Drought Without a Drought Policy

The weakest monsoon since 2015 hurts incomes, prices and demand. Water, insurance and procurement decide who bears the loss.

This year's monsoon did not fail in a dramatic way. There was no single week of terror, no headline-grabbing flood or famine. Instead, it fell short quietly, month after month, and by the end of September the season was 12.6% below normal. According to the India Meteorological Department, that makes it the weakest monsoon since 2015.

The rain also fell unevenly. The south peninsula received nearly a quarter less than normal. Maharashtra has declared a drought, even though Mumbai had an unusually wet start to July. In Uttar Pradesh, heavy rain at the wrong stage of the rice crop cut yields. Around Karnal and Gharaunda in Haryana, farmers have reported that rice yields are 10% to 20% lower than last year. Weather experts expect El Niño, the warming of Pacific waters that often disturbs India's rain, to be one of the strongest on record, so the risk does not end with this harvest.

A weak monsoon is not a surprise to India. It has happened before and will happen again. The real question is whether the country has a working system for bad years, or whether each one is handled as a new emergency. This year's experience suggests it is still closer to the second.

How a bad rainy season travels

The effects of poor rain do not stay in the fields. They move through the economy in a chain.

First, farmers lose part of their crop. Costs also rise. In dry spells, pests and diseases spread more easily, so farmers buy more pesticides. Power shortages push them towards diesel pumps, and diesel prices are climbing because of the oil shock. India's electricity deficit in September was the highest for that month in nearly a decade, partly because weak rain reduced hydropower while heat raised demand.

Second, household incomes fall. Villages spend less on tractors, motorbikes, appliances, gold and weddings. The signs are already visible. Year-on-year growth in tractor sales slowed to 0.8% in August, from 28.1% in July. Growth in two-wheeler sales eased to around 20% from 28%.

Third, prices rise. Food makes up more than a third of the retail inflation basket. Inflation was 4.82% in August, above the RBI's 4% target for the third month in a row, and the full effect of the monsoon had not yet reached markets. Reservoir levels in most major wheat-growing states are at three-year lows, according to Goldman Sachs, which raises worries for the winter crop.

Fourth, the central bank has to respond. Higher food inflation is one reason economists expect the RBI to raise interest rates on 7 October. Costlier loans then press on the same families and firms already facing weaker incomes.

A failed monsoon is a farm story on Monday, a food-price story on Wednesday and an interest-rate story by Friday.

Three pillars that decide who pays

When rain fails, three things decide how badly a farmer is hurt: water, insurance and the price the farmer receives. India has structures for each. Each has gaps.

Water

Roughly half of India's farmland still depends mainly on rain. The rest is irrigated, by canals, tube wells and other sources. Irrigation is the most direct protection against a poor monsoon. Where it exists, a farmer can sow and harvest even when the sky does not cooperate.

But irrigation has costs of its own. In parts of Haryana and Punjab, farmers grow water-hungry paddy by pumping groundwater, and water tables have been falling for years. In a drought, deeper pumping needs more electricity or diesel, which is exactly what is in short supply. So irrigation protects farmers in the short run but can store up trouble for the long run.

The policy lesson is to invest in both sides: more efficient irrigation, such as drip and sprinkler systems, and better management of groundwater. A shift away from crops that need the most water in the driest areas would also help, though that needs support, because farmers will not give up assured income without alternatives.

Insurance

India has a national crop insurance scheme, the Pradhan Mantri Fasal Bima Yojana, which is meant to compensate farmers when yields fall because of weather. On paper, a drought year is exactly when it should pay out.

In practice, the speed and size of payouts decide whether insurance helps or merely exists. Farmers often complain about delays, disputes over how losses are measured and low compensation compared with their actual loss. Yield estimates depend on crop-cutting experiments, which can be slow. If a family has borrowed money for seed and fertiliser, a payout that arrives six months later may not prevent a debt trap.

The simplest improvement would be for the government and insurers to publish, district by district, the expected yield loss, the number of claims received and the timeline for payment. If the claims are paid quickly in a year like this, trust in the scheme will grow. If not, farmers will see insurance as a promise that does not work when needed.

Prices and procurement

The third pillar is the price at which a farmer sells. The government buys wheat and rice at fixed support prices, mainly in states such as Punjab and Haryana, and this procurement offers strong protection for those crops. For many others, such as pulses and oilseeds, farmers depend much more on market prices.

This matters now because the government is reportedly considering cutting import duties on lentils and yellow peas. The aim is to bring in more supply and calm food prices. That is a sensible short-term move for consumers. But it has a trade-off. If imports surge just as Indian farmers are preparing to sell or sow, domestic prices can fall and discourage production, which makes India more dependent on imports in the future.

Neither choice is wrong in itself. The point is that the trade-off should be explained to the public. Where duties are cut, they should be time-limited and linked to clear supply targets.

What the government has done right

It is fair to credit what has worked. The Centre acted early on the numbers, trimming its target for foodgrain output in the current year to about 373 million tonnes, citing El Niño. Admitting a weaker crop is better than pretending the year is normal.

The new rural employment scheme, VB-G RAM G, has also taken in a rush of demand. In September, 15.64 million households asked for work, about 34% more than a year earlier. That is the kind of safety valve rural India needs in a bad year, although, as other reports have pointed out, the work actually delivered fell, which is a concern in itself.

Other parts of the economy are holding up. GST collections were strong in September, and the manufacturing index reached a seven-month high. India's foreign exchange reserves give it room to manage imports of food and fuel. The picture is not one of general collapse. It is one of an economy that can absorb a shock, but at a heavy cost to farm households.

What is still missing

The deeper problem is that each bad monsoon seems to be handled afresh. Several gaps stand out.

• Early action. India's forecasts are good, and the signs of a weak season were visible by mid-year. Yet many support measures arrive after losses are clear. Pre-agreed triggers, such as a given rainfall shortfall in a district leading to automatic relief steps, would speed things up.

• Local data. National figures hide big variations. A district with a 40% rainfall shortfall needs a different response from one with a 5% shortfall. Publishing district-level rainfall, sowing and yield data in near real time would make targeting far better.

• Fair funding. Drought is a recognised disaster for central and state relief funds, but states often wait for approvals and assessments before money moves. Clear timelines for declaring drought and releasing funds would help families plan.

• Storage and logistics. Having enough grain in godowns is only useful if it can be released quickly to places in need.

• Cash support. When incomes fall sharply, direct transfers to small and marginal farmers can help bridge the gap, if they are quick and targeted.

None of these is a new idea. All are within reach. They require attention between droughts, not during them.

The climate question

It is tempting to treat this as a one-off. But the broader pattern suggests otherwise. Climate scientists expect more extreme weather in India: longer dry spells, sharper bursts of heavy rain, and shifts in timing. A season in which Mumbai has a record wet July while the south is a quarter short of rain is the kind of pattern that makes planning hard.

That means India needs a farm policy built for variability. Crop choices, seed varieties, irrigation, storage and insurance must work together. A rice farmer in Haryana, a pulse grower in Karnataka and a cotton farmer in Maharashtra face different risks. A single national response will serve none of them well.

Why this matters beyond the village

It would be wrong to see this only as a rural issue. Farm income drives demand for goods made in towns and cities. Food prices affect every family's budget. Interest rates affect every loan. When the monsoon fails, factories, shops and banks also feel it.

It also matters politically. A government that is seen to respond quickly and fairly to drought builds trust. One that responds late, or unevenly, loses it. Farmers in Haryana and elsewhere are watching how crop losses are assessed and how claims are paid. Their experience will shape how they judge policy.

The test ahead

The next few months will show whether the system is ready. The winter wheat crop will depend on soil moisture and reservoir levels that are already low. If El Niño persists, next year's monsoon could also be at risk.

India does not lack knowledge about what to do. It has experts, data, schemes and funds. What it needs is a drought policy that works before the drought, with clear triggers, quick payments, honest data and fair prices. A country that wants to be a leading economy cannot leave millions of farm families to the weather each year. The monsoon of 2026 has given a warning. The question is whether the policy that follows will match it.