Despite a modest recovery in Jul-26, India's monsoon season’s cumulative rainfall deficit still remains sizable at 12% below normal (as of 2nd Aug)
Download ReportQuantEco Research | INDIA Monsoon Update - July softens the blow, but risks persist
India's monsoon season’s cumulative rainfall deficit at 12% below normal (as of 2nd Aug), has been accompanied by pronounced regional imbalances, subdued kharif sowing and low reservoir levels. The outlook remains challenging as an intensifying El Niño is expected to keep rainfall below normal through the remainder of the season, with a potential positive Indian Ocean Dipole offering partial relief albeit later in the year. From a macroeconomic perspective, the balance of risks is increasingly skewed towards weaker agricultural growth, rural demand and renewed food inflation pressures. While allied agricultural activities may cushion the impact on overall farm GVA, historical relationships and empirical evidence suggest that a 10% monsoon shortfall could materially lift food prices and add around 100 bps to FY27 headline CPI, reinforcing our inflation forecast of 5.1% amid additional upside from already affected fuel price hikes, commodity price pass-through and rupee depreciation.