Will a poor monsoon have the same effect in 2025 as it did earlier?

India's agricultural sector is still largely dependent on the four-month-long Southwest monsoon, but that correlation may be weakening as irrigation infra develops

With about a month to go, the countdown has begun for the 2025 southwest monsoon forecast. Economists, agriculture experts and policy gurus are all looking to the skies, in a manner of speaking, as they wait for the official monsoon forecast— an event of immense significance for the entire country. Whether it’s the pure-play agriculture sector or the related ecosystem, monsoon is serious business.

 

The June-September monsoon months determine not only agriculture production but also rural consumption and general economic growth. While recent studies show that India and particularly its agriculture have, of late, become somewhat resilient to the vagaries of the southwest monsoon, the four-month rainy season that provides more than 70 per cent of the country’s annual precipitation remains a top of the charts event.

 

Why is monsoon a big event

 

The monsoon is unarguably the lifeline of India’s economy, particularly the agriculture sector, and its spillover effect is felt in almost every other sphere of economic activity. A recent World Bank Working Paper titled ‘Weather Shocks and Rural Economic Linkages’, which examined the complex relationships between rainfall shocks, agricultural productivity, and rural economic activity in Rajasthan, India’s largest state by area, underscored this fact.

 

Using district-level agricultural data from 1990 to 2015, enterprise surveys from 2010 to 2016, and household consumption data from 2014 to 2016, the research analysed three key relationships. First, positive rainfall shocks increase agricultural productivity by approximately 7 per cent compared to negative shocks, with irrigation infrastructure significantly moderating this effect. Second, it explored whether these weather-induced agricultural productivity changes have substantial spillover effects on rural non-farm enterprises, particularly those engaged in retail trade. It found that positive rainfall shocks increase enterprise revenues by 25.7 per cent and value-addition by 30.3 per cent, primarily through increased local demand for non-tradable goods. Third, rural household consumption responded positively to favourable rainfall conditions, with monthly per capita expenditures increasing by 6 per cent during positive rainfall shocks. This increase is predominantly driven by higher spending on luxury goods rather than essential items, supporting the demand-side channel through which weather shocks affect non-farm enterprise performance.

 

These findings highlighted the strong interconnections between agriculture conditions and non-farm economic activity in rural areas, with important implications for policies aimed at building rural economic resilience in the context of increasing weather variability.

 

 

The forecast for 2025

 

So far, most meteorologists believe that the 2025 southwest monsoon, starting from June, is likely to be ‘normal’.

 

Their optimism is based on a few factors. First is that an already weak La Niña has entered a ‘neutral’ phase and is expected to stay that way till June

 

A ‘neutral’ La Niña could mean that while it might not have a big positive impact on the rains, the negative effects of El Niño can also be ruled out. Even as La Niña has a positive correlation with Indian monsoons, El Niño is known to cause poor rains over the Indian peninsula.

 

The La Niña, which was expected to form around October 2024, was virtually absent till late December 2024. When it finally arrived, it was very weak and probably one of the shortest La Niña events in history. It came and went in a blink.

 

Such an unusual phenomenon creates ‘uncertainty’ in the minds of some weathermen who feel that further observation and analyses of existing and future weather models would be needed before arriving at any concrete forecast on the 2025 monsoon season.

 

But the big question remains: Even if rains are poor in 2025, is there evidence that it will have the same effect on crop production and other related activities as it did in the past?

 

Declining impact on farming

 

Recent research by industry chamber PHDCCI, published under the title ‘India’s Agricultural Transformation: From Food Scarcity to Surplus’ found that while the common perception is that poor annual rainfall has a negative impact on foodgrain production, there are exceptions.

 

“Rainfall does not appear to have a statistically significant impact on foodgrain production since the last few years which contrasts with the traditional view of India’s heavy reliance on monsoon rains for agriculture,” the study said.

 

Based on a regression analysis for the period between 2012-13 and 2022-23, the research found that the correlation between rainfall and foodgrain production is only ‘moderately positive’. However, this correlation becomes ‘strongly positive’ when it comes to prices, electricity and fertiliser availability, and irrigation coverage. Warehousing capacity and foodgrain production also show a ‘weak correlation’, the data found.

 

In other words, the research suggests that India’s foodgrain production is increasingly influenced by factors such as prices, electricity consumption, warehousing capacity, and rise in gross irrigated area and less from rainfall.

 

The study added that at 10 per cent ‘significance level’, gross irrigated area shows a statistically significant positive relationship with foodgrain production.

 

“The shift indicates a move away from traditional dependence on rainfall towards modern irrigation methods,” the study said.

 

According to the authors, annual rainfall (including monsoon months) is tabulated from the Jan-December period for the regression analysis while all other variables including foodgrain production, electricity consumption, WPI-food articles (for analysing the impact of prices on production), etc is on a financial year basis.

 

Whether the correlation between the monsoon and its impact on Indian agriculture, which is still fairly pervasive, is weakening is something that will play out in the years and decades to come.