Monsoon Tracker: The lesser known facts·     

Through this publication, we cover the unsaid or understated facts about the ongoing monsoon season. This has implications on both rural demand and monetary policy.

·     We find that the 5% surplus rainfall at all-India level camouflages the spatial disparity to the extent that 26% of the sub-divisions of India are seeing deficient rainfall (the highest being in Bihar, UP, Haryana, Punjab).

·     There is still only a 50% chance of La Nina developing in the latter half of 2024 (as per Australian Bureau of Metrology). In the recent past, when La-Nina develops, the resultant climatic conditions tend to remain for 6-7 months (favourable scenario for India).

§   La Nina conditions may lead to higher moisture content conducive for good rabi sowing (RBI)

·     SW monsoon accounts for 80% of the total rainfall. With change in climatic conditions, August-September (55%) sees higher rainfall than July-August (42%).

§   July-August rains (in mm) have been less than the normal distribution of rainfall.

·     Water reservoir levels improving, but more progress required – especially in the North (Rabi growing region).

·     East, NE and NW regions are not only deficient in rainfall, but also deficient in reservoir levels.

·     Despite rainfall dispersion, 89% of Kharif sowing completed (1.4% YoY)

·     Wheat is a winter crop. Given the current status of rainfall and water reservoir levels, the Rabi crop production may get impacted. The probability of La Nina and rainfall patterns in Aug-Sep will give further clarity.

·     Will La Nina come to rescue and ease food inflation in H2FY25? History shows that in La Nina years, inflation is less.   

·     The RBI would not rush into the rate cut cycle and instead wait to see the unfolding of known-unknown events that impact the inflation trajectory towards 4% target on a durable basis. With that as a backdrop, we expect the RBI to start the rate cut cycle only in 2025 (our call: Feb-2025).