India Isn’t Ready For El Niño

El Niño Threatens Farms And Rural Economy, But India Isn’t Prepared

By Prasanna Mohanty

What?

On June 11, the US National Oceanic and Atmospheric Administration (NOAA) confirmed that El Niño had developed in the tropical Pacific and warned that it could strengthen into a “very strong” event this year. Global forecasters expect it to increase through the year, when India experiences its crucial monsoon season. 

El Niño is a climate pattern in which sea surface temperatures in the tropical Pacific Ocean become unusually warm, altering rainfall patterns and weather systems across large parts of the world, including India. 

Though warnings of El Niño and heatwaves surfaced months earlier, turning more definitive since April, the Ministry of Agriculture and Farmers Welfare launched its “Khet Bachao Abhiyan” on June 1. 

The ministry has proposed that agricultural scientists, experts and public representatives spread out and create awareness among farmers. At a review meeting the next day, the ministry identified 197 districts as most vulnerable and talked about “focusing on seeds, moisture conservation, water management and alternative crop planning” for kharif. 

Rabi didn’t find a mention except that enough seeds will be available, as also for kharif. At the June 16 review, the number of most vulnerable districts was increased to 326, spanning 12 states.

GV Ramanjaneyulu, executive director of the Centre for Sustainable Agriculture, said that the preparations should have begun in May, not June. “Farmers across the country started sowing in May with pre-monsoon showers. The plants will dry if there is no rain for another week”, he told The Core, adding that farmers should have been asked to delay sowing, avoid water guzzling paddy and sugarcane and be provided with drought-resistant seeds. 

Why It Matters 

The impact of El Niño this year could be worse than earlier ones, not only because it may raise the temperature by over 1.5°C, but also because it follows 2025, one of the warmest years on record.  

While the government may have launched an initiative, it seems to have not yet reached the farmers. Farmer leader Balbir Singh Rajewal of the Bharat Kisan Union told The Core that he had neither heard nor read about the “Kheti Bachao Abhiyan”, hence there was no question of farmers being aware or being prepared. 

The risks posed by El Niño and heatwaves are compounded by the limited resilience of India’s agricultural system.

Ramanjaneyulu said, “Resilience comes from local conditions, but we don’t plan agricultural output based on soil, water and environmental conditions. Our policy is what the government thinks is right. Half of Punjab is not suitable for paddy, and except for basmati, most of the paddy produced is not locally consumed either, but it is grown because the central government procures it.”

Unlike in previous years, there is no fallback option for farmers either. The job guarantee scheme MGNREGS has been replaced with VB-G RAM G, which is no longer a demand-driven scheme and is scheduled to start only in July, entirely bypassing the peak demand quarter of April-June (which accounted for 40% in FY25).

Where to Invest $100,000 Right Now, According to Experts

Investors face a dilemma. When the S&P 500 finished its worst quarter since 2022 last month, diversifiers like bonds and bitcoin fell too.

Even with the turnaround in mid-April, analysts at Goldman Sachs and Vanguard have projected low-single-digit annualized returns from 2024-2034.

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$300 billion

That’s the size of a proposed private investment fund at the heart of a new US-Iran framework agreement, according to a Reuters exclusive.

The Lead: Companies from the US, Gulf countries, Asia, South America and Africa have reportedly committed more than half the money. The fund will begin operating once negotiators conclude a final deal.

Iran initially sought around $400 billion for reconstruction and economic recovery after the conflict. Negotiators instead built a $300 billion investment fund that relies on private capital rather than government reparations.

The broader agreement seeks to end months of conflict between Washington and Tehran. Under the framework, the US would lift its naval blockade, reopen the Strait of Hormuz and begin talks on sanctions relief and Iran’s nuclear programme. Officials from both countries are expected to sign a memorandum of understanding in Switzerland later this week.

Impact: The deal would benefit India as well. A stable Strait of Hormuz would secure a key oil shipping route, ease pressure on energy imports and help lower crude prices.

Telegram Challenges India's Ban

Messaging app Telegram has filed a petition in a New Delhi court challenging an Indian government order that has temporarily blocked the platform, Bar and Bench reported.

The order, which came into force on Tuesday, will remain in place till the National Eligibility cum Entrance Test - Undergraduate (NEET-UG), a major medical entrance exam, is reheld on June 21.

Telegram was banned, citing concerns that the app’s channels were being used by organised cheating networks to circulate leaked or fake question papers.

Overview: Telegram's lawyers mentioned the challenge before a Delhi High Court judge on Wednesday, who agreed to take up the petition shortly. Founder Pavel Durov questioned the ban's effectiveness, saying it punishes Telegram's 150 million Indian users rather than "the insiders who leaked the exam materials”.

The ban was issued under an IT law provision allowing app blocks "in the interest of sovereignty and integrity of India, Reuters reported.

Setting: Last month, the government cancelled the medical entrance exam taken by 2.3 million students, triggering nationwide protests and calls for Education Minister Dharmendra Pradhan's resignation.

Safer Seas Ahead?

Marine insurers could further reduce war-risk premiums on ships sailing through the Strait of Hormuz if the US-Iran agreement holds, according to industry executives quoted by Business Standard.

Backdrop: Months of conflict in the Gulf drove up insurance costs, in some cases to several times their normal levels, as underwriters priced in the risk of missile attacks, vessel damage and disruptions to commercial shipping. Those higher premiums increased the cost of moving oil, fuel and other cargo through one of the world's busiest energy corridors.

Outcome: Insurers have already started lowering premiums after Washington and Tehran agreed to a framework aimed at ending the conflict and reopening the Strait of Hormuz. However, underwriters remain cautious. They want to see several weeks of uninterrupted shipping and a lasting reduction in tensions before cutting rates more aggressively. Lower premiums could eventually reduce shipping costs for importers, including those in India.

India’s Airline Profits Set to Fall

Domestic airlines are facing mounting cost pressures from elevated aviation turbine fuel (ATF) prices, airspace restrictions and rupee depreciation amid the West Asia conflict.

This will drag down their operating profit by 10-15% in FY27 to Rs 16,000-17,000 crore, from about Rs 19,000 crore last fiscal, according to Crisil Ratings.

Context: Global ATF prices surged over 50% above pre-conflict levels before easing recently, but remain well above last fiscal year's average.

Manish Gupta, Deputy Chief Ratings Officer at Crisil, said, “Coupled with currency-related pressures, this will push up the overall cost per available seat kilometre to Rs 4.8–5.0 per km this fiscal from Rs 4.3 per km last fiscal, thereby weighing on overall profitability.”

Setup: Impacted by the war, the global airline industry is also set to earn just $23 billion in net profit in 2026, roughly half the $41 billion previously projected and down sharply from $45 billion in 2025, the International Air Transport Association said last week.

Mumbai Runs Dry

India's poor monsoon season is already taking a toll, as Mumbai grapples with its driest June in over a decade, forcing authorities to cut water supply to construction sites and slash industrial usage by 20% starting Wednesday, Reuters reports.

India is facing its weakest monsoon in years, and the strain is already visible well beyond Mumbai. Weak rainfall has spurred concerns among farmers and markets alike over delayed sowing, lower crop yields, and rising food prices in the months ahead.

Context: Mumbai’s seven supplying lakes now sit at just 10.35% capacity, leaving Mumbai's 13 million residents with only 40 days' worth of water. This follows an earlier 10% cut imposed in mid-May, as Maharashtra has received 75% lower rainfall than average so far this month.

Impact: Construction sites in Mumbai face disconnected water supply and frozen new connections, though developers expect manageable short-term disruption since monsoon rains are anticipated by the month-end, much later than their usual early-June arrival.

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Indian Markets Are Now Cautious

On Episode 904 of The Core Report, financial journalist Govindraj Ethiraj speaks to Gauri Shankar Nagabhushanam, CEO at CapitaLand India Trust, in an excerpt from our Special Edition. We also feature an excerpt from our show How India’s Economy Works hosted by journalist and author Puja Mehra and featuring economist Renu Kohli, formerly at the Reserve Bank of India and the IMF and currently senior fellow at the Centre for Social and Economic Progress (CSEP).

• Indian Markets Are Now Cautious As They Standby For West Asia Developments

• FTA With UK To Kick Off Next Month Even As Indian Companies Step Up Investments There

• Singapore Based Real Estate Investment Giant Capitaland Outlines India REIT Strategy And Outlines Datacentre Investment Plans

• India’s Rupee Problem Links To The Capital Account And Not The Current Account And Why That Matters

• Mumbai Is Running Out Of Water