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Weather Derivative is a rather new, but a very important hedging instrument for India. A successful or a failed Monsoon can change not only the economics of the best companies, but on an aggregated basis affects the whole nation. There are as many people praying for a good monsoon as there people praying that the Sensex crosses 21,000. After all, it seems that India thrices (or rather survives) on those four months of water shed. So, who would be the bigger beneficiary of the weather derivative. Banks of course. Because irrespective of the position, there are most likely going to take a role of a broker and offload any open exposure to another client. In terms of which weather parameter that is most likely going to be part of the derivative market...its going to be the annual monsoon. Since Agriculture is the key driver of Indian Economy, weather derivatives linked to the Monsoons will be the most important and most traded. It now remains how the weather derivative market takes shape in the future. A survey indicates that this market is expected to grow to US$ 2.5 billion in the next few years.