Below-normal monsoon and West Asia conflict cloud India's agriculture outlook
Bank of Baroda says India's first 2026 monsoon forecast of 92% of the long-period average, combined with gas disruptions linked to the West Asia conflict, creates a double risk for crops, input costs and rural incomes.
India's farm economy is facing a more difficult start to the 2026 season after the India Meteorological Department issued its first long-range forecast for the southwest monsoon at 92% of the long-period average. Bank of Baroda said that is the lowest initial forecast in at least 25 years and a sharp reversal from the above-normal rainfall recorded in both 2024 and 2025.
The bank said total rainfall has a close relationship with both kharif and rabi output, which means the monsoon has a direct bearing on farm income growth and rural consumption. In practical terms, a weaker monsoon can hit production, slow value addition in agriculture and weaken demand in the countryside. That is why the forecast is being treated as an early warning sign not just for farmers but for the wider economy.
The weather risk is being reinforced by a geopolitical one. Bank of Baroda said the conflict in West Asia has disrupted gas supplies, and gas is a primary input in the production of fertilizers and other agricultural inputs. As a result, this year's harvest outlook depends not only on the availability of water but also on whether fertilizers and pesticides remain accessible and affordable through the season.
The exposure is significant because irrigation coverage in India has remained at only 50% to 60% over the past five years. Rainfall therefore stays critical for many crops, especially in interior regions. The bank also noted that the monsoon determines reservoir levels that support year-round water availability and influences allied farm activity beyond field crops. Its framework includes non-crop segments as well, including horticulture, tobacco and rubber.
Historical data in the note points to a strong statistical link between monsoon performance and agricultural growth. The reported correlation coefficient between actual monsoon performance and kharif production is 0.64, while rabi stands at 0.59, suggesting kharif is more rainfall-sensitive. The bank added that sub-normal monsoons, defined as less than 96% of the long-period average, have usually been associated with lower agricultural growth. In 2014-15 and 2015-16, when rainfall was below 90% of normal, kharif output fell, although rabi production still stayed positive.
Bank of Baroda also translated the forecast into rainfall volume. With normal rainfall averaging around 87 cm, a 92% monsoon would imply roughly 80 cm this year. The bank stressed that this remains a preliminary estimate and that a refined forecast should come at the end of May, closer to the start of the monsoon. Even so, the current projection already signals that Indian agriculture is entering the season with two linked vulnerabilities: uncertain rainfall and the risk of more expensive farm inputs.