Reserve Bank's fight against inflation is likely to weaken

Mumbai: While the Reserve Bank of India has been tightening monetary policy and increasing the repo rate for some time to bring down inflation, the trend of seeing El Nino conditions in the current year's monsoon has raised the possibility that the Reserve Bank's anti-inflation exercise may fail. In 2015, there was a 13 percent deficit in rainfall due to El Nino.

Due to El Nino conditions, drought and lack of rain often occur in the country, it has a wide impact on the agricultural economy of the country.

America's National Oceanic and Atmospheric Administration has declared El Nino conditions this year, raising concerns among policymakers about what the next southwest monsoon will be like for India.

As the country's agricultural crops depend on the southwest monsoon, the lack of rainfall is unlikely to affect crop production, an agricultural expert said. Crops like rice, mung bean, tuver dal, soybean and groundnut require good rainfall.

While barely 45 percent of India's crop area is irrigated, shortfall in rainfall will affect the kharif crop due to which the possibility of food grain prices escalating in the country in the next financial year is not ruled out. However, if meteorologists are to be believed, El Nino and Monsoon rainfall are not directly related and its main impact depends on the timing and extent of when El Nino takes shape.

A clear knowledge of how El Nino will affect India will depend on the forecast of the Indian observatory in April-May.

In 2015, due to El Nino, the country saw a deficit of 13 percent of the long-term average rainfall. If this is repeated in the current year, the possibility of inflation is not ruled out, said another agriculture expert.