India’s current monsoon deficit is the highest since fiscal year 2016 (FY16), driven primarily by strengthening El Niño conditions. Gaura Sen Gupta, economist at IDFC First Bank, highlights that India’s reservoir levels are running below their 10-year average and, combined with uneven spatial distribution, threaten both kharif and rabi crops. This unfavourable dynamic raises the risk that food inflation will remain elevated, especially for perishable items. In an interview with Mint, Sen Gupta warns of stress in rural demand post-harvest in the March quarter (Q4FY27), which could, in turn, dampen rural consumption. Edited excerpts:
The current monsoon deficit is the highest since FY16, when the rainfall deficit was 13.8%. The weakness in the monsoon is due to very strong El Niño conditions. There are adequate food grain stocks, which mitigate some of the inflation risk for cereals. However, perishables remain a challenge as they can’t be stored. Kharif sowing remains marginally below last year's levels, with rice sowing tracking below last year's.
The area under irrigation has improved over the years, reaching 60% coverage. However, substantial sowing still depends on monsoon performance. Moreover, reservoir levels are tracking marginally below normal levels and could reduce further if rainfall momentum weakens in September. El Niño conditions are expected to continue to strengthen and likely peak in November-December. Reservoir levels are important for rabi crops, which are reliant on irrigation facilities
Kharif sowing has held up better than expected, tracking 1.5% below last year. Rice, which is the main kharif crop, is tracking lower than last year by 3.7% year-on-year. Other crops, such as pulses, coarse cereals and oilseeds, are largely close to last year's sowing levels. The drop in rice sowing may reflect deficient rainfall in Punjab (9.6% share of total rice production) and Telangana (9.4% share of total rice production).
Rabi sowing is reliant on irrigation facilities, and from that perspective, reservoir levels need to be monitored. Currently, reservoir levels are marginally below normal (10-year average), and rainfall is expected to be below normal in September. This could further reduce reservoir levels.