Kharif season faces “double whammy” from El Nino risk and Gulf tensions: Experts
Drawing attention to macro risks, CareEdge Ratings Chief Economist RajSinha said that the interplay of climatic and geopolitical factors could aggravate supply-side pressures. “The increased El Niño risk in the current financial year is likely to aggravate existing supply-side pressures, particularly those arising from the West Asian crisis,” he said.
Regarding the historical impact of El Nino, Sinha added: “El Nino years were associated with an average contraction of 5.4 percent in Kharif production and an average decline in agricultural GVA growth of 0.3 percent.”
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He also pointed out increasing external pressures, saying, “The agricultural sector is already under pressure due to rising global fertilizer prices and declining export opportunities due to disruptions in the Strait of Hormuz.”
This signaled potential policy buffering despite headwinds. “The government is expected to mitigate some of this impact through increased fertilizer subsidy allocations and sectoral relief measures,” he said.
On inflation dynamics, Sinha highlighted the ongoing uncertainty: “While the government and oil marketing companies have absorbed a significant portion of the energy price shock… the situation remains uncertain and volatile.” He warned that “weakened Kharif production due to El Niño could keep food prices high”, adding that “the combination of higher inflation and lower agricultural production is likely to weigh on rural consumption in particular”.
Echoing similar concerns, Amit Gupta, Senior Research Analyst at Kedia Advisory, called the situation a “double whammy”. He said: “Water scarcity directly reduces rice and pulse yields, while conflicts increase the costs of fertilizer and diesel. This combination risks higher food inflation and reduced rural incomes.”
Offering a more measured view, Kotak Neo’s Riteshkumar Sahu said that although the risks are real, they are not yet serious. “The forecast of below-normal monsoon rainfall at around 92 per cent of the long-term average raises some concerns… but this should not be immediately interpreted as a serious crop threat,” he said.
Sahu emphasized that the quality of rainfall is more important than quantity: “Agricultural production in India depends not only on total rainfall but also on its timing, regional distribution and number of drought spells.” “Even with slightly below normal rainfall, good spatial distribution and adequate reservoir levels can support near-normal production,” he added.
However, he warned that geopolitical developments could increase risks. “Tensions in the Gulf region may increase crude oil, fertilizer and freight costs,” he said, adding that high input costs could affect the yield of important crops such as paddy, pulses and oilseeds.
On buffers and outlook, Sahu said: “India has strong foodgrain stocks… and policymakers will closely monitor the progress of the June-July monsoon and Kharif sowing trends.”
Overall, experts said Kharif’s outlook will depend on two key variables; the progression and distribution of the monsoon and the rate at which supply disruptions related to West Asian tensions are easing.
