(Reuters) - A summer drought makes a bad situation worse for an Indian economy already crippled by a sharp slowdown in growth, persistent inflation and a politically hamstrung government.
Late on Thursday, New Delhi confirmed the first drought in three years as monsoon rains are likely to be less than 90 percent of the long-term average, dealing a blow to Asia's third-largest economy, where more than half the farmland lacks irrigation.
"We already have a scenario in which growth is going down and inflation is going up, so it's going to worsen this further," said D.K. Joshi, principal economist at ratings agency Crisil.
Weak rains in the four-month monsoon that started in June will drive up food prices and erode spending power in a country where more than half the population relies on the rural economy, crimping demand for goods from tractors and motorbikes to soap.
The economy grew at 5.3 percent in the March quarter, its slowest in 9 years, but headline inflation above 7 percent has prevented the central bank from cutting interest rates at its last two policy reviews. This increases pressure on the government of Prime Minister Manmohan Singh to take steps that will revive investment.
Just over halfway through the season, rains are 20 percent below normal, and the weather office forecast that the El Nino weather pattern should reduce rains again in the second half.