India forecast an El Nino-weakened monsoon in 2026 that will bring the lowest rainfall in 11 years, fuelling concerns over crops, food prices and growth in the world's fifth-largest economy, battling inflationary pressures from the Iran war.
The monsoon delivers about 70% of annual rains to replenish crucial water sources in a nearly $4-trillion economy where nearly half of farmland lacks irrigation and about half the population earns its livelihood from farming.
Prospects of weak rainfall and distribution add to inflation risks and weigh on growth, said Gaura Sengupta, chief economist at IDFC First Bank.
"A deficient monsoon, particularly in the crucial July-August months, can add to the pressure and push up inflation closer to an average of 5.5% if food inflation spikes," Sengupta said.
That compares with India’s retail inflation of 3.48% in April, driven by higher food prices, though the outlook is clouded by energy costs linked to the Middle East conflict.
This year's monsoon is seen at 90% of a long-period average, below an April forecast of 92%, M. Ravichandran, secretary in the earth sciences ministry, told a press conference earlier on Friday.
That would make it the weakest since 2015, when the El Nino weather phenomenon reduced rainfall to 87%.
An El Nino is likely to develop soon and influence rainfall, Ravichandran added, with its intensity expected to range between moderate and strong in the latter half of the monsoon season.
India is forecast to receive below-average rainfall in June, for less than 92% of the long-period average, Ravichandran said.
The India Meteorological Department defines average, or normal, rainfall as ranging from 96% to 104% of a 50-year average of 87 cm (35 inches) for the four-month monsoon season.
Sufficient stocks of staples
India has received below-average rainfall in most El Nino years, sometimes triggering severe droughts that damaged crops and led to curbs on grain exports.
Despite sufficient stockpiles of staples such as rice and wheat, a patchy monsoon could mean lower incomes in the countryside home to about two-thirds of a population of 1.4 billion.
Lower rural incomes in turn typically dampen sales of consumer goods, from motorcycles to refrigerators.
"Below-normal rainfall could affect early-season planting of pulses, cotton, edible oilseeds and coarse grains such as corn," said Ashwini Bansod, vice president for commodities research at Phillip Capital India, a Mumbai-based brokerage.
Rice paddy is also at risk in non-irrigated areas in parts of the northern and northwestern states, Bansod said.
The world's largest exporter of rice and onions and the second-largest producer of sugar, India is also the world's largest importer of edible oils, filling nearly two-thirds of its demand.
An El Nino occurs when ocean temperatures rise above normal in the central and eastern Pacific, typically bringing hot and dry weather to Southeast Asia and other regions.
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