El Nino And Iran Sharpen Indias Food Prices Challenge

The southwest monsoon was 39.8 per cent below normal in June, with the all-India average rainfall of 99.5 mm the fifth lowest recorded for that month after 2014, 2009, 1926 and 1905. This month, which coincides with the peak plantings of the kharif crop, has been better so far. Not only has the cumulative rainfall deficit for the season (June-September) narrowed to 24.1 per cent as on July 5, the monsoon has advanced to cover roughly 95 per cent of the country’s area. That should, in turn, help boost kharif sowing acreages, which were overall 22.7 per cent lower compared to last year’s coverage till June 25. The lag was even more for oilseeds (53.3 per cent), pulses (30.5 per cent) and cotton (34.6 per cent). Those gaps can potentially close with the monsoon’s revival from June 30.

But the outlook, on the whole, is still not great. The India Meteorological Department has forecast average rainfall over the country for July, too, to “most likely to be below normal”. Worse, the dreaded El Niño is in a “moderate” phase now, while predicted to intensify into a “strong” event during the second half of the monsoon season and turn “very strong” over October-January. The impact wouldn’t be limited to the monsoon rainfall and the kharif crops grown during this season. Since El Niño is known to suppress rainfall and also raise temperatures, it could result in a relatively short and warm winter, affecting the upcoming rabi season crops like wheat, mustard, chana, masoor and potato as well. The last “strong” El Niño event of 2023-24 led to annual retail food inflation averaging over 8.5 per cent between July 2023 and December 2024. Without proactive supply-side management, there is every risk of a repeat of that protracted episode of elevated food prices.

India imported a record 16.9 million tonnes (mt) of vegetable oils in 2025-26 and 7.3 mt of pulses the previous fiscal. El Niño — which has overtaken Iran as the No 1 risk factor for the Indian economy today — will make further imports inevitable. While keeping the import window open, the government must ensure minimum support prices for pulses, oilseeds, millets and cotton through payment of the difference over open market rates. It will incentivise farmers to cultivate these crops, instead of water-intensive rice, wheat and sugarcane. The year 2026-27 will also test the flagship crop insurance (PMFBY) and rural employment (VB-G RAM G) schemes. Their implementation on the ground matters as much as the supply-side measures to control food inflation.