India Ratings Report Reduction in Agriculture's Vulnerability to Monsoon Shocks

India Ratings reported that the percentage of area under irrigation in India increased from 41.7 percent in 1996-97 to 54.32 percent in 2018-19 (FY19). This rise in irrigated land has resulted in a decrease in the correlation between kharif foodgrain output and monsoon precipitation from June to September, which was 0.4 from FY13 to FY21. This correlation was higher at 0.6 and 0.8 from FY97 to FY04 and FY05 to FY12, respectively.

According to India Ratings, the link with both the area seeded and the foodgrain output differs among areas. "A glance at the region-wise correlation for the entire period during FY97-FY21 or any truncated period in between suggests that south peninsular India is more vulnerable to a shortfall in monsoon rains than any other region in terms of both area sown and food grain output," it added. Central India (CI), which was more sensitive between FY05-FY12, became less vulnerable to monsoon rains during FY13-FY21, according to India Ratings. It was stated that one of the likely reasons could be the increase of irrigated land in this region.

"While irrigated area in Madhya Pradesh increased to 61.6 percent in FY19 from 40.1 percent in FY05, irrigated area increased to 33 percent in Rajasthan and 51 percent in Gujarat during the same period, from 23.4 percent and 33 percent, respectively," India Ratings said. The negative association between monsoon rainfall and kharif acreage or output demonstrates the detrimental impact of high rainfall, which frequently causes floods and crop devastation.

While this situation could occur in any part of the country, it was most pronounced in Northeast India (NEI) in terms of output during FY97-FY04 and in Central India (CI) in terms of area during FY13-FY21. Ind-Ra feels that an increase in rabi crop yield has decreased the negative impact of the weak monsoon on India's agriculture. Historically, agriculture output was higher during the kharif season than during the rabi season. According to India Ratings, "however, over the past several years, rabi food grain output/production has been mostly either at par or higher (consistently during FY18 to FY22) than kharif production."

According to the Indian Meteorological Department's (IMD) estimate, monsoon rainfall in 2023 would be 4% lower than the long-period average (LPA). The monsoon rainfall shortfall is related to El Nino conditions that are expected to emerge during the monsoon season. Although the likelihood of low rainfall increases in an El Nino year, Ind-Ra believes there is no one-to-one relationship between the emergence of El Nino and low monsoon rainfall in India. The emergence of El Nino does not always imply a large decrease in rainfall and/or dryness.

"Ten of the 33 years from 1990 to 2022 were classified as El Nino years of varying intensity." However, India experienced a rainfall deficit of more than 5% in seven of these ten years, with only five of these seven years classified as drought years," according to India Ratings. Monsoon rainfall is a complex process, with El Nino/La Nina, the status of the Indian Ocean Dipole (IOD), the Tropical Atlantic SST, and Eurasian land heating all having an impact on its performance across India.

"If the IOD value stays at or above 0.4, it creates favourable conditions for monsoon rainfall. The Indian Ocean now has neutral IOD conditions, however the IMD predicts positive IOD conditions to develop during the 2023 southwest monsoon season. If this occurs, there is still a reasonable likelihood of reducing the negative impact of El Nino on monsoon rainfall in 2023," India Ratings stated.