A ‘Below Normal’ Monsoon? What El Niño Could Mean for India’s Economy

The India Meteorological Department (IMD) issued its first long-range forecast for the southwest monsoon on April 13, projecting rainfall at 92% of the Long Period Average (LPA). That places it in the "below normal" category.

According to the weather department, there is a 66% probability of rainfall being either below normal or deficient this season, driven primarily by the expected development of El Niño conditions in the equatorial Pacific in the latter half of the monsoon. Private forecaster Skymet puts that probability slightly higher, at 70%.

Around 60% of India's farmers are entirely dependent on monsoon rainfall for the kharif cropping season, making this forecast more than just a weather story. It sits at the centre of India's food economy.

What El Niño Does to Monsoon

El Niño refers to an unusual warming of surface waters in the central and eastern Pacific Ocean. It disrupts atmospheric circulation patterns and typically suppresses rainfall over South Asia during the June-September monsoon window.

Since 1982, there have been three years when a very strong El Niño was forecast, and two out of those three times rainfall was deficient. The historical record is fairly consistent: strong El Niño years tend to bring below-normal to deficient monsoon conditions. The notable exceptions, such as 1997 when rainfall was normal despite a very strong El Niño, are outliers rather than the rule.

IMD director general Mrutyunjaya Mohapatra told reporters that a positive Indian Ocean Dipole developing later in the season, along with below-normal snow cover over the northern hemisphere, could partly offset the El Niño impact, Down To Earth reported. But forecasters are not counting on it to fully neutralise the damage.

Worst Affected Crops

Not all crops suffer equally. According to an ICICI Bank report, the most vulnerable are rain-fed crops are coarse cereals, pulses, oilseeds, and spices. These crops have irrigation coverage of just 19% to 44% of sown area, leaving them highly exposed when rainfall falls short.

Rice and wheat, by contrast, have irrigation coverage of roughly 96% and 95% respectively. This acts as a buffer. In case of deficient rainfall, the impact on wheat and rice is less than on other crops, unless there is a very large deficiency as seen in 2002 when monsoon was over 20% below normal.

The pattern held in 2014 and 2015, two consecutive below-normal years. Oilseeds output fell 16% and 8.2% year-on-year respectively. Pulses dropped 11% and 4.8%. Meanwhile, rice production held relatively steady.

The Inflation Arithmetic

Lower crop output does not automatically translate into higher prices. The relationship is more layered. For oilseeds, global commodity prices are often the bigger driver. For rice and wheat, government minimum support prices (MSPs) and buffer stocks play a dominant role.

India's current buffer stocks offer meaningful protection on the cereal front. Rice inventory stands at 36 million tonnes and wheat at 24 million tonnes, roughly three times and twice the buffer norm respectively, meaning the government can draw down on stocks to stabilise supply.

Where the risk is real is in rain-fed crops, which carry a combined weight of 6.1% in India's CPI basket. Historically, years with deficient rainfall have seen average CPI food inflation of 5.7%, compared to 4.4% in non-deficient years, according to the ICICI Bank report. The weighted impact on headline CPI works out to around 0.4 percentage points.

Current Context

The timing matters. India's CPI inflation edged up to 3.40% in March 2026 from 3.21% in February, with food inflation rising to 3.87%. These remain manageable numbers, but the trend is moving upward heading into monsoon season.

The RBI has projected CPI inflation at 4.6% for FY27, flagging El Niño as a potential threat to agricultural output and food prices. Piramal Finance's chief economist Debopam Chaudhuri noted separately that while macro conditions look broadly stable, expected El Niño conditions could put renewed pressure on food prices later in the year.

There is one additional complication. Fertiliser prices have been rising globally. The ICICI Bank report points out that global food prices and energy prices tend to move in the same direction, meaning higher crude oil costs can feed into farm input costs and eventually into retail prices.