at it though or else it is possible that we'll see more of the same weather shortfalls.

Some amount of turbulence is evident in the Indian equity markets after a great rise over several weeks. Yesterday saw hefty selling. Today, the indices showed some strength in the morning but has been giving out now and then, closing mostly in the range of 2%. Advance-decline ratio is clearly in favor of the declines at the moment.

Sectorwise, the rise is as follows:

• BSE Power up 3.62%
• BSE Capital Goods up 3.46%
• BSE Consumer Durables up 2.74%
• BSE Bankex up 2.5%
• BSE Healthcare up 2.3%
• BSE Metal up 2.14%
• BSE FMCG, Oil&Gas b0th up 2%
• BSE Teck up 1.68%
• BSE Auto up 1.5%
• BSE IT up 1%
• BSE PSU up 0.97%
• Realty sunk under selling pressure, down 1.14%.
  

On May 1st, the New Pension Scheme, previously open to only government employees, was released to the public too. So regular retail investors can shore up their retirement savings using this new option along with provident funds. Some analysts, however, are a bit cautious as it is still a new concept, India's very own social security plan, and many smaller details are still not clear such as the taxation aspect. Click here for some details on this scheme.