Rural demand check: El Niño spoiling the party?

研报英文原文证据摘录

Rural demand check: El Niño spoiling the party?

FICC Research

EM Strategy

24 July 2026

India

Rural demand check: El Niño

spoiling the party?

Below-normal rains and El Niño are expected to weigh on Aastha Gudwani

rural demand amid likely lower real income growth this year. +91 (0) 22 6719 6075

aastha.gudwani@barclays.com

Sowing is catching up, but is still down y/y, constraining BSIPL, India

outlook for harvest. Impact on cereal prices cushioned by Amruta Ghare

food stocks, pulses and oil seeds warrant monitoring. +91 (0) 22 6719 6074 amruta.ghare@barclays.com

BSIPL, India

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• A “below normal” monsoon rainfall forecast by the IMD, deficient rains season to date and

further strengthening of El Niño conditions are serious headwinds to India’s macro outlook.

We see a three-way impact: agricultural output, prices and rural incomes/demand.

• For output, beyond the headline rainfall number, spatial and temporal distribution of

monsoon rain matters. After a poor start in June, monsoon rains are progressing slowly and

improvement in kharif sowing reflects that.

• Proxy indicators of rural demand until the onset of monsoon were generally strong, but we

are concerned about rural demand compression amid lower real rural income growth in

FY26-27; rural consumer confidence is tapering too.

• As for prices, a solid buffer stock position for cereals offers cushion for rice, if supply

disappoints. Pulses, oil seeds and coarse cereals may create price pressures, aggravated by

import channels.