India’s Finance Ministry has warned that a developing El Niño weather pattern could hurt the upcoming kharif crop season and push food prices higher. The warning came in the ministry’s Monthly Economic Review for May, released on Saturday.
The ministry said that if rainfall falls short due to El Niño, the impact on food inflation, rural demand and overall economic growth could be quick and severe. This comes at a time when global energy prices are already high, adding to existing inflationary pressures.
Despite the weather concerns, the government says it is in a good position. Rice and wheat stocks held by the Food Corporation of India and state agencies stood at 817.53 lakh tonnes as of end-April 2026. Reservoir storage is also healthy, at 123.86 per cent of the decadal average. Summer crop sowing has also gone up, with area coverage rising to 83.08 lakh hectares from 80.01 lakh hectares last year.
El Niño Could Hit Pulses and Oilseeds Hard
The India Meteorological Department has said monsoon rainfall this year is likely to be around 92 per cent of the Long Period Average, with a real chance of below-normal rains depending on how El Niño interacts with other weather factors. Rice production has historically held up during El Niño years because major producing states have good irrigation. But pulses and oilseeds, which depend heavily on rain and are grown in rain-fed areas, have seen sharp falls in past El Niño episodes. Livestock and dairy farmers could also suffer due to fodder shortages, lower milk output and higher feed costs.
On the demand side, things still look reasonable. Car and vehicle sales have grown strongly across all categories, including two-wheelers, passenger cars, commercial vehicles and tractors. However, domestic air passenger traffic fell 1.3 per cent compared to last year, pointing to some cooling in consumer spending. The ministry cautioned that if the monsoon is weak and economic activity slows, overall demand could face pressure in the coming months.
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