ICRA Warns of Agricultural Challenges in India Due to Monsoon Variability and Global Conflicts
Indian agricultural sector under threat by trifecta of below-Normal Monsoon, El Nino, and West Asia war: ICRA
Image: The Economic Times
India's agricultural sector faces significant challenges in FY2027 due to a predicted below-normal monsoon, potential El Nino conditions, and fertilizer supply disruptions linked to the ongoing conflict in West Asia. The India Meteorological Department forecasts rainfall at 92% of the Long Period Average, marking the lowest estimate in 25 years, which could adversely affect crop yields and food prices.
- 01The India Meteorological Department forecasts monsoon rainfall at 92% of the Long Period Average, the lowest in 25 years.
- 02A 62% probability of El Nino developing between June and August 2026 could further weaken monsoon rainfall.
- 03Fertilizer supply disruptions due to the West Asia conflict may impact domestic agricultural production.
- 04ICRA has revised its FY2027 agriculture Gross Value Added growth forecast to 3.0%, with consumer price inflation expected to exceed 4.5%.
- 05Reservoir storage levels are currently at 47% of live capacity, providing some support against weak monsoon conditions.
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India's agricultural sector is bracing for a challenging year as ICRA reports a trifecta of threats: below-normal monsoon rainfall, potential El Nino conditions, and fertilizer supply risks stemming from the ongoing conflict in West Asia. The India Meteorological Department (IMD) projects that the 2026 Southwest Monsoon will deliver rainfall at 92% of the Long Period Average (LPA), the lowest initial forecast in 25 years. This decline from previous years, where rainfall was above normal, raises concerns for kharif crop sowing, which is crucial between June and September. Additionally, a 62% chance of El Nino developing could exacerbate the situation by further reducing rainfall. The West Asia conflict threatens to disrupt fertilizer supply chains, complicating domestic production efforts. ICRA has adjusted its FY2027 agriculture Gross Value Added (GVA) growth forecast to 3.0% and predicts consumer price inflation to surpass 4.5%, driven by anticipated increases in food prices. However, current reservoir levels are at 47% of live capacity, higher than last year’s 40%, which may provide some buffer against adverse conditions. The report emphasizes the importance of well-distributed rainfall and reasonable increases in minimum support prices to sustain farm sentiment amidst these challenges.
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The predicted agricultural challenges could lead to increased food prices and affect rural demand, impacting farmers and consumers alike.
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