Improved rains equals improved buying power?

Mumbai: India's rain deficit has reduced considerably as clouds break over Central and Western skies.

• June: Rainfall 43 per cent less annual average
• July: Rainfall 24 per cent less annual average
  

The dying kharif crop now has a better chance.

This is good news for top corporate houses who depend on rural demand to spur growth. A good harvest increases rural incomes, fuelling demand in the economy.

''I am optimistic about the rains. We will continue our full thrust in rural India,'' said Adi Godrej, Chairman, Godrej Group of Industries.

On the downside, UP, Punjab and Haryana - the nation's grain bowl, remain critically rain deficit.

• Uttar Pradesh: -50 per cent
• Punjab, Haryana: -65 per cent
  

Uttar Pradesh, that produces more than half of India's sugarcane has seen a drop in planting by over 1 lakh hectares.

The fruit producing states are equally barren.

• Himachal: -56 per cent
• Jammu: -22 per cent
  

The overall cultivation has dropped by over 100 hectares.

• 2009, July: 307 lakh hectares sown
• 2008, July: 411.5 lakh hectares sown
  

Mahindra & Mahindra, India's top tractor company says that this huge deficit has impacted purchasing power.

''Monsoon has an impact on the sentiment,'' said Anand Mahindra, Vice Chairman & Managing Director, Mahindra and Mahindra.

Traditionally a poor monsoon can reduce the GDP by up to 1 per cent. Little wonder that stock markets are closely chasing the monsoons.

"Markets are watching the monsoon closely for triggers," said Rakesh Jhunjhunwala, trader and investor.

You can never be sure about the rain and the clouds. But for an economy emerging out of a slowdown, monsoon this year has become more of a sentiment driver.