Below-normal monsoon may hit Kharif output; Fuel food inflation risks: Report

New Delhi [India], June 3 (ANI): The India Meteorological Department's (IMD) revised forecast of a below-normal southwest monsoon at 90 per cent of the Long Period Average (LPA) is expected to weigh on agricultural output, rural demand and food inflation, with rain-fed crops likely to face the maximum impact, according to a report by ICICI Bank Research.
The weather office has lowered its monsoon forecast from the earlier estimate of 92 per cent of LPA and assigned a 60 per cent probability to deficient rainfall during the June-September period. The onset of the monsoon has also been delayed, while rainfall during June is expected to remain below normal across most parts of the country.
According to the report, the impact of the weak monsoon could be particularly severe in the Monsoon Core Zone (MCZ), which comprises Gujarat, Rajasthan, Madhya Pradesh, Chhattisgarh, Odisha, Maharashtra and Jharkhand. The region accounts for nearly 40 per cent of India's food production and is likely to receive below-normal rainfall.
"Impact on early sowing activities is seen due to delayed or below normal rains, along with persistent heatwave conditions. Potential El-Nino conditions could further impact kharif output," the report said.
The report noted that northwest, central and southern regions of the country are expected to witness below-normal rainfall, while northeast India is likely to receive near-normal rains. In addition, the emergence of El Nino conditions during the monsoon season could further aggravate weather-related disruptions and affect crop yields.
Among agricultural segments, rain-fed crops such as pulses, coarse cereals, oilseeds and spices are considered the most vulnerable due to relatively low irrigation coverage and their concentration in regions expected to experience rainfall deficiency.
"Rainfed crops such as pulses, coarse cereals and spices are most vulnerable due to lower irrigation coverage, and larger concentration in affected regions. Rice and Wheat are relatively insulated due to higher irrigation coverage and reservoir levels," the report stated.
The report highlighted that coarse cereals and pulses face the highest downside risks. Pulses production is largely concentrated in central and northwest India, while coarse cereals are predominantly grown across northwest, central and southern regions. Irrigation coverage for these crops remains limited, making them highly dependent on monsoon rainfall.
However, the report also pointed to several mitigating factors. Reservoir levels currently stand at 31 per cent of total capacity, higher than the long-term average of 26 per cent. In addition, India recorded a robust 5.3 per cent year-on-year increase in foodgrain production during the 2025-26 crop year, led by strong output of rice, wheat, coarse cereals and pulses.
Large buffer stocks of rice and wheat are also expected to cushion any supply-side shock. Rice inventories stand at around 39 million tonnes, while wheat stocks are estimated at 42.8 million tonnes, significantly above prescribed buffer norms.
Despite these safeguards, the report warned that food inflation risks remain elevated, particularly for pulses, edible oils and other rain-fed crops. It projected retail inflation could rise towards 5 per cent in FY27, driven by higher food and energy prices amid weather-related disruptions and firm global commodity prices.
The report said the evolving El Nino conditions and monsoon performance during the kharif season would remain key factors determining agricultural output, inflation trends and the broader economic outlook in the coming months. (ANI)