Will El Niño weaken India’s economy?

Source: The post “Will El Niño weaken India’s economy?” has been created based on “Will El Niño weaken India’s economy?” published in “The Hindu” on 7th July 2026.

UPSC Syllabus: GS 3– Indian Economy

Context:  El Niño is a climate phenomenon that weakens the southwest monsoon and adversely affects India’s agriculture-based economy. In 2026, the IMD reported a 40% rainfall deficit in June and forecast below-normal rainfall in July, raising concerns about economic growth and food security.

 Impact of a Poor Monsoon on India’s Economy

1. Decline in Agricultural Production: A poor monsoon reduces agricultural production and lowers the contribution of agriculture to the economy.
2. Fall in Rural Income and Demand: A weak monsoon reduces farm incomes, which may decline by up to 10%, and weakens consumer demand in rural areas.
3. Rise in Food Inflation: Lower agricultural output increases food prices and leads to higher food inflation.
4. Impact on Livelihoods: Agriculture contributes about 20% of Gross Value Added (GVA), employs 46% of the workforce, and supports nearly 55% of India’s population. Therefore, a weak monsoon directly affects livelihoods.
5. Slowdown in Rural Economy: Reduced rural demand negatively affects sectors such as construction, automobile sales, tractors, and real estate.
6. Lower Economic Growth: A combined El Niño and drought may reduce India’s GDP growth by 20–65 basis points.
7. Pressure on External Sector: Lower agricultural production may increase imports, widen the Current Account Deficit (CAD), put pressure on the rupee, and reduce agricultural exports despite their strong growth in recent years.

Impact of El Niño on Agriculture and Inflation

1. Several major droughts, including 1972, 1982, 2009, and 2015, occurred during El Niño years.
2. Since 2000, five out of six El Niño years experienced deficient rainfall.
3. In 2009 and 2010, poor rainfall caused crop GVA to contract by 2.5% and 3.2%, respectively.
4. Food inflation reached double digits in 2009 because of lower agricultural output.
5. In 2015, inflation remained moderate due to effective food management, restrained MSP hikes, and low global commodity prices.

Is India Prepared for Another Weak Monsoon?

1. Around 315 districts are vulnerable to poor monsoons.
2. Out of these, 111 districts across 12 States face high risk due to poor irrigation facilities.
3. Reservoir storage is lower than last year and slightly below the normal level.
4. Another consecutive weak monsoon could severely strain water resources.

Measures to Drought-Proof India’s Economy

1. The government should expand irrigation facilities to reduce dependence on rainfall.
2. It should increase public investment in climate-resilient agriculture.
3. Drought-resistant and high-yielding crop varieties should be developed and promoted.
4. Farmers should be provided easy access to improved seeds and modern technologies.
5. Policies should focus on reducing disaster risks before they occur rather than relying only on crop insurance.

Conclusion: El Niño poses a major challenge to India’s agriculture, inflation, rural livelihoods, and overall economic growth. Strengthening irrigation, improving climate resilience, and investing in long-term risk reduction are essential to protect the economy from future droughts.

Question: Why does El Niño remain a major risk to India’s economy? Discuss its impact on agriculture, inflation, and economic growth. Also suggest measures to drought-proof the Indian economy.

Source: The Hindu