Journal Press India^®

Author Details ( * ) denotes Corresponding author

Indian monsoon rainfall has significant variations and unpredictability. Therefore, there is a need for suitable risk mitigation techniques to manage the monsoon risk. This paper aims to study the statistical properties of the monsoon (rainfall) risk profile of the meteorological subdivisions of India. A thorough examination of the monsoon rainfall's statistical properties will help to understand the monsoon risk problem and the feasibility of rainfall derivatives for India. The study is based on the empirical data of the South-West monsoon rainfall for the past fifty years of all 36 meteorological sub-divisions. The results reveal that the monsoon rainfall data has taken a wide range across years and sub-divisions reflecting that the variability has increased in recent years. This is particularly useful to design rainfall derivatives’ contracts. Therefore, the creation of the monsoon (rainfall) risk market similar to the temperature risk markets holds the key to effective management of monsoon risk in India.

Keywords

Monsoon; Rainfall derivatives; Risk markets; South-west monsoon; Variability

1. Bharath, V. & Kotreshwar, G. (2020). Evaluating rainfall risk profile of Indian subcontinent based on index metrics. Indian Journal of Finance and Banking, 4(2), 38-50.
2. Cao, M., Li, A., & Wei, J., (2004). Weather derivatives: A new class of financial instruments. working paper, York University, XL Weather & Energy, Stamford, CT and University of Toronto, Toronto, April.
3. Chacko, K., Ranadive, R., Sachdeva, M., & Hede, S. (2018, August 21). Economic and industrial impact of Kerala floods. Care Ratings. Retrieved from https://www.careratings.com/uploads/newsfiles/Economic%20and%20Industrial%20Impact%20Kerala.pdf.
4. Charanjit, S., Rio, C. R. D., Soundarajan, V., Nath, V. & Shivaranjani, V. (2019). Assessing India’s mounting climate losses to financial institutions. Action on Climate Today. Retrieved from https://www.preventionweb.net/publications/view/63287
5. Dash, S. K., Kumar, J. R., & Shekhar, M. S. (2004). On the decreasing frequency of monsoon depressions over the Indian region. Current Science, 86(10), 1404-1411.
6. Dileep. N., Bharath.V., Jyothi, V. S. & Kotreshwar, G. (2021). Rainfall index based futures: A tool for absorbing systemic monsoon risk. Mukt Shabd Journal, X(VI), 232-240.
7. Gadgil, S., & Gadgil, S. (2006). The Indian monsoon, GDP and agriculture. Econ. Political weekly, 41, 4887-1895.
8. Ghosal, S. (2020, June 9) NCDEX to publish two rainfall-based indices on Wednesday. The Economic Times. Retrieved from https://economictimes.Indiatimes.com/markets/ commodities/news/ncdex-to-publish-two-rainfall-based-indices-on-wednesday/article show/7628519
9. Guhathakurta, P., & Revadekar, J. (2017). Observed variability and long-term trends of rainfall over India. In Observed climate variability and change over the Indian region Springer, Singapore. 1-15.
10. Guhathakurta, P., & Revadekar, J. (2019). Observed variability and long-term trends of rainfall over India. In Observed Climate Variability and Change over the Indian Region Springer Singapore. 1-15.
11. Guhathakurta, P., (2003). Drought in districts of India during the recent all India normal monsoon years and its probability of occurrence. Mausam, 52(2), 542-545.
12. Guhathakurta, P., Rajeevan, M., Sikka, D. R., & Tyagi, A. (2015). Observed changes in southwest monsoon rainfall over India during 1901–2011. International Journal of Climatology, 35(8), 1881–1898.
13. Kotreshwar, G. (2015). Securitization of rainfall risk in india: designing rainfall derivative contracts based on standard metrics. Paper presented in International Conference on Emerging Trends in Finance Accounting, SDM-IMD, Mysuru.
14. Kotreshwar, G., (2006). Managing monsoon risk in India: Why not monsoon derivatives? The ICFAI Journal of Derivatives Markets, 3(3), 76-83.
15. Kumar, K. K., & Parikh, J. (2001). Indian agriculture and climate sensitivity. Global Environmental Change, 11(2), 147-154.
16. Kumar, K. N., Rajeevan, M., Pai, D. S., Srivastava, A. K., & Preethi, B. (2013). On the observed variability of monsoon droughts over India. Weather and Climate Extremes, 1, 42-50.
17. Kumar, K. R., Pant, G. B., Parthasarathy, B., & Sontakke, N. A. (1992). Spatial and subseasonal patterns of the long‐term trends of Indian summer monsoon rainfall. International Journal of climatology, 12(3), 257-268.
18. Mooley, D. A., & Parthasarathy, B. (1983). Fluctuations in all-India summer monsoon rainfall during 1871–1978. Climatic Change, 6(3), 287-301.
19. Mooley, D. A., Parthasarathy, B., Sontakke, N. A., & Munot, A. A. (1981). Annual rain‐water over India, its variability and impact on the economy. Journal of Climatology, 1(2), 167-186.
20. Pai, D. S., Guhathakurta, P., Kulkarni, A., & Rajeevan, M. N. (2017). variability of meteorological droughts over India. In Observed Climate Variability and Change over the Indian Region (pp 73-87). Singapore: Springer.
21. Pai, D. S., Latha, S., Guhathakurta, P. & Hatwar, H. R. (2011). District-wide drought climatology of the southwest monsoon season over India based on standardized precipitation index (SPI). Natural Hazards, 59, 1797–1813. Retrieved from doi:10.1007/s11069-011-9867-8.
22. Panagariya, A. (2009, July). Climate change and India: Implications and policy options. National Council of Applied Economic Research, 6(1), 73-151.
23. Parchure, R. (2002). Varsha bonds and options: Capital market solutions for crop insurance problems. UTI Institute of Capital Markets, Mumbai. Retrieved from http://www.utiicm.com/rkparchure.
24. Parthasarathy, B., Munot, A. A., & Kothawale, D. R. (1994). All-India monthly and seasonal rainfall series: 1871–1993. Theoretical and Applied Climatology, 49(4), 217-224.
25. Pattanaik, D. R., & Rajeevan, M. (2010). Variability of extreme rainfall events over India during southwest monsoon season. Meteorological Applications, 17(1), 88-104.
26. Rajeevan, M., De, U. S., & Prasad, R. K. (2000). Decadal variation of sea surface temperatures, cloudiness and monsoon depressions in the north Indian ocean. Current Science, 79(3), 283-285.
27. Shivkumar, D., & Kotreshwar, G. (2013). Trading in weather risk transfer products–Reengineering rainfall indexation. International Journal of Business and Management Invention, 2(11), 33-41.
28. Shivkumar, D.P (2014). Weather risk management in India- Feasibility of monsoon (rainfall) derivatives as an ART (Alternative Risk Transfer) instrument (Doctoral dissertation, University of Mysore). Retrieved from http://shodhganga.inflibnet .ac.in:8080/jspui/handle/10603/72545#