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Strengthening El Nino conditions and a return of the Indian Ocean Dipole (IOD) to neutral are raising downside risks to the monsoon, with rainfall in September projected to be below 94 per cent of the long-period average (LPA), ICICI Bank said in a report.
The bank said the monsoon had already weakened in August, with rainfall 16 per cent below LPA, taking the cumulative deficit as of August-end to 14 per cent. The outlook for September remains cautious as El Nino conditions intensify and support from the IOD fades. Outlook for September remains cautious, with IMD projecting below-normal rainfall during September (<94% of LPA) over the country, ICICI Bank said in its report. The report said the probability of strong to very strong El Nino conditions during July-September has been revised to around 99 per cent, including a 75 per cent probability of very strong conditions. The probability of very strong El Nino conditions rises to around 100 per cent for September-November, according to the report. The report further added that the El Nino index rose to 2.45 in August, well above the 0.8 threshold, while the IOD index weakened to around 0.22 and returned to the neutral zone. Thus, the strengthening El Nio and fading support from IOD remain downside risks to monsoon performance during the remaining season, it said. The impact is already visible in kharif sowing. As of August 28, 107.1 million hectares had been sown, around 2 per cent lower than the 109 million hectares recorded a year earlier. Rice acreage was down 3.4 per cent year-on-year, while coarse cereals declined 2.3 per cent and oilseeds fell 0.5 per cent. However, the report said the situation was not uniformly weak. Around 97 per cent of the normal kharif area had been sown by August-end, compared with 99 per cent last year, while pulses acreage rose 1.2 per cent. Reservoir storage also remained below last years level. Storage across 150 reservoirs stood at 68 per cent of capacity as of August 27, compared with 74 per cent a year earlier. ICICI Bank, however, expects improved rainfall to support a recovery in reservoir levels in September. Despite monsoon concerns, rural demand has remained resilient, led by tractor and two-wheeler sales, while agricultural credit growth stood at 17 per cent year-on-year in July, supporting the broader rural outlook. (ANI)
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