Weak monsoon threat looms; food inflation fears rise
The India Meteorological Department (IMD) revised its 2026 Southwest Monsoon (SWM) forecast to 90% of the Long Period Average (LPA) — classifying the season as "below normal" (below 96% of LPA is the threshold).
IMD estimates a 60% probability of a deficient SWM season, with Central India, Northwest India, and the Southern Peninsula most at risk of significantly below-normal precipitation.
El Niño conditions, formally declared active by the US National Oceanic and Atmospheric Administration (NOAA) on June 11, 2026, are forecast to intensify through the June–September season, with a 92% probability of El Niño prevailing.
The Union Agriculture Ministry has flagged approximately 150-200 high-vulnerability districts and is preparing stage-wise contingency crop plans and irrigation responses for the kharif season.
A major agricultural disruption from the monsoon deficit could push CPI food inflation up by an additional 0.4 percentage points, according to projections, adding to existing inflationary pressures.
Agriculture employs approximately 43% of India's workforce and contributes around 17-18% of GDP; rural demand, kharif sowing, and food supply chains are all directly linked to monsoon performance.
India's Monsoon System
India receives rainfall from two distinct monsoon systems:
1. Southwest Monsoon (SWM) — June to September The dominant rainy season, accounting for approximately 70-75% of India's annual rainfall. The SWM originates over the Arabian Sea and Bay of Bengal, driven by a pressure differential between the heated Indian landmass (low pressure) and the cooler Indian Ocean (high pressure). Moisture-laden winds arrive in two branches — the Arabian Sea branch (hits Kerala first) and the Bay of Bengal branch (enters Northeast India). Normal onset over Kerala is around June 1.
2. Northeast Monsoon (NEM) — October to December Affects Southeast India, particularly Tamil Nadu, Andhra Pradesh, and parts of Karnataka. Accounts for about 10-15% of annual rainfall. Associated with the withdrawal of the SWM and reversal of wind patterns.
IMD Forecasting: - IMD issues Long Range Forecasts (LRF) in April and May using Multi-Model Ensemble (MME) forecasting based on coupled global climate models (CGCMs), including IMD's own Monsoon Mission Climate Forecast System (MMCFS). - LPA (Long Period Average): Defined as average monsoon rainfall from 1971–2020, approximately 868.6 mm. - Classification: Normal = 96-104% of LPA; Above Normal = 104-110%; Below Normal = 90-95%; Deficient = <90%; Excess = >110%.
IMD's revised 2026 forecast of 90% LPA places the season at the lower boundary of "below normal," with a 60% probability of slipping into "deficient" (<90%) — a threshold that has historically triggered food supply shocks.
El Niño and La Niña — Impact on India's Monsoon
El Niño: Periodic warming of the central and eastern Pacific Ocean surface temperatures, occurring every 3-7 years. During El Niño years, the Walker Circulation (east-west atmospheric circulation) weakens, reducing moisture supply to the Indian subcontinent. Result: Below-normal or deficient monsoon rainfall in India. Historically, 6 of the 7 major drought years in India since 1950 occurred during El Niño events.
La Niña: The opposite — cooler-than-normal Pacific SSTs. Associated with above-normal monsoon rainfall over India. The 2022 and 2023 kharif seasons benefited from La Niña conditions.
NOAA/IMD: NOAA's Climate Prediction Center and IMD jointly track the El Niño-Southern Oscillation (ENSO). IMD declared El Niño onset in June 2026; NOAA formally confirmed on June 11, 2026.
The 2026 season marks the first El Niño since 2023, with models projecting intensification through the season — the key driver of IMD's revised below-normal forecast.
Food Inflation: Supply Shocks and the RBI's Response Framework
India's Inflation Targeting Framework: Established under the RBI Act (amended 2016), the Flexible Inflation Targeting (FIT) framework mandates the RBI to maintain CPI headline inflation at 4% (±2% tolerance band, i.e., 2%-6%). The Government renewed this mandate for the five-year period April 1, 2026 to March 31, 2031.
The Monetary Policy Committee (MPC), a six-member body (3 RBI officials + 3 external members appointed by Government), meets at least 4 times a year to set the policy repo rate.
MPC's Approach to Food Inflation: - Food inflation driven by weather, seasonal factors, or supply chain disruptions is classified as a supply-side shock — transitory in nature. - The MPC does not typically raise rates to address supply-shock food inflation, as monetary policy cannot fix supply-side constraints. - The standard policy tool for food inflation is government-side: releasing buffer stocks from Food Corporation of India (FCI) reserves, restricting exports (as done with non-basmati rice in 2023-24), MSP revisions, and import duty reductions. - However, if food inflation becomes persistent and feeds into core inflation (second-round effects), the MPC may tighten policy.
Food's Weight in CPI: Food and Beverages constitute approximately 45.86% of the CPI basket (highest single weight). This means food price spikes translate rapidly and significantly into headline CPI, breaching the 6% upper tolerance band even when non-food inflation is contained.
Key Institutions: - Commission for Agricultural Costs and Prices (CACP): Recommends Minimum Support Prices (MSPs) for 23 kharif and rabi crops annually. - Food Corporation of India (FCI): Manages central food grain procurement and buffer stocks under the National Food Security Act (NFSA) 2013. - FRBM (Fiscal Responsibility and Budget Management) Act, 2003: Constrains fiscal space for emergency food/fertilizer subsidies; food subsidy is currently the largest revenue expenditure item.
A below-normal monsoon compresses kharif crop output (paddy, pulses, oilseeds, coarse cereals), reducing supply while rural income declines compress purchasing power. With food constituting ~46% of CPI, even a 0.4 pp additional food inflation push could take headline CPI above the 6% upper tolerance band — triggering the RBI's legal obligation to send an explanatory report to the government.
Agricultural Credit and Kharif Season Dependence
- Kharif crops (sown June-July, harvested October-November): Paddy, sorghum, maize, bajra, cotton, groundnut, soybean, sugarcane — all heavily rain-dependent and central to food inflation and rural income.
- Rabi crops (sown October-November, harvested March-April): Wheat, mustard, gram — depend on residual soil moisture and irrigation.
- India has ~140 million farming households. A deficient kharif season reduces rural incomes and domestic food supply simultaneously.
- Agricultural credit target (2025-26): ₹22 lakh crore; primary conduit through NABARD, Regional Rural Banks (RRBs), and cooperative credit societies.
- IMD 2026 SWM forecast: 90% of LPA (below normal; revised May 29, 2026)
- Probability of deficient season: 60%
- LPA definition: Average rainfall 1971-2020 ≈ 868.6 mm
- El Niño declared: NOAA formally confirmed June 11, 2026
- El Niño probability (June-Sept 2026): 92%
- High-risk districts flagged: ~150-200 by Agriculture Ministry
- Most-at-risk regions: Central India, Northwest India, Southern Peninsula
- CPI food weight: ~45.86% of consumption basket
- Additional food inflation risk: Up to 0.4 percentage points if major disruption
- Agriculture's share of workforce: ~43%
- Agriculture's GDP contribution: ~17-18%
- RBI CPI target: 4% (±2%), renewed for 2026-2031
- MPC response to supply shocks: Supply-management, not rate hikes (standard approach)
- Normal monsoon range: 96-104% of LPA