| Ms. Deepa Susheel, III M.Com |
El Nino is a weather condition. It happens when the water in the Pacific Ocean becomes more hot than normal. Because of this, weather can change in many places. In India, El Niño can sometimes cause less rain but not drought necessarily. India gets a lot of rain from the south-west monsoon. Farmers need good rain to grow crops. If there is less rain, crops may not grow properly. Farmers may earn less money and spend less money. This can also affect many businesses because there are no much consumers due to low income.
The effect can happen like this:
Farmers may not buy tractors if they are not sure about their income. Farmers may delay buying bikes and scooters affecting automobile Industries. People in villages may spend less money on things which are not very important. Lack of agricultural raw materials for production can also affect Food companies. Farmers may change their buying preference of fertilizers depending on the rain and agricultural yield. If farmers earn less money, they may have difficulty in paying them back or even less borrowing since the farmers would not want to invest in agricultural activities. Less rain can also affect commercial crops like cotton, soybean, corn and pulses.
El Nino does not stop all big business deals in India. But it can make companies worried about the future. Companies may not know how much they will sell or how much money they will make.
So, they may delay big investments, stop or postpone expansion plans, wait before buying something expensive, take loans more carefully, wait for more information before signing a big contract.
Suppose a company wants to invest ₹500 crore to build a new factory and the factory depends a lot on people in villages buying its products. If the company thinks there will be less rain, it may think that farmers will earn less money. So, farmers may not buy the products. Because of this, the company may wait before investing the full ₹500 crore.This shows how weather can affect big business decisions. In India, companies and economists watch El Nino because it can affect the monsoon. They especially watch rural income and spending. So, El Niño can affect big business decisions in India.
But El Nino does not always cause the same effect. Other weather conditions can also change its impact.