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Rain bets: How market-driven rain predictions could have given IMD a run for its monsoon money

Vikram Doctor, ET Bureau Jul 8, 2012, 04.55AM IST
(Monsoon photos from Times…)

Come June, everyone is checking the skies. Farmers worried about their crops, politicians worried about their election prospects, meteorologists worried about being blamed for wrong forecasts, Delhiites worried about water cuts, Mumbai's commuters worried about rain-hit railway services, and let's not forget the gamblers who, according to a recent ET report, have as much as Rs 2,000 crore riding on rain bets.

From Trade Winds...

Ancient Indian texts dating back to the Upanishads of 3000 BCE repeatedly talk about clouds and rain. The monsoon is also at the foundation of modern meteorology, from when it scaled up from just local weather prediction to large-scale analysis of how weather works across continents and oceans.

One of the first to attempt was Edmond Halley, the 17th century astronomer best known for predicting his comet (and the recent transit of Venus), but also author, in 1686, of A Historical Account of the Trade Winds and Monsoons Observable in the Seas Between and Near the Tropics, With an Attempt to Align the Physical Cause of the Said Winds.

Two centuries earlier Vasco da Gama had broken the stranglehold Arab sailors had on the hugely profitable Indian Ocean trade. He persuaded a mysterious Indian sea pilot he found in the East African port of Malindi to reveal the secret of how summer monsoon winds would take ships up from Africa to India and then return them later the same year. This annual cycle of winds was what was called the monsoon (the actual rains, which is what we in India call the monsoon was called 'the breaking of the monsoon').

...To Cyclones

Henry Piddington, a retired sea captain-turned-scientific observer in early 19th century Calcutta, would give these storms the more accurate and descriptive name of cyclones. Piddington was president of the Marine Courts of Inquiry in Calcutta, and one of the subjects he investigated was a devastating storm that hit the Bengal coast in 1789 and killing an estimated 20,000 people. Piddington's experience as a sailor helped him visualise the circular twisting nature of such storms and he derived a term from the Greek word kyklon, which means moving in a circling way.

Calcutta already had its first weather observatory by then, set up in 1785, with Madras following in 1796 and Bombay, rather later, in 1826. But it was only after another devastating storm that hit Bengal in 1864, followed by monsoon failures and famines in 1866 and 1871, that the British realised that monsoon prediction was so important for their vital imperial possession in India that it needed a more sustained, coordinated effort. In 1875, the Indian Meteorological Department (IMD) was set up.

After IMD, the Bets

Indians were quick to use these new techniques of rain prediction — but not always in ways that the British foresaw or approved. The same period that saw the establishment of the IMD saw the panic over rain-gambling which, as Ritu Birla has explored in her book Stages of Capital: Law, Culture and Market Governance in Late Colonial India, established important issues over markets and the permissibility of speculation. Barsat ke satta, she notes, was a popular practice in Rajasthan where the relative lack of rains meant that it was anticipated and measured all that more intently.

  Rain gambling was particularly popular with the region's native Marwari community, and as prolonged droughts forced them to leave for other parts of India, they took the practice along. When the British in Bombay became aware of it they did not approve. Official British policy in India was to prevent gambling, and so in 1888 two Gujarati merchants were arrested and among the items seized from their premises was a large rain gauge.

But instead of just giving in, the merchants fought back. In court they pointed to the hypocrisy of the British banning gambling, but allowing betting on horse-racing on the grounds that it required some skill. Justice Jardine of the Bombay High Court agreed, writing that the gauge "registers quantity just as the watch in the hand of the judge at a horse-race registers time..." The merchants were acquitted.

Human Control?

A similar controversy in Calcutta in 1897 saw the Marwari community organising itself for the first time to protest the penalisation of rain-gambling. In a couple of memorials presented to the government they pointed out that "the rain is independent of human control".

Not only did this make it the most perfect subject to bet on, it also meant that "rain-gambling conduces to the promotion of science which no other form of betting does". Audaciously, the signatories said they had invested in studying meteorology across India and even suggested that their reports were more accurate than the IMD's.

The government wasn't inclined to take them up on their offer to share the said reports, any more than the current government seems likely to listen to the rain bettors of today. Yet perhaps this was a mistake, since such exchange-based prediction systems have shown a fairly high degree of efficiency — as might be expected when you have real money to lose, as opposed to your main priority, as with IMD, being to keep the government happy.