India El Nino Rain Check

DBS analyzes the impact of a projected strong El Niño on the Indian economy, noting that while inflation risks are rising to 4.9% for FY27, structural mitigants like irrigation and high food stocks will limit the damage to growth and policy rates.

Key Takeaways

• 1.The IMD projects below-normal rainfall (8% below the Long Period Average) due to a strong El Niño occurrence which may be the strongest in three decades.
• 2.Economic output impact is mitigated by an increasing share of irrigated land and a modest 16-17% share of agriculture in India's GDP mix.
• 3.Food price spirals are likely to be contained by excessive foodgrain stocks (over 60mn metric tonnes) and administrative supply-side measures.

Table of Contents

• El Niño and monsoon – some but not all
• Economic watch factors
• Output
• Inflation impact
• Policy implications.

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