Discuss the transmission mechanisms through which a weak monsoon induced by El Niño affects India's growth and inflation trajectory. Suggest policy responses.

Q. Discuss the transmission mechanisms through which a weak monsoon induced by El Niño affects India's growth and inflation trajectory. Suggest policy responses. (15 marks, 250-350 words)

IMD's updated long-range forecast placed the 2026 southwest monsoon at 90% of LPA with a 60% probability of a deficient season [1], days before NOAA declared El Niño onset in the tropical Pacific [2]. Since a large share of India's net sown area remains rain-fed, such a shock travels through distinct output, demand and price channels rather than hitting the economy uniformly.

Output channel - Deficient June rainfall delays kharif sowing, cutting acreage and yields in rice, pulses and coarse cereals. - Worst hit are the 111 high-priority districts with under 25% irrigation coverage, flagged by the Centre for Kharif 2026 [3]. - Lower agricultural GVA drags headline GDP growth, with knock-on effects on agro-processing and hydropower via reduced storage.

Rural demand channel - Falling farm incomes compress rural consumption — tractors, two-wheelers, FMCG — weakening aggregate demand. - Casual agricultural wage employment shrinks, widening rural-urban divergence in recovery.

Inflation and monetary policy channel - Food carries close to two-fifths of the CPI basket [4], so supply shortfalls in vegetables, pulses and cereals transmit rapidly to headline inflation. - The RBI has explicitly flagged an uneven monsoon amid El Niño as an upside risk to inflation while holding the repo rate at 5.25% with a neutral stance [5], constraining space for growth-supportive easing. - Higher import dependence on pulses and edible oils adds a current-account and fiscal-subsidy burden.

Policy responses - Operationalise district-wise contingency crop plans, pre-positioned seed reserves for resowing, and advisories through Krishi Vigyan Kendras [3]. - Calibrated open-market release of buffer stocks and strict NFSA entitlements to anchor food prices and protect the poor. - Expand micro-irrigation and watershed works under PMKSY, and ensure timely PMFBY claim settlement. - Front-load MGNREGA allocations in deficit districts to cushion rural incomes.

A weak monsoon is therefore a growth-and-inflation problem, not merely an agricultural one. Deepening irrigation coverage, climate-resilient seed systems and sharper early-warning use can progressively decouple India's macro trajectory from ENSO cycles, advancing SDG-2 on zero hunger.

(~330 words)

Sources: 1. IMD/PIB — Updated Long Range Forecast for Southwest Monsoon Seasonal Rainfall, June–September 2026 (29 May 2026) — 90% of LPA forecast, 60% probability of deficient rainfall 2. NOAA Climate Prediction Center — ENSO Diagnostic Discussion — El Niño onset declared, expected intensification 3. DD News (Prasar Bharati) — Centre steps up Kharif preparedness amid El Niño threat; vulnerable districts identified — 111 high-priority districts with <25% irrigation; contingency plans, seed reserves, KVK advisories 4. Ministry of Statistics & Programme Implementation — Consumer Price Index — weight of food group in the CPI basket 5. Reserve Bank of India — Monetary Policy Statements and MPC Resolutions — El Niño/uneven monsoon flagged as inflation risk; repo rate held at 5.25% with neutral stance