Treat El Niño As An Economic Warning, Not A Weather Report

The numbers from the world's weather agencies on upcoming weather conditions are hard to ignore. The World Meteorological Organisation puts the odds of an El Niño between June and August 2026 at 80 per cent, rising above 90 per cent by November.

America's forecasters give it a 96 per cent chance of lasting through the winter of 2026-27, and a 63 per cent chance of becoming a "very strong" event between November and January, which would rank among the largest since records began in 1950.

For India, these are not lines in a science bulletin. They are an early warning about jobs, food prices and growth. The mechanism explains the economics. Every few years, the trade winds that push warm water toward the western Pacific weaken, and that warm water spreads back east, releasing a vast store of heat into the atmosphere. That is why the hottest years on record tend to be El Niño years; the last strong event, in 2023-24, helped push 2024 to a global temperature record.

The heat does not stay over the Pacific. Through what scientists call teleconnections, it reshapes rainfall worldwide, and one of its most reliable effects is a weaker, later monsoon over India. That is where a distant ocean becomes a domestic problem.

The monsoon delivers close to 70 per cent of the rainfall India needs to grow crops and refill reservoirs. India's weather office has already forecast monsoon rainfall at 92 per cent of the long-period average, its "below normal" category and the first below-average call in three years.

The shock then travels through three channels: heat, which cuts the productivity of workers who cannot escape the sun; agriculture, where weak rain hits the rural production base; and inflation, where food makes up 47.6 per cent of the consumer price basket, one of the highest weights in the world. Food inflation was already 4.2 per cent this April, before the worst of the season.

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Three scenarios for India

How bad it gets depends on the strength of the event, the spread of the rain, and what else hits us at the same time. The figures that follow are illustrative, drawn from the ranges in published studies, not a forecast.

The Glancing Blow: This is the resilient India the IMF has documented. The farm sector’s share of the economy has fallen from 28 per cent in 1997 to about a fifth today. Irrigated area has grown from 22.6 million hectares in 1950-51 to 86.4 million, and buffer stocks cushion the rest. A typical El Niño shaves only about 0.15 per cent off growth, and prices rise modestly. This holds if the event stays moderate and the rain, though light, is well spread.

The Below-Normal Year: A strong El Niño pulls the monsoon clearly below normal, with deficits concentrated in the heartland; central India was already running a rain deficit of roughly 64 to 65 per cent in mid-June. Kharif yields fall, irrigation and groundwater costs climb, and the growth drag moves to about 0.25 per cent.
A 2023 study in Nature shows the catch: the damage does not end when the rain returns, but keeps accumulating for three more years. Inflation rises about 0.5 to 0.6 points, led by food, and the Reserve Bank of India is caught between supporting growth and taming prices.

The Compounding Crisis: This is the tail risk the 63 per cent odds make real. A very strong El Niño peaks in the winter of 2026-27 and lingers into a scorching spring. One Dartmouth economist estimates India's foregone output at around one trillion dollars by 2032, with the global toll above ten trillion. The same Nature study found recent strong events cost the world 2.1 trillion dollars (1997-98) and 3.9 trillion (2015-16), about 4 to 5 per cent of global output each. History shows how compounding turns lethal: the El Niño of 1877-78 helped trigger a famine that killed an estimated 50 million people.

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Why India must brace now

Even the middle scenario is dangerous, because the shock is not landing on calm waters. A Middle East conflict has already lifted fuel and fertiliser costs and pushed shipping rates about 40 per cent above pre-crisis levels. While there is a deal between the USA and Iran, things are still uncertain. El Niño will raise prices further on its own. The IMF found oil roughly 14 per cent higher and other commodities about 5 per cent higher a year after the shock.

At home, cooling demand is expected to lift coal-fired generation by around 10 per cent, just as drought threatens hydropower. An El Niño takes the training wheels off global warming.

Preparation needed, not guesswork

Strengthen heat-action plans and early-warning systems, protect outdoor workers, push drought-resistant seeds, repair irrigation and curb groundwater overuse, keep grain reserves ready to steady prices, plan power for a hotter, drier grid, and act early as the UN's food agency finds every rupee spent before a disaster returns about seven in losses avoided.

The strength of this El Niño is still uncertain, but the direction of the risk is not. India should plan for all three scenarios and move before the monsoon does.

(Note: The author is a public policy analyst. Views expressed in this article are his own.)