Abstract
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.
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