India's Agricultural Sector Faces Challenges from Monsoon Forecast, El Nino, and Geopolitical Tensions
Indian agricultural sector under threat by trifecta of below-Normal Monsoon, El Nino, and West Asia war: ICRA
The Economic Times
Image: The Economic Times
India's agricultural sector is at risk due to a predicted below-normal monsoon, potential El Nino conditions, and fertilizer supply disruptions linked to the ongoing conflict in West Asia. The India Meteorological Department forecasts rainfall at 92% of the Long Period Average, marking the lowest estimate in 25 years, which could significantly impact crop yields and food prices.
- 01India's agriculture sector is threatened by below-normal monsoon forecasts and potential El Nino conditions.
- 02The India Meteorological Department predicts rainfall at 92% of the Long Period Average for the upcoming monsoon.
- 03Fertilizer supply risks due to the West Asia conflict could disrupt agricultural production.
- 04ICRA has flagged risks to agricultural Gross Value Added growth and consumer price inflation.
- 05Higher reservoir levels may provide some support despite the challenging conditions.
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India's agricultural sector is bracing for a difficult year as the India Meteorological Department (IMD) forecasts a 92% rainfall of the Long Period Average (LPA) for the 2026 Southwest Monsoon, marking the lowest first long-range forecast in 25 years. This below-normal rainfall is expected to adversely affect kharif crop sowing, which relies heavily on monsoon rains from June to September. Additionally, a 62% probability of El Nino developing could further weaken monsoon conditions, posing risks to crop yields and agricultural output. The ongoing conflict in West Asia raises concerns about fertilizer supply chains, potentially affecting both raw materials and finished products. ICRA has also indicated downside risks to its forecast of 3.0% growth in agriculture Gross Value Added (GVA) for FY2027, with consumer price inflation likely to exceed 4.5% due to rising food prices. While reservoir storage levels are currently at 47% of live capacity, higher than last year, the overall agricultural outlook will depend on monsoon performance and geopolitical developments.
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The predicted below-normal monsoon and fertilizer supply issues could lead to increased food prices, affecting consumers and farmers alike. This may also impact rural demand and agricultural profitability.
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