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India Monsoon Update — Uneven Season, but Resilient Sowing Limits Immediate Economic Concerns

ICICIdirect Research 04 Sep 2026 DISCLAIMER

India's 2026 southwest monsoon season has been distinctly uneven so far, characterized by a weak start, a meaningful recovery in July, followed by another moderation in August.

  • El Niño conditions prevailed at the onset of season, prompting IMD to revise down its rainfall forecast to 90% of Long Period Average (LPA) from its initial estimate of 92%.
  • June was particularly weak, with rainfall at 35% below LPA, resulting in a significantly deficient start to the season.
  • Rainfall witnessed a strong recovery in July, with the monthly deficit narrowing sharply to just 1% below LPA.
  • July is particularly important from an agricultural perspective, accounting for nearly one-third (~33%) of the total southwest monsoon rainfall.
  • However, momentum weakened again in August, with rainfall at 16% below LPA.
  • Consequently, cumulative rainfall for the season currently stands at 13% below LPA.

With IMD forecasting September rainfall at around 91% of LPA, the probability of the full monsoon season ending with a deficit of ~14–15% has increased materially. If realized, this could potentially make Monsoon 2026 one of the weakest monsoon seasons witnessed in the past decade.

Agricultural activity remains relatively resilient

  • Total kharif sowing stands at ~107 million hectares, marginally lower by ~1.7% YoY.

Reservoir position - The water situation remains somewhat less comfortable than the sowing data.

  • Pan-India reservoir storage is currently ~18% below last year's level.
  • Storage is also ~3% below the long-term average.

While the current storage position is not alarming, a weak September could potentially have implications for rabi crop prospects and irrigation availability in certain regions.

Economic and investment implications: Cautious, but not alarmist

At this stage, the economic impact of a below-normal monsoon appears contained. Reasonably resilient sowing activity, along with adequate foodgrain buffer stocks, should help cushion the immediate impact on agricultural output and food inflation. We remain cautious, but not alarmist.

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