The southwest monsoon, which accounts for most of the annual rainfall received in India, is crucial for the country's largely farm-dependent economy.
The monsoon season powers the country's agriculture sector, which contributed 15% to the country’s gross domestic product (GDP) in FY24 and provided employment to 45% of the overall workforce.
A normal or mildly surplus rainfall is usually linked to increased earnings for farmers, better livelihood for farm labourers, controlled food inflation, and high rural consumption.
A good monsoon leads to lower rural unemployment, as the boost in farm activity provides more daily-earning opportunities for landless labourers.
A robust monsoon season bolsters the RBI's efforts to curb inflation. One of the direct impacts is seen on food prices, which are moderated in cases of normal or above-normal rainfall.