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Informist, Tuesday, Jun. 30, 2026

 

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--Fin min: Economic activity maintained momentum in early months of FY27
--CONTEXT: Finance ministry releases Monthly Economic Review for June 
--Fin min: Monsoon rainfall deficit a concern 
--Fin min: Among things India needs to build buffers, water may top the list 
--Fin min: Economy continues to exhibit resilience 
--Fin min: Need close attention on signs of moderation in industrial activity 
--Fin min: Need close attention on signs of evolving inflationary pressures 
--Fin min: Monsoon, geopolitical uncertainties pose downside risks to growth 
--Fin min: Monsoon, geopolitical uncertainties pose upside risks to inflation 
--Fin min: Inflation may remain contained in coming months 
--Fin min: Concerns over India external stability should dissipate gradually 
--Fin min: Need national policy on buffer stocks for critical raw materials

 

NEW DELHI – Monsoon rainfall deficit remains a concern this year, with weak progression of the southwest monsoon weighing on kharif crop sowing, the finance ministry said on Tuesday. The rainfall deficit fear remains despite favourable conditions with supportive reservoir levels and adequate availability of fertilisers.

 

"Among the many things India needs to build buffers for in the coming years, water may be at the top of the list," the ministry said in its monthly economic review for June. During Jun. 1–29, the country recorded 92.2 millimetres of rain, 42?low the normal for the period, data from the India Meteorological Department showed. The department on Tuesday said the country will see below-normal seasonal rainfall over most parts in July and projected below-normal rainfall at 94% of the long-period average. The area under kharif crops across India as of Thursday was down 23% from a year ago at 18.3 million hectares, according to data from the agriculture ministry released Monday.

 

Below normal rainfall coupled with the persistent geopolitical uncertainties causing ongoing disruptions to oil production and pass-through of cargoes through the Strait of Hormuz pose risks to global growth and inflation. "While easing oil prices and improving global supply-chain conditions may help alleviate some external pressures, uncertainties surrounding the monsoon and geopolitical developments in West Asia continue to pose downside risks to the growth and upside risks to the inflation outlook," the finance ministry said. 

 

The Indian economy, so far, has shown resilience irrespective of these challenges. The cessation of the war in West Asia has brightened India's growth outlook and also reduced inflation and external deficit risks, the ministry said.

 

In the early months of 2026-27 (Apr-Mar), economic activity in India maintained its momentum as seen in most of the high-frequency indicators such as e-way bills generation, purchasing managers' indices, automobile sales, and electricity consumption, the ministry said. These indicators continued to reflect underlying strength in domestic economic activity. "...although emerging signs of moderation in industrial activity, along with evolving inflationary pressures, demand closer attention ahead," it added.

 

The finance ministry sees inflation readings to remain relatively contained in the coming months as the global environment continues to evolve. "Recent easing in global commodity markets, a correction in crude oil prices, and softening of key input prices such as urea may help moderate imported inflationary pressures," the ministry said.

 

With the onset of war in West Asia on Feb. 28, crude oil prices traded much higher from the sub-$73 per barrel level. Oil prices even hit the $120 per barrel level during the war. The recent signing of an interim peace deal between the US and Iran has brought oil prices back to the pre-war level. "The decline in international commodity prices is expected to provide some cushion against further price pressures," the ministry said.

 

But the normalisation of global supply chains and trade flows to pre-conflict levels may take time, the ministry said. "The government interventions, adequate buffer stocks of key agricultural commodities, and continued supply-side management measures also help mitigate potential supply disruptions."

 

The war was a reminder of the need for a national policy on buffer stocks for a range of critical raw materials and inputs, the ministry said. Now, attention turns to the impact of a deficient monsoon. "While the monsoon rains are expected to improve in July and August, experts point to the increasing unpredictability of rainfall patterns," it said.

 

On the policy side, India dealt with the war with a combination of near term and structural measures designed to enhance the country's resilience to future energy shocks and their economic impacts, the ministry said. While India's macroeconomy remained stable, concerns over external stability should dissipate gradually, it added.  End

 

US$1 = INR 94.66

 

Reported by Shweta

Edited by Akul Nishant Akhoury

 

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