The Southwest (SW) Monsoon rainfall was deficient at 60% of long period average (LPA) in June 2026, materially lower than the India Meteorological Department’s (IMD’s) forecast of <92% of LPA for the month. This has led to year-on-year (YoY) decline of ~23% in kharif sowing (as on June 25) as well as moderation in reservoir storage levels (by 10 pp YoY to 26% at end-June). ICRA’s assessment reveals that most Monsoon Core Zone (MCZ) states such as Rajasthan, Maharashtra, Karnataka, Odisha and Chhattisgarh are highly monsoon dependent, and thus, vulnerable to weather-related shocks like El Nino owing to low irrigation cover; these together account for ~35% of the total area sown for kharif crops. Looking ahead, the rainfall outcomes in July 2026 remains crucial to determine crop output, amid large concentration of SW monsoon rains (32% of total) and kharif sowing (55%) in the month. Given this, the IMD’s forecast of a below normal (<94% of LPA) rainfall in July 2026 is quite concerning, as it would weaken prospects for agriculture output and rural sentiments. At present, ICRA foresees downside risks to our existing GVA growth forecast of agriculture, forestry and fishing of 1.4% in FY2027 (+3.0% in FY2026), depending on the severity of El Nino.

SW monsoon rains 40% below LPA in June 2026; kharif sowing down 23%: The SW Monsoon witnessed a delayed onset in 2026, along with intermittent rainfall and an extended dry spell. The pan-India rainfall was deficient, at 40% below LPA, in June 2026, materially lower than the IMD’s forecast of <92% of LPA for the month, with a sizeable shortfall across all regions. As a result, the all-India reservoir storage declined to 26% of live capacity at full reservoir level (FRL) at end-June 2026 from 36% a year ago, and 31% at end-May 2026, belying the trend of a seasonal uptick in the month.

Rainfall outcomes in July key to determine crop output: India typically receives ~32% of its entire SW Monsoon rainfall in the month of July, followed by 29% in August. Further, ~55% of the total area sown during the kharif season, is covered in the month of July, with this proportion being much higher for several crops such as pulses (65%), oilseeds (66%) and coarse cereals (62%). This suggests that rainfall outcomes in July 2026 (IMD’s forecast: <94% of LPA) remain key to determine crop output for the ongoing kharif season.