Since 1980, all drought years in India were El Niño years, but all El Niño years were not drought years. If the year 2014 does turn out to be an El Niño and a drought for India eventually, the wisdom lies in being alert and prepared now, than panicky.
Weather watchers around the world are abuzz with the possibility of a strong El Niño in 2014—something akin to the monstrous one in 1997, the worst recorded so far, which played havoc in many parts of the world. Estimates of economic losses from the 1997 El Niño vary widely, but one such estimate by the University of New South Wales puts it around $35 billion, besides the loss of 23,000 human lives.
In India, El Niño is generally feared to be causing droughts. For example, in 2002, there was El Niño and India had more than 19% deficient rainfall—below Long Period Average (LPA)—resulting in a severe drought. While the foodgrain production tumbled by 18% (38.1 million tonnes), the overall agri-GDP dropped by about 7%, implying a loss of more than $8 billion (2004-05 prices). Such a drop in food production can set food prices soaring, and given that food inflation in India is already at uncomfortably high levels, this can send shivers down the spine of many people and policy makers. Yet, it is worth remembering that India had escaped the worst El Niño till date (1997) without a scratch!
So, what is the relation between El Niño and droughts, and what is their probability of coinciding in India this year? This is the key question that policy makers and traders are interested in as it has huge implications for the economy, especially food prices and agri-trade. In the worst case scenario, this may turn out to be the toughest test for the incoming government after the elections, forcing it to hit the ground running!
What is El Niño?
Very briefly and in a lay man’s language, El Niño refers to the changes in the world climate triggered by rising sea surface temperatures in the Pacific Ocean. These temperature deviations, measured from an average temperature during 1971-2000, are called sea-surface temperature anomalies (SSTA) and are captured as three months’ moving averages in the Oceanic Niño Index (ONI). When this ONI crosses +0.5 (-0.5) degrees Celsius for five consecutive time periods in a year, the year is declared as El Niño (La Niña) year. Weather