India's Kharif Season Hit by El Nino-Driven Monsoon, Affecting Crop Yields & Price

India is facing the prospect of intensified inflationary pressures on its economy due to lower-than-expected output in the kharif season, primarily impacting rice and pulses production. This setback can be attributed to weak monsoons associated with the El Nino weather pattern.

The diminished monsoon rains have also adversely affected water reservoir levels, posing a potential threat to upcoming winter crops, particularly wheat, which heavily relies on irrigation.

The initial estimates for foodgrain production in the kharif season stand at 148.57 million tonnes (mt), a 4.6 percent decrease from the final estimates of 155.71 mt in the previous season. The monsoon season, which contributes nearly 70 percent of the rainfall required for crop growth and replenishing reservoirs and aquifers, plays a critical role in India's $3 trillion economy.

The 2023 monsoon season concluded with a deficit of 5.6 percent, marking it as a "below-normal" monsoon—the first such occurrence in over four years. Recent data from the Central Water Commission (CWC) reveals that water in reservoirs stands at 179.835 billion cubic meters (BCM), significantly below the capacity of 257.812 BCM, constituting a 30 percent shortfall.

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The total rainfall from June 1 to September 30 across India amounted to approximately 821 millimeters, compared to the normal level of 869 millimeters. This means that the monsoon season concluded with rainfall equivalent to 94 percent of the Long Period Average (LPA).

Rice production is expected to be 3.8 percent lower, at 106.31 mt, compared to 110.51 mt in the previous season. The government had aimed to produce 158.06 mt of food grains, including 111 mt of rice, in the kharif season.

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The estimates of production are based on data provided by the states and validated by the Centre, utilizing information from sources like the Crop Weather Watch Group (CWWG), remote sensing estimates, econometric modeling, historical trends, and inputs collected from farmer surveys.

In response to the looming food inflation threat, the Indian government has recently imposed restrictions on farm products and stock limits, underscoring its sensitivity to this issue ahead of the general election scheduled for next year. Last month, the government reduced stock holding limits for wheat for traders, wholesalers, and retailers from 3,000 tonnes to 2,000 tonnes, a move aimed at stabilizing the market.

As India navigates the challenges posed by a weaker monsoon and lower crop yields, it remains crucial for the government to adopt effective policies to manage inflationary pressures and ensure food security for its citizens.

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