Research Report

India received deficient rainfall at 87% of the long period average (LPA) in the Southwest Monsoon season 2026, the lowest since 2015 (86% of LPA), amid considerable temporal and spatial unevenness owing to the development of El Nino conditions. This impacted kharif sowing, which expectedly trailed the year-ago levels by 1.2% at end-September 2026, led by a contraction across most crops barring pulses and coarse cereals.

• Lower acreage, along with unevenness in rainfall, is likely to dampen crop yields and kharif output. Looking ahead, the shortfall in reservoir storage levels vis-à-vis the historical average at end-September 2026 is expected to have a bearing on the ensuing sowing and output of rabi crops, particularly in the southern region, where the lag is quite severe (-24 pp vs. historical average).
• ICRA has pared its agri-GVA growth forecast for FY2027 to a tepid ~1.0% in FY2027 from 1.3%, which is likely to be supported by the performance of the non-crop sector. We remain circumspect around the potential impact of the weak monsoon on crop output and farm incomes, which may dampen rural demand in H2 FY2027. Additionally, this would exert upside risks to food inflation outlook for H2 FY2027.