Why the monsoon matters
India has expanded irrigation coverage over the years, but large parts of agriculture continue to depend on rainfall. Veer Patil, consultant at the Centre for Law, Policy and Governance, NFPRC Foundation, said irrigation has reduced rainfall risks for crops such as wheat, sugarcane and rice in some regions. However, pulses, oilseeds and several short-duration vegetables – commodities that often drive food inflation – remain largely rainfed. “The monsoon-agriculture relationship has become more segmented. Irrigation has decoupled staples from rainfall risk, but the inflation-sensitive crop basket, particularly pulses and oilseeds, remains largely rainfed,” Patil said.

Prof Barun Kumar Thakur, faculty of economics at FLAME University, said rainfall timing and distribution matter as much as the total rainfall received. “The monsoon remains the most critical factor of India’s kharif output despite an expansion in irrigation. Though irrigation has drastically improved agricultural resilience, half of the cultivated land is still rain-fed, and irrigated agriculture depends on monsoon-fed basins and groundwater,” he said.

The warning signs appear before inflation data
Economists track district-wise rainfall, kharif sowing progress, soil moisture, groundwater levels, reservoir storage and wholesale mandi prices to assess whether crop output is likely to be affected. Patil said national rainfall numbers often mask regional stress. “The meaningful cut is at the level of what I call the ‘six-state supply belt’ – Maharashtra, Karnataka, Madhya Pradesh, Rajasthan, Chhattisgarh and Odisha,” he said, adding that weekly sowing data released by the agriculture ministry remains “the single-most actionable leading indicator” for assessing crop prospects.

This year, rainfall has been uneven across regions. Janhavi Bhujabal, research consultant at the Climate and Sustainability Initiative (CSI), said the weak start to the monsoon coincides with a strengthening El Niño Southern Oscillation, which is associated with weaker and uneven monsoon conditions. She said the June rainfall deficit was particularly visible across central India and parts of eastern and northeastern India. While a positive Indian Ocean Dipole could improve rainfall in July and August, delayed rainfall may not fully offset losses in areas where sowing has already been pushed back. “In regions where sowing has been delayed, later rainfall may not fully compensate for the weak start. Rain-fed agricultural regions and areas dependent on seasonal or non-perennial water sources are thus likely to be less bolstered,” Bhujabal said.

She added that parts of Madhya Pradesh and Maharashtra’s Deccan Plateau deserve close attention because June rainfall is critical for kharif crops such as soybean and cotton.

Why food inflation moves first
Vegetables usually react first because they have short production cycles and little storage. Pulses respond in two stages – first through market expectations based on sowing data and later through actual crop arrivals. Cereals generally move more gradually because government stocks help cushion supply shocks. There is an implicit assumption that the monsoon’s effects on prices materialise mainly after the kharif harvest. This is empirically incorrect for vegetables and meaningfully wrong even for pulses,” Patil said. He said vegetables can register price increases within weeks because disruptions quickly reduce market arrivals. Pulses begin responding even before harvest as traders react to lower sowing acreage and weaker production expectations. Thakur said markets often price in supply risks before official crop estimates become available. “Rainfall deficits affect vegetables quickly, as prices often rise within a week due to their short growing cycles and perishable nature. Pulses and cereals respond more steadily, typically within a month, as lower sowing and production expectations tighten supply,” he said.

Beyond food prices
Delayed sowing and weaker crop prospects can reduce farm incomes, affecting spending across rural India. That can weigh on demand for fast-moving consumer goods (FMCG), tractors, entry-level two-wheelers, fertilisers and other products linked to the rural economy. Bhujabal said regions dependent on rain-fed farming have limited ability to recover within the same agricultural season once sowing is delayed. “For small and rain-fed farmers, this can affect farm incomes and leave limited room to adjust within the same agricultural season,” she said.

Why the RBI is watching closely
For the RBI, a temporary increase in food prices is not always enough to alter monetary policy. The concern grows if food inflation becomes persistent or starts influencing broader inflation expectations. Vishrut Rana, Asia-Pacific senior economist at S&P Global Ratings, said food will remain one of the biggest determinants of inflation this year because of its large weight in the CPI basket. “The monsoon will be a significant inflation determinant this year. Food has a high weight in the CPI basket of nearly 40 per cent. Core inflation, excluding food and energy, is relatively stable. The other key determinant will be energy prices,” he said. Rana said disruptions have already affected several kharif crops, including oilseeds, groundnuts, cotton, pulses such as toor and moong, and rice. He added that India’s foodgrain reserves could soften some of the immediate impact.

According to him, higher food prices can eventually push up headline inflation even if core inflation remains stable. “A food price shock can become a wider inflation concern if inflation expectations rise materially. This leads to second-round effects with prices of broader goods rising. The risk of such effects is greater if accompanied by an energy price shock,” Rana said. He added that the RBI would tighten monetary policy if overall inflation rises sufficiently to threaten inflation expectations.

Originally published in Business Standard.