Even as the Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday trimmed its inflation forecast, it flagged El Niño-driven risks to agriculture and rural demand, warning that a deficient and uneven southwest monsoon could cloud the domestic growth outlook despite government measures to cushion the impact.
Deficient and uneven south-west monsoon amidst El Niño conditions poses some risks to the agriculture sector’s outlook and rural demand, said RBI Governor Sanjay Malhotra.
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Nevertheless, the government’s initiatives pertaining to crop diversification, including short-duration as well as climate-resilient crops, and water harvesting and conservation, among others, are expected to mitigate the impact, he stated in his monetary policy address.
“Furthermore, sustained momentum in services, continuing impact of GST rationalisation, and broadly stable employment conditions should continue to support urban demand.”
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