The Indian agricultural sector faces a significant period of uncertainty due to a below-normal monsoon forecast and the ongoing conflict in West Asia, threatening to disrupt production and rural economic growth. The India Meteorological Department (IMD) issued its first long-range forecast for the 2026 Southwest Monsoon, estimating rainfall at 92 per cent of the Long Period Average (LPA).

This projection represents the lowest initial forecast in at least 25 years and indicates a sharp reversal from the above-normal rainfall recorded during 2024 and 2025. Bank of Baroda noted that the performance of the monsoon carries heavy weight for the broader economy.

"Total rainfall has a close relation with both kharif and rabi output and hence will have an impact on overall growth in farm income and hence rural consumption," the Bank stated.

The geopolitical situation in West Asia further complicates the outlook for the current year. The conflict has caused disruptions in the supply of gas, which is a primary component in the production of essential farming inputs.

"A good supply of water is a necessary condition for a good harvest although this year, due to the disruptions caused in supply of gas due to the war, other inputs that go into agriculture like availability and cost of fertilizers and pesticides will also have a bearing on the final outcome," the statement added.

Given that irrigation coverage in India ranged from only 50 to 60 per cent over the last five years, rainfall remains vital for several crops, especially those grown in the interior regions. Beyond field crops, the monsoon determines reservoir levels for year-round water supplies and influences allied agricultural activities. The Bank tracks these impacts across two distinct periods, using the July-September and October-December quarters to cover kharif outcomes, while the January-June period accounts for rabi production.

"This measurement also includes non-crop items such as horticulture, tobacco, and rubber," the Bank said. Historical data suggests a strong correlation between monsoon performance and agricultural growth rates. According to the bank, the correlation coefficient for kharif production with actual monsoon performance is 0.64, while rabi stands at 0.59.

This indicates that kharif crops tend to be more dependent on rainfall levels than the rabi season."Sub-normal monsoon i.e. less than 96 per cent of LPA has been associated with lower growth rates in agriculture. In 2014-15 and 2015-16 when monsoon was less than 90 per cent of normal, kharif production had declined. But in these years, rabi production was positive and significant," the bank said.

The growth of value addition in agriculture is currently reckoned over a 12-year period starting from 2012-13. With the IMD's midpoint estimate for 2026 falling below the levels seen in previous decades, the sector remains under watch for its impact on overall GDP calculations and the stability of rural incomes.

While this first forecast is a preliminary one and requires a wait for the revised outlook in late May, it serves as a critical early indicator for the sector. The bank observed that while variations between early forecasts and actual rainfall occurred in the past, the deviation has narrowed in recent years due to better prediction models.

"The normal rainfall as per the average is around 87 cms which means that 92 per cent would work out to 80 cms this year. In fact, this is the lowest forecast made by the IMD during this period. There would however be a more refined forecast closer to the start of the monsoon by the end of May and this must be considered as a very preliminary prediction," the Bank stated.

Published on April 18, 2026