India's already weak monsoon could set the stage for a difficult winter cropping season, with a record-strength El Niño, depleted reservoirs and rising temperatures adding to risks for farm output and food inflation, according to Citi Research.
The 2026 southwest monsoon is ending with rainfall around 12% below the long-period average, making it the most deficient monsoon since the 2015 El Niño year, Citi said.
While heavy rains in late September helped narrow the cumulative deficit, they also triggered flood-like conditions in parts of northern and eastern India. Citi said the late-season deluge may not necessarily benefit standing Kharif crops.
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The rainfall shortfall has also been widespread. As many as 23 of India's 36 meteorological subdivisions have recorded more than 10% rainfall deficiency, while 15 have seen deficits exceeding 20%, the report said.
Citi, citing the IIT-Gandhinagar India Drought Monitor, said nearly half of the country was experiencing drought-like conditions as of September 23, compared with around 30% during the 2023 El Niño. About 10% of the country was classified as experiencing extreme or exceptionally dry conditions.
The concern is now shifting towards the Rabi season. Water reservoir levels across India stood at just 71% of live capacity, below the 10-year average of 80% and the lowest level for this point of the year since 2016, Citi said.
The situation is particularly important for wheat-producing states such as Madhya Pradesh, Rajasthan and Punjab. Uttar Pradesh, which accounts for about a third of India's wheat production, is relatively better placed, with reservoir levels around 84%.
At the same time, Citi expects the El Niño to remain unusually strong. The World Meteorological Organization has estimated a nearly 100% probability of the phenomenon persisting through February 2027, while Australia's weather bureau sees Niño 3.4 readings potentially reaching levels above the warmest recorded since reliable observations began in 1950.
A warmer and drier winter could increase the risk of heatwaves during the March-April 2027 harvest period, potentially affecting wheat and other winter crops. Citi pointed to the 2022 heatwave, which damaged wheat crops and contributed to a sharp rise in food inflation.
The pressure is already visible in some crops. States accounting for about three-fourths of India's onion output, two-thirds of pulses and half of rice production have experienced rainfall deficits of more than 10%, Citi said.
The report estimates September consumer inflation could trend towards 5.6% year-on-year, driven partly by higher prices of onion, sugar, rice and pulses. Onion prices were nearly double their year-earlier levels in September, according to daily price data cited by Citi.
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Citi also flagged a broader global food-price risk, noting that emerging-market food inflation rose to 11.5% in August, from a contraction of 0.3% in February.
For rural India, the picture remains mixed. Consumption indicators are still relatively resilient, but tractor and two-wheeler sales growth slowed sharply in August, while fertilizer sales and rural employment indicators have also weakened.
Citi said the combination of a deficient monsoon, low water reserves and a potentially prolonged El Niño could therefore pose mounting risks to Rabi output, food inflation and rural economic activity in the second half of FY27.
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