In India, about 60 percent of agricultural lands, which still depends largely on the monsoon. The lack of irrigation facilities forces farmers to bet with the monsoon. If you observe other natural phenomena that can significantly affect the economy, there is no other natural phenomenon that approaches the monsoon, which has a significant impact on the Indian economy. Therefore, the rain drops we receive from the Monzón not only provide water to crops but also to the economic development of India, impacting food inflation to the main political decisions.
Connection of the Monzonic Economy: a decade in review
When analysis of the last decade exhaustively, from 2014 to 2024, to look at the economic impact of the monsoon, what we observe is: normal rain periods, agricultural GDP increased by an average of 3.8 percent. However, when the country faces the deficitive rain, the growth of agricultural GDP is limited to 1.2 percent, according to RBI 2003 data. Such a child of fluctuations and instability in agricultural performance has a direct effect on rural consumption. And we know that rural consumption represents approximately 50 percent of the consumption of households in the country, according to the data of NSO 2023. Justification of the fact that in 2018 when the rain was 9.4 percent, below the interruption. 2.1 Per Cent, Food Inflation Increased by 6.8 Per Cent and Rural Demand For Durable Goods Sharply Declined BY 14 Per Cent Year-on-Year Base, reported by the ministry of statatics and program implementation 2019 Raentary for the Raintingry for the Rainting for the Raintingry for the Rainting for the Raintingry for the Rainterry for the rainería for the rainería for rainería, Wereman for the rainería for rainería, Were that for the Raentroy, Werellary for the Rainty. The normal rain in 9.7 percent, led to a bumper harvest, which possible helped the country to control food inflation despite the serious interruptions in the supply chain of the entire country, the 2021 economic survey reported.
Beyond agriculture: undulation effects in all sectors
The impact of the monsoon is not limited only to agricultural activities, but extends beyond several sectors of the country. The moments when countries faced insufficient rain, such as 2014, 2015 and 2018, a decrease of approximately 8 percent in two -wheeled sales was observed. These sales are considered a robust indicator of rural demand. According to Nielsen-IQ 2022 data, the FMCG (rapid movement goods) sector experienced a strong disparity between rural and urban demand, which is around 3.5 percentage points during periods of rain deficit. In addition, the monsoon is quite crucial for residential and industrial sectors. For example, the water collected from the deposits of the duration of the monsoon is used to operate hydroelectric plants in India, which affects the generation of electricity. These fluctuations and unstable conditions of the monsoon contribute to the costs of electricity, partly during the low rainy times, exerting additional pressure on the industrial units.
The prognosis of 2025: economic implications
The Indian Meteorology Department (IMD) is optimistic this year with respect to the Monzón, which is projected to be almost normal. It means that if the rain occurs immediately with a minimum variety in all regions, the economy will be better, maintaining other constant factors. Then, a potential result in this case would be a reduction in food inflation. Allhe, food inflation is already low, around 3.16 percent, could be further reduced and relieve pressure on homes. In addition, it is also anticipated that favorite monsoon conditions improve direct agricultural production, which contributes 0.4 percent to 0.5 percent of Indian’s GDP this year. In the context of the rural economy, where demand is left behind the urban demand by 2.6 percent in recent years, a favorable and distributed monsoon could increase spending in cities, towns and smaller low income groups. Indeed, the RBI, which faces normal rain, could also relieve monetary policy measures because historically, every time the country experiences a normal monsoon, the RBI has successful controlled inflation. At the same time, it has implemented policies that support economic growth, according to the RBI 2024 Bulletin.
Beyond short -term relief: address structural vulnerabilities
A period in which climate change rewrites the rules and changes the established norms. The significant dependence of a rain country presents a worrying scenario, revealing structural deficiencies within the sector. If we observe the last decade of 2014-2024, India has experienced a great increase in the climatic events of the advertiser such as irregular rain, which increases by about 43 percent, according to the Department of Indian Meteorology. And the duration of dry spells The monsoon also increased by 8 percent, according to the Indian Tropical Meteorology Institute. Such changes in climatic conditions have considerable economic costs, which the Ministry of Finance estimated as approximately 0.7 percent of the country’s GDP annually. Secondly, inadequate irrigation facilities and infrastructure always remained a central problem in agriculture in India. As you know, half of the cultivation lands have direct or indirect access to irrigation only, as reported by the Ministry of Water Resources 2024. However, the disaggregated land seems to increase only 5.6 percentage points in recent decades.
Now, as we see that the 2025 monsoon approaches, the short -term economic perspective will depend largely on rain patterns throughout the country. However, in the long term, India must strategically invest in irrigation infrastructure. Particularly resource efficiency systems, such as drip irrigation, etc. Promotion actively intelligent climate agriculture as a need for time, and to adapt rural houses, rural media must diversify. Therefore, as long as these changes are not made, Indian agriculture will continually play with the monsoon that could have a broader impact on the economy.
The author is an assistant economy professor, Business Management School, NMIMS Hyderabad
Posted on May 18, 2025
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