Patchy monsoon could lift inflation, hurt rural economy: S&P
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New Delhi: A weak southwest monsoon could spike India's inflation to 5.1% in FY27, hurt rural demand and put pressure on sectors ranging from agriculture and microfinance to tractors and two-wheelers, even as the broader economy and banking system remain resilient, S&P Global Ratings said in a report released on Monday. S&P expects higher food and energy prices to push headline inflation to 5.1% in FY27, likely prompting the Reserve Bank of India ( RBI ) to maintain a moderately tight monetary policy stance. Food accounts for about 40% of India's consumer price index basket, making inflation particularly sensitive to disruptions in farm production. Last month, the RBI's monetary policy committee kept the repo rate unchanged at 5.25%, citing geopolitical risks, supply-chain disruptions and weather-related uncertainties. While agriculture contributes around 18% of India's gross value added and employs nearly 40% of the workforce, S&P noted that the economy has become less dependent on the farm sector over the past three decades as manufacturing, infrastructure, finance and technology have gained prominence. India’s economy expanded 7.7% in FY26, while agriculture grew 3%, helping cushion the impact of a weak monsoon on overall economic activity. India witnessed its driest June in more than a decade, and the fifth-driest since records began in 1901, with southwest monsoon rainfall at 39.8% below the LPA. On 30 June, the IMD said that India is likely to receive below-normal rainfall in July, at less than 94% of the long-period average. His reporting aims to simplify complex policy issues for a wider audience while maintaining depth and credibility.<br><br>Outside of work, he enjoys tracking policy developments, finding scoops, and travelling, reflecting his curiosity about how economic decisions shape everyday life. Stay updated with the latest Trending , India , World and US news.
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S&amp;P expects higher food and energy prices to push headline inflation to 5.1% in FY27, likely prompting the Reserve Bank of India (RBI) to maintain a moderately tight monetary policy stance.
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