economy · 2026-07-04
Strong El Nino Threatens India's Monsoon
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WMO confirms El Nino will intensify to 'strong' during Jul-Sep, the peak southwest monsoon period. India already recorded its 5th driest Jun in 126 years, with a 30% rainfall deficit as of Jul 3.Jul is the critical month for kharif sowing. Below-normal rain, forecast at ~94% of the 280mm long-period average, could disrupt crop output and food prices.Farmers sowing rice, pulses, and oilseeds face immediate risk. States dependent on rain-fed agriculture like Maharashtra, Karnataka, and UP could see lower yields.
What made Jun 2026 India's 5th driest?
El Nino conditions emerged in Jun, suppressing moisture flow into the Indian subcontinent. The monsoon onset was significantly delayed, with Delhi receiving its onset only on Jul 3. The country recorded a 30% rainfall deficit by that date, making it the 5th driest Jun since 1901.
Is the warming Indian Ocean worsening this?
Yes. WMO flagged above-normal Indian Ocean temperatures alongside the Pacific El Nino. A warmer Indian Ocean weakens the land-sea temperature gradient that drives monsoon winds toward India. In 2023, a similar Indian Ocean Dipole pattern contributed to erratic rain distribution across peninsular India.
How does a 30% deficit compare to past years?
India's worst Jun deficits were in 2009 (47% deficit) and 2014 (43% deficit), both El Nino years. The current 30% deficit is severe but not unprecedented. However, combining it with a strong El Nino forecast makes the Jul-Sep trajectory riskier than either 2009 or 2014 at this stage.
Could delayed onset still recover by Aug?
Historically, monsoons have recovered partially after slow starts. In 2015, despite a weak Jun, Aug-Sep rains brought seasonal totals closer to normal. But WMO forecasts El Nino strengthening through Sep, reducing recovery odds. IMD's models show the deficit persisting, unlike years when La Nina offered a mid-season correction.
How could kharif sowing shortfalls hit prices?
Jul alone accounts for the highest rainfall share of the entire monsoon season. Kharif crops like rice, pulses, and soybean need timely sowing rains in Jul. IMD forecasts only ~94% of the 280mm average. A 2014 El Nino year saw pulses prices spike ~40% the following year, straining household budgets.
What specific crops need Jul rains most?
Rice transplanting in Punjab and Haryana peaks in Jul. Soybean sowing in Madhya Pradesh, India's largest producer, requires consistent Jul moisture. Pulses like tur dal need early Jul sowing to meet their 120-day growth cycle. Missing the sowing window by even two weeks can cut yields 15-20%.
How do fertilizer companies respond to this?
Companies like Coromandel International and UPL see demand shifts during deficit monsoons. Farmers delay fertilizer purchases when rains are uncertain, compressing sales into a narrow window if rains arrive late. In 2014's El Nino year, Coromandel's Q2 fertilizer volumes dropped ~12% before recovering in Q3.
Could govt intervene on food prices early?
The govt typically uses buffer stock releases and import duty cuts. In 2023, India banned non-basmati rice exports after erratic monsoon rains. The Food Corporation of India holds ~30Mn tonnes of wheat and rice as buffer. Early procurement or duty waivers on pulses imports are the most likely first moves.
Which farming regions face the worst risk?
Rain-fed farming belts in Maharashtra's Vidarbha, Karnataka's northern districts, and eastern UP are most exposed. These regions grow pulses and coarse cereals without irrigation backup. For context, only about 50% of India's net sown area has assured irrigation, leaving half of farmers weather-dependent.
Which states lack irrigation to cope?
Jharkhand, Chhattisgarh, and Odisha irrigate less than 35% of farmland. Maharashtra's Marathwada region irrigates under 20%. These areas depend almost entirely on monsoon timing. By contrast, Punjab irrigates over 98% of cropland, insulating it from rainfall shortfalls in most years.
How do crop insurance payouts work here?
Under Pradhan Mantri Fasal Bima Yojana, payouts trigger when district-level yields fall below a threshold, typically 70% of the historical average. In 2019's delayed monsoon, ~8.5Mn farmers received claims. But payouts often arrive months after harvest, forcing farmers to borrow at high rates in the interim.
What happens to rural wages if crops fail?
MGNREGA demand spikes during crop failures as farmers seek wage work. In 2015's El Nino year, MGNREGA person-days rose ~18% nationally. Rural wages stagnate because labor supply floods non-farm work. This suppresses rural consumption, hitting FMCG companies like Hindustan Unilever, which derives ~35% of revenue from rural India.
Source: indianexpress.com