The South West monsoon plays a major role in the Indian economy. So, from economists to farmers to RBI MPC members, everybody prays for a bumper monsoon as it would cool food inflation and boost demand for consumer goods.

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Likewise, the Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das has raised concerns over the delayed or weak monsoon in the minutes released on Thursday, June 22.

The RBI governor said the South West monsoon in the backdrop of a likely El Nino weather pattern needs to be watched carefully, especially for its impact on food prices in India.

He said international prices of key food items like rice and sugar are at elevated levels and adverse climate events have the potential to quickly change the direction of the inflation trajectory. Already, the slow progress of the monsoon is causing a delay in the sowing of oilseeds in the ongoing Kharif season.

Professor Jayanth R Varma noted that the official forecast of a normal monsoon provides some comfort, but it is tempered by the fact that the forecast includes an almost even chance of the monsoon being below normal or worse.

“Fortunately, the forecast likelihood of a deficient monsoon is only marginally higher than the climatological probability, and the chance of a drought appears to be rather remote. This augurs well because the Indian economy is quite resilient to a monsoon which is somewhat below normal if its spatial and temporal distribution is satisfactory," Varma said.

Another MPC member, Dr Rajiv Ranjan, said the deficient monsoon could have a more tangible impact on inflation due to the higher share of food items in the CPI consumption basket.

According to Dr Michael Debabrata Patra, idiosyncratic monsoon-related risks have risen and need to be seen off over the ensuing months after the RBI kept the short-term lending rate (repo) unchanged.

Shashanka Bhide felt that the normal monsoon forecast by the Indian Meteorological Department (IMD), despite the emergence of the El Nino phenomenon, would be supportive of agricultural growth.

The significant downside risks to growth are the unfavourable rainfall conditions during the monsoon season, steeper than expected decline in global demand conditions, and supply chain disruptions due to spillovers from the geopolitical conflicts, he added.

Dr Ashima Goyal, said, "Inflation has moderated into the tolerance band but is not yet firmly on the path to target, particularly in view of monsoon-related uncertainties."

(Edited by : Shoma Bhattacharjee)