Even as analysts are still working out the implications of the Iran conflict on the economy, trouble seems to be brewing on another front — the upcoming monsoon. Global weather watchers are now forecasting a likely re-emergence of El Nino this year. World Meteorological Organisation in its early March update said that fading La Nina conditions could morph into a warming El Nino episode by May to July with a 40 per cent probability. The recent European Centre for Medium Term Weather Forecasts prediction is more direct, with a 22 per cent chance of a ‘super’ El Nino, an 80 per cent chance of a strong one and 98 per cent chance of a moderate event this year. Should such forecasts come good, the Indian economy could face headwinds on both growth and inflation, calling for policy vigilance.
To be sure, there have been false alarms on El Nino in recent years. El Nino events can also vary in severity and not all of them adversely impact India’s agricultural output. Offsetting factors such as the Indian Ocean Dipole can blunt its impact on the monsoon. Nevertheless, it is hard to ignore that 10 of the 15 drought years in India since 1950, were brought on by El Nino. Moderate to strong El Nino years saw rainfall fall short of LPA (Long-Period Average) by 14-15 per cent. This led to a 1-2 percentage point contraction in the agriculture leg of GVA (Gross Value Added) in those years. Recent official estimates peg the growth in Agriculture GVA at just 2.4 per cent for FY26. A second consecutive year of poor growth can dent rural employment and incomes. Moderate/strong El Nino years have also sparked food inflation, due to kharif output declining by between 6 and 12 per cent. This is a worry, as RBI’s forecasts already expect consumer price inflation to rise to 4 and 4.2 per cent in the first two quarters of FY27, without budgeting for El Nino.
In recent years, the government has attempted to address food shortages and inflationary trends set off by El Nino through post-facto interventions. It has undertaken releases of foodgrain stocks from Central buffers, banned exports and opened the floodgates of imports on agri-commodities in short supply. But such interventions carry a price. Ad-hoc export bans and import duty cuts hit realisations for farmers, who are already engaged in a risky occupation.
This makes it critical to get a hold on the strength and timing of the upcoming El Nino ahead of the kharif sowing season. This will enable proactive policy choices on trade, sowing decisions and water conservation. It is important that the India Meteorological Department (IMD) makes a realistic assessment of the likelihood and severity of El Nino in its April monsoon forecast. Experience shows that it tends to underplay the El Nino impact. In the El Nino years 2018 and 2023, IMD forecasted normal monsoons with rainfall at 97 and 96 per cent of LPA. However, actual monsoon performance turned out much worse, with rainfall at 91 and 94 per cent of LPA. More accuracy is called for here.
Published on March 13, 2026