Weak monsoon threat looms; food inflation fears rise

What Happened

• 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.

Static Topic Bridges

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%.

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.

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.

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.

Key Facts & Data

• 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