Below-normal monsoon and West Asia conflict cloud India's agriculture outlook: BoB
The Bank of Baroda's (BoB) economic research unit flagged that India's agricultural outlook for 2026–27 is threatened by a dual shock: a below-normal monsoon forecast and supply chain disruptions from the West Asia conflict
The India Meteorological Department (IMD) on April 13, 2026 issued its first Long Range Forecast predicting SWM rainfall at 92% of the Long Period Average (LPA) — the lowest initial forecast in 25 years
West Asia conflict disruptions to gas supply affect fertilizer availability: 85% of urea production requires imported LNG as feedstock; ~70% of urea imports and ~41% of DAP imports come from Gulf countries
The combination threatens both the supply side (lower crop output from deficient rain and fertilizer shortage) and the demand side (rural distress dampening consumption)
Ratings agency ICRA also warned of a "trifecta" of threats to Indian agriculture: below-normal monsoon, emerging El Niño conditions, and the West Asia war's supply chain disruptions
Southwest Monsoon — IMD Forecast Methodology and Classification
The Southwest Monsoon (SWM) is India's primary annual precipitation event (June–September), accounting for ~70% of India's annual rainfall. The IMD issues a two-stage Long Range Forecast (LRF): Stage I in April (all-India seasonal forecast) and Stage II in June (updates with more granular regional and monthly forecasts). The IMD classifies monsoon rainfall relative to the Long Period Average (LPA) — the benchmark average computed over 1971–2020, equal to approximately 868.6 mm for the country as a whole.
Key Details
- IMD classification of SWM seasonal rainfall:
- Excess: >104% of LPA
- Normal: 96–104% of LPA
- Below Normal: 90–95% of LPA
- Deficient: <90% of LPA
- 2026 forecast: 92% of LPA (±5% model error) — classified as "Below Normal"
- Probability distribution: 35% chance of deficient; 31% chance of below normal; 34% combined chance of normal/above normal/excess
- El Niño: Pacific Ocean warming phenomenon that typically suppresses Indian monsoon rainfall; expected to develop June–September 2026
- Indian Ocean Dipole (IOD): a positive IOD (warmer western Indian Ocean) can partially offset El Niño's negative impact on Indian rainfall; IOD expected to turn positive late in the 2026 season
A 92% LPA forecast, combined with a 35% probability of turning fully deficient, creates significant agricultural uncertainty. Kharif crop sowing (primarily rice, pulses, oilseeds, cotton) depends on early and steady monsoon onset — delays or deficient early-season rainfall can irreversibly reduce crop yields.
El Niño and Indian Ocean Dipole — Impact Mechanisms on Indian Rainfall
El Niño (ENSO — El Niño-Southern Oscillation) refers to the anomalous warming of the central and eastern tropical Pacific Ocean, which disrupts global atmospheric circulation. India's monsoon is driven by the sea-land temperature differential between the Indian Ocean and the heated Indian subcontinent; El Niño weakens this differential by warming the Pacific, diverting moisture away from the Indian Ocean convection systems.
Key Details
- El Niño years with deficient Indian monsoon: 1987, 2002, 2009, 2014, 2023 showed significant rainfall reduction
- Indian Ocean Dipole (IOD) mechanism: when western Indian Ocean is warmer than eastern (positive IOD), it enhances moisture convergence over India and can partially neutralise El Niño effects — the 2019 season had positive IOD mitigating weak El Niño
- IMD's 2026 assessment: El Niño developing in the second half of the monsoon season (August–September), with positive IOD developing late — limited ability to compensate for El Niño
- Historical data: Out of 27 El Niño years between 1951 and 2023, 17 (63%) had below-normal or deficient monsoon rainfall in India
- 2026 is first below-normal monsoon forecast since 2023
The El Niño emergence between June and September 2026 is the primary climate driver behind the IMD's below-normal forecast. The positive IOD, expected only late in the season, may partially compensate but is unlikely to fully offset El Niño's suppressive effect on monsoon rainfall.
Fertilizer Supply Chain — India's Import Dependence and West Asia Exposure
India is the world's second-largest consumer of fertilizers and is significantly import-dependent for urea and DAP (di-ammonium phosphate) — the two most important fertilizers for Indian agriculture. The West Asia crisis has disrupted both the feedstock supply (LNG for urea production) and the direct import pipeline.
Key Details
- Urea: nitrogen fertilizer; India's domestic production depends heavily on imported LNG as feedstock; 85% of urea feedstock is imported LNG
- India's urea imports (2024): ~5.64 million tonnes; ~70% from Oman, Saudi Arabia, UAE, Bahrain
- DAP imports (2024): ~4.57 million tonnes; Saudi Arabia accounts for ~41%
- Fertilizer subsidy: India provides massive fertilizer subsidies to keep prices affordable — Budget 2025-26 allocated approximately ₹1.64 lakh crore for fertilizer subsidies
- Key fertilizer importers: IFFCO, KRIBHCO, RCF (Rashtriya Chemicals and Fertilizers) — public sector entities
- Price control: urea prices are controlled by government (currently ₹242/bag of 45 kg); DAP prices are partially controlled
The Hormuz crisis disrupts the supply of fertilizers precisely during the critical pre-kharif period (April–June) when farmers procure inputs for June–July sowing. A fertilizer shortage or price spike translates directly into higher production costs, reduced application (crop yield loss), and food inflation.
Kharif Agriculture — Crops, Rainfall Dependence, and Economic Significance
Kharif crops are sown in June–July at the onset of the southwest monsoon and harvested in September–October. They account for approximately 50% of India's food grain production. Paddy (rice), maize, bajra, jowar, groundnut, cotton, soybean, sugarcane, and pulses (tur, moong) are major kharif crops.
Key Details
- Kharif sowing window: mid-June to mid-July (varies by region); onset of monsoon is the trigger
- Key kharif crops by area: rice (~43 million ha), cotton (~12 million ha), groundnut (~5.5 million ha), maize (~9 million ha)
- Normal kharif food grain production (recent years): ~150–160 million tonnes (rice + coarse cereals + pulses)
- Agriculture's share of GDP: approximately 17–18% (FY24); employs ~45% of workforce
- Food inflation linkage: inadequate kharif production raises cereal and vegetable prices; CPI Food has a weight of ~39% in India's headline CPI basket (base year 2012 — due for revision)
- MSP (Minimum Support Price): recommended by CACP (Commission for Agricultural Costs and Prices) and approved by Cabinet; set for 23 crops including all major kharif crops
A below-normal monsoon reduces kharif crop output; simultaneously, West Asia-linked fertilizer supply disruptions increase input costs. The combined effect is a supply-side shock to agricultural production that will translate into higher food prices and rural income stress — testing India's food security architecture and welfare mechanisms.
- IMD 2026 SWM forecast: 92% of LPA (below normal category)
- LPA for India (1971–2020 base): 868.6 mm
- IMD's "below normal" definition: 90–95% of LPA
- Deficient (< 90% LPA) probability in 2026: 35%
- First below-normal forecast since 2023; lowest initial forecast in 25 years
- India's fertilizer import dependence: urea — 70% from Gulf; DAP — 41% from Saudi Arabia
- LNG feedstock for urea production: 85% imported
- West Asia's share of India's fertilizer imports: >45%
- Agriculture's share of India's GDP: ~17–18%
- Agricultural workforce: ~45% of total workforce
- India's kharif food grain production (typical): 150–160 million tonnes/year
- Kharif sowing trigger: onset of southwest monsoon (typically June 1 over Kerala)