Below-normal monsoon may lift inflation, impact growth in FY27

India's macroeconomic outlook for FY27 could be influenced significantly by monsoon performance, with below-normal rainfall expected to create upward pressure on inflation and affect growth momentum, according to a report by Tapan Doshi, smallcase manager and Founder of Thoughtful Investors Research LLP.

The report states that the India Meteorological Department (IMD) has forecast monsoon rainfall at 92% of the Long Period Average (LPA), which is classified as below normal. This raises concerns around food inflation, rural demand recovery and the overall interest rate outlook. 

According to the report, nearly 55% of India's net sown agricultural land is rain-fed, making monsoon patterns critical for agricultural output, rural income and supply chains. Agriculture, which contributes around 15%-16% to India's GDP and supports nearly 45% of the population, remains highly dependent on rainfall conditions. 

Uneven or delayed rainfall during key sowing periods could impact crops such as rice, pulses, sugarcane, soybean and oilseeds, potentially affecting agricultural productivity and food availability. Food inflation has already been witnessing upward pressure in recent months.                    -ANI