Heavy monsoon rains in India will help increase production and reduce crop imports

In 2025, monsoon rains in India will be heavier than usual for the second season in a row, which allows us to hope for high agricultural performance in Asia’s third largest economy.

Monsoons provide up to 70% of the rainfall needed to irrigate crops and recharge reservoirs and aquifers. Half of the country’s farmland is not irrigated, so some crops are heavily dependent on rains between June and September. Heavy rains would help lower food prices, curb inflation, and boost rice exports.

The monsoon, which usually arrives in the southern state of Kerala on June 1 and ends in mid-September, will reach 105% of the multi-year average this year, the India Meteorological Department predicts.

Above-normal rainfall is expected over most of the country, with the exception of some areas in the northwest, northeast and southern peninsular areas, where rainfall will be lower. The El Niño phenomenon, which reduces monsoon rainfall, is not expected during the rainy season.

Average or normal rainfall is considered to be between 96% and 104% of the 50-year average of 87 cm over a 4-month season. In 2024, India received 107.6% of the multi-year average, against a forecast of 106%.

Economists believe that agricultural growth will keep inflation at the level predicted by the Reserve Bank of India, which will allow it to change rates in the face of global volatility. Last week, the Reserve Bank of India cut the repo rate for the second time in a row and changed monetary policy to stimulate the economy ahead of the imposition of tariffs by the United States.

A further 50 basis point cut is not out of the question, but it could be cut further if retail inflation remains below 3.5%, Canara Bank said. According to government data, India’s retail inflation rate fell to 3.34% in March, the lowest in five years, as food prices continued to fall.

India is the world’s largest rice exporter and second largest sugar producer. Thanks to rainfall in 2024, the authorities were able to lift restrictions on rice and onion exports, but left the sugar export quota at 1 million tonnes.

Traders hope that the heavy rainfall will not only boost exports of sugar, rice and onions, but also reduce imports of edible oils. India, the world’s largest importer of edible oils, currently meets two-thirds of its demand by importing palm, soybean and sunflower oils from Indonesia, Malaysia, Argentina, Brazil, Ukraine and the Russian Federation.

Tags: India, crop forecast, sunflower oil