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After witnessing a large deficit in June 2026 (60% of the long period average/LPA), India recorded above-normal rainfall at 103% of LPA in July 2026 as against the India Meteorological Department’s (IMD’s) forecast of <94% of LPA for the month. Boosted by surplus rains in July 2026, the extent of year-on-year (YoY) contraction in kharif sowing narrowed sharply to just ~3% at end-July 2026 from ~23% seen at end-June 2026. Nevertheless, the IMD’s forecast of below normal rains in August 2026 (<94% of LPA) is concerning, as India receives ~29% of its Southwest (SW) Monsoon rainfall in August and ~20% of overall kharif sowing takes place in the month. Given the 13% deficit during June-July 2026, rainfall in the entire monsoon season would print at 90% of the LPA, if actual rainfall in August-September turns out to be at 93% of the LPA (at the upper bound of the IMD’s estimate for this period), in line with the lower end of the IMD’s 2nd long range forecast (90% +/-4% of LPA) which was published in May 2026. Kharif sowing in the remainder of the season needs to grow by ~13% to meet last year’s final acreage level, which seems slightly high. We expect the cumulative kharif sowing to dip by 1-2% YoY in 2026, although a better turnout for non-crop segment of agri, would prevent a contraction in agri GVA, as seen in many past El-Nino years. ICRA continues to estimate the GVA of agriculture, forestry and fishing to grow by ~1.2% in FY2027, with risks to the downside.

Key highlights:

* Rainfall deficient at 87% of LPA during June-July 2026: India received above normal rainfall at 103% of LPA in July 2026, sharply exceeding the IMD’s forecast (<94% of LPA; below normal). Overall, cumulative rainfall has remained deficient at 87% of LPA during June-July 2026, amid spatial and temporal unevenness. Given this, the rainfall in the entire SW Monsoon season would amount to 90% of LPA, if actual rainfall in August-September turns out to be at 93% of LPA (upper bound of the IMD’s forecast for these months). This is in line with the IMD’s 2nd long range forecast (90% +/-4% of LPA) which was published in May 2026.

* Kharif sowing down 3% YoY at end-July 2026; rainfall in August crucial: Amid a pick-up in rains in July 2026, the acreage under kharif sowing gathered pace, with the YoY contraction narrowing to ~3% as on July 31, 2026 from ~23% as on June 25, 2026. The sowing of crops like pulses and coarse cereals moderated by 6-8% YoY at end-July 2026, while the YoY contraction is relatively mild in the case of rice (-2.2%) and cotton (-2.4%). On the contrary, sugarcane and oilseeds saw YoY rise in their acreage levels at end-July 2026.

* Sowing in Maharashtra and Karnataka sharply lags owing to poor monsoons: While the YoY kharif acreage deficit narrowed considerably by end-July 2026 on a pan India basis, the recovery remains uneven across states. As on July 31, 2026, kharif sowing declined materially in states such as Maharashtra (-8% YoY), Karnataka (-26%), and Odisha (-12%), which together account for ~25-26% of overall sowing. There is a broad-based acreage contraction across crops in these states, owing to the rainfall lull seen in June 2026. Adequate rainfall and consequent rise in sowing in states such as Karnataka and Maharashtra in August 2026 remains key to support kharif crop outcomes. This would also aid in building up reservoir levels (for rabi crops), given the relatively low irrigation cover in these states.

* Agri GVA to grow by 1.2% YoY in FY2027: ICRA’s assessment suggests that to meet last year’s final area of 112.1 million hectare, kharif sowing in remainder of the 2026 season needs to grow by 13.2% YoY, which seems on the higher side. We expect the cumulative kharif sowing to decline by 1-2% YoY in 2026. However, the non-crop portion has historically supported the overall agri GVA in El-Nino impacted years. Overall, the GVA growth of agriculture, forestry and fishing is expected to print at ~1.2% in FY2027 (+3.0% in FY2026), albeit with risks tilted to downside.

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