July rains ease monsoon deficit, but crop and inflation risks persist

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New Delhi: India has sharply narrowed much of its monsoon rainfall deficit after heavy showers in early July, easing fears triggered by one of the weakest starts to the season in years. But with rainfall still uneven and the crucial kharif sowing window far from over, policymakers and farmers are not breathing easy yet.

The cumulative shortfall in rainfall eased to 19.3% during 1 June-13 July from 38% at the end of June, according to India Meteorological Department (IMD) data. However, the improvement was uneven, with east and northeast India still reporting a 35.5% deficit, followed by the south peninsula (21.5%), northwest (11.9%) and central India (8.5%).

India typically receives about 32% of its seasonal monsoon rainfall in July followed by 29% in August. On 30 June, the IMD had forecast July rainfall at 94% of the long-period average, suggesting below-normal precipitation could persist through the month’s most critical sowing period.

July is also the most crucial month for kharif sowing, with around 55% of the total cultivated area usually brought under cultivation during the month. The share is even higher for certain crops—65% for pulses, 66% for oilseeds, and 62% for sowing of coarse cereals, according to Aditi Nayar, chief economist of Icra Ltd.

As of 10 July, total area planted with kharif crops stood at 53.12 million hectares, much below the 63.25 million hectares in the year-ago period, reflecting the impact of delayed and uneven monsoon rainfall across several agricultural states. Acreage under key crops such as paddy, pulses, oilseeds and cotton is also trailing last year’s levels.

While recent showers have improved soil moisture and accelerated sowing in some states, persistent rainfall deficits elsewhere continue to delay planting and cloud the outlook for crop yields.

“Despite the recent rainfall, soil moisture remains inadequate in many regions, limiting kharif sowing,” said Sudhir Panwar, an agriculture expert and former member of Uttar Pradesh Planning Commission.

He added that the pace of planting of pulses, paddy, rice, and oilseeds—and their subsequent crop development—will largely depend on how the monsoon performs during the rest of July.

Driven by rising food prices, retail inflation accelerated to 4.38% in June from 3.9% in May, breaching the Reserve Bank of India’s (RBI’s) 4% midpoint target for the first time since the new consumer price index (CPI) series was introduced in January 2026. Food inflation was at 5.32% in June compared to 4.78% in May.

Taking note of the uncertainty around food inflation from the impact of the sub-normal monsoon and El Niño, the RBI in its 5 June monetary policy statement projected retail inflation for FY27 at 5.1%.

“Uneven rainfall so far, a below-normal monsoon forecast, and the onset of El Niño conditions could put pressure on food prices,” said Dipti Deshpande, senior director and principal economist at Crisil Ltd.

Sarwan Singh Pandher, farm leader and coordinator of the All India Kisan Mazdoor Morcha, said farmers are bearing the brunt of the weak monsoon.

“Based on initial field reports, we expect a decline in both acreage and yields. Higher irrigation costs are likely to further squeeze farm incomes, adding to the financial stress faced by cultivators,” Pandher said.

Queries emailed to the IMD, ministry of agriculture and farmers welfare, and the ministry of consumer affairs, food and public distribution on 14 July, remain unanswered till the press time.

Not everyone is worried about the monsoon’s early impact, with D.K. Joshi, chief economist at Crisil Ltd, saying it is too early to draw firm conclusions.

“We should wait until the end of July, as the progress and distribution of monsoon rainfall over the next two weeks will be critical for the kharif season,” Joshi said, pointing to comfortable government buffer stocks of rice and wheat.

“The more vulnerable seg...