The country’s Meteorological Department on Thursday predicted normal rainfall in India this year. It stated that the rainfall is expected to be around 99% of the long period average. It sits in the range of 94% to 104% which it considers normal. If this estimate turns out to be true, it would make 2022 the fourth consecutive year of normal rainfall. That private weather forecaster Skymet has also predicted that a normal monsoon brightens the chances of one.
Together, these augurs well for our otherwise worrying inflation outlook. Globally, prices have jumped, shaken by the Ukraine war. In India, retail inflation has gone well above the Reserve Bank of India’s (RBI) upper limit of 6% at 6.95% in March. This has made monetary policy tightening inevitable. The central bank recently revised its inflation forecast for this fiscal year from 4.5% to 5.7%, but it may also be over-optimistic, given that the effects of the oil shock are about to begin fully. Even before the prices went up. Core inflation, stripped volatile fuel and food have also increased. Thankfully, RBI doesn’t have to worry about bad rains this year. There’s already a lot of challenge on its radar.