Nithin Kamath has warned that India could face mounting inflationary pressures this year if below-normal monsoon rains coincide with persistently elevated global oil prices, a combination he said may eventually compel the Reserve Bank of India (RBI) to raise interest rates.
In a post on X, the Zerodha chief described 2026 as "a case of when it rains, it pours", citing concerns around weak rainfall forecasts and their potential impact on food inflation and rural incomes.
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"Every few years, the Pacific Ocean warms up abnormally, and that phenomenon is called El Niño. When it happens, India's monsoon weakens," Kamath wrote, referring to forecasts by the India Meteorological Department projecting rainfall to be 6% below normal this year.
Kamath said the outlook may appear manageable initially, but stressed that nearly 70% of India's annual rainfall is received during the monsoon season, while around 60% of farmers continue to rely heavily on rainfall rather than irrigation.
"If history is any guide, we may have a terrible year ahead," he said, noting that close to 60% of El Niño years since 1951 have resulted in below-average rainfall in India. He also pointed to 2009, when monsoon rainfall dropped to 78% of the long-period average, marking the weakest monsoon in nearly four decades.
2026 is turning out to be a case of when it rains, it pours.
— Nithin Kamath (@Nithin0dha) May 25, 2026
Every few years, the Pacific Ocean warms up abnormally, and that phenomenon is called El Niño. When it happens, India's monsoon weakens. This year, it looks like a super El Niño is developing, and the IMD is already… pic.twitter.com/pBE3g8iOpd
A deficient monsoon typically disrupts agricultural output, particularly for crops such as rice, pulses, sugar and vegetables, often resulting in higher food prices. Food inflation remains a critical component of India's retail inflation basket because of its large share in household spending.
Kamath said these risks are emerging at a time when global energy markets are already facing disruptions due to escalating tensions in West Asia. Referring to the Strait of Hormuz, he described the situation as an “unholy mess” amid concerns over supply disruptions through one of the world's most vital energy transit routes.
“Trump's war with Iran has effectively shut a channel that carries 20% of the world's oil and 20% of its LNG,” Kamath said.
India imports nearly 80-90% of its crude oil requirements and roughly half of its natural gas consumption, leaving the economy vulnerable to sustained increases in global energy prices.
According to Kamath, the Indian crude basket averaged $114 per barrel in April and around $106 per barrel in May, levels he said remain well above India's comfort zone.
Higher crude prices typically feed into fuel inflation, transportation costs, fertiliser expenses and the current account deficit, he added.
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Economists have long viewed a simultaneous rise in food and energy prices as one of the most difficult scenarios for the RBI, as it puts pressure on inflation while also weighing on economic growth.
“When food and energy prices rise together, the RBI cannot stay quiet,” Kamath said. “Beyond a point, it will have to start hiking rates, and that is when a bad situation starts to feel like a crisis.”
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