News

This is a Mint Premium article gifted to you. Subscribe to enjoy similar stories.

When it rains, it pours — and this year’s monsoon in India is proving exactly that. Northwest India has seen excessive rainfall, causing severe floods in Punjab, Haryana, and Himachal Pradesh. This raises concerns about the damage to standing kharif crops, which could weigh on kharif output, food inflation, and rural incomes.

Central and southern states have also recorded surplus rainfall, while eastern and northeastern states face rainfall deficits — a potential threat to paddy, pulses, and jute cultivation.

“Cumulatively, the all-India average rainfall surplus is 8.7% above the long period average (LPA) on 7 September (up from 6.7% as of 1 September). The rains deluge is concentrated in the northwest region, where cumulative rainfall is in the 'excess' category, at 37% above the LPA (rising from 27% above LPA at the end of August," said a Barclays Research report dated 8 September.

LPA, or long period average, serves as a benchmark to track whether rainfall is normal, above normal, or deficient.

Punjab and Rajasthan are staring at major losses after the heavy rains. According to a Crisil Ratings report on 9 September, in Punjab, paddy, sugarcane, and cotton crops were submerged across districts. In Rajasthan, bajra, jowar, soybean, groundnut, green gram, and black gram have been damaged in Ajmer, Tonk, Kota, Bundi, Jaipur, and Dausa.

Since food items make up a significant part of the Consumer Price Index (CPI), uneven or excessive rainfall can trigger a spike in food prices — pushing headline inflation higher.

In July, headline CPI inflation, also called retain inflation, had slipped to a multi-year low of 1.55%, down from 2.10% in June, driven by falling prices in vegetables, pulses, spices, and meat. But analysts expect an uptick in August’s CPI data, to be released today, as prices of some food items rise.

Punjab, which accounts for about 9.6% of India’s total rice output, remains vulnerable. Continued rainfall could also affect winter wheat sowing.

Still, not everyone is sounding the alarm. It is too early to worry about the impact on food inflation due to heavy rainfall in certain states as official estimates of kharif are still awaited, said Gaura Sen Gupta, economist at IDFC First Bank.

“Even if there is a spike in cereal prices, the Food Corporation of India data shows we have adequate food stocks to tackle the shortage."

Historical data supports her view— there have been years with adverse monsoon, yet food inflation was moderate.

“For instance, in FY19 there was a 9% deficit and it was an El Niño year, yet food inflation moderated; in FY22 there was a surge in rainfall activity in September, food inflation continued to moderate," she added.

Meanwhile, the overall, kharif sowing momentum is robust, with cereals providing a strong base for production. However, sowing in oilseeds and cotton is lagging. As of 5 September, overall, area under sowing was higher by 2.5% year-on-year to 1,105.42 lakh hectares, shows official data.

“September’s rainfall pattern will be critical with the IMD projecting above-normal precipitation across northern and central India. This coincides with key growth stages for paddy, cotton, soybean, maize and onion, making the month vital for crop health and yield," said the Crisil report.

Download the Mint app and read premium stories

Log in to our website to save your bookmarks. It'll just take a moment.

You are just one step away from creating your watchlist!

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.

Your session has expired, please login again.

You are now subscribed to our newsletters. In case you can’t find any email from our side, please check the spam folder.

This is a subscriber only feature Subscribe Now to get daily updates on WhatsApp