Salaried households, middle class and rural poor bearing the Super El Niño brunt

India is confronting the cascading effects of a powerful Super El Niño event that has already delivered one of the weakest southwest monsoons in more than a decade. Rainfall for the June–September season ended at roughly 87 per cent of the long-period average, a deficit of 12.6 to 15 per cent. This makes it the fourth driest monsoon since 2001 and the 13th driest since 1901. With the phenomenon expected to peak between October and December and persist into early 2027, the daily-needs cost index is under sustained upward pressure. The salaried class, middle-income families and rural poor stand to suffer the sharpest erosion of purchasing power, while large commercial players in water bottling and organised dairy remain relatively insulated from the worst effects.

Historical patterns during El Niño and rainfall-deficit years are unambiguous. Kharif yields typically fall by an average of 6.5 per cent in deficit years and as much as 8.4 per cent during El Niño episodes, while overall agricultural output contracts by about 7–10 per cent compared with the 4–6 per cent growth recorded in normal years. This season, areas that were sown under food grains and oilseeds declined by a relatively modest 1.2 per cent year-on-year, yet yield losses are expected to transmit rapidly into higher prices. Rice-acreage alone fell by more than 15 lakh hectares in the early phase of the season.

Early market signals already confirm the strain: in a span of roughly 20 days, sugar prices rose 10.16 per cent, milk 6.12 per cent, flour 6.67 per cent and pulses 4.68 per cent. Analysts project that food inflation could breach seven per cent if the rabi season also faces moisture stress. Sugar production forecasts have already been revised sharply downward — from 33.6 million tonnes to 29.5 million tonnes — with mill prices at risk of climbing further toward ₹50 per kg during 2027.

Rural India faces a dual crisis of water and fodder. At the end of the monsoon, the 178 major reservoirs monitored by the Central Water Commission (CWC) held significantly less water than a year earlier — roughly 21 per cent lower — and well below the 10-year average.

In Telangana, the Krishna and Godavari reservoirs stood at just 241 TMC against a combined capacity of 585 TMC. Earlier in the season, live storage in 150 major reservoirs had dipped to around 24 per cent of capacity. Groundwater levels in key Deccan and central Indian districts have declined further after successive weak recharge seasons. Drought conditions have been declared across five states, with Maharashtra reporting drought in about three-quarters of its sub-districts and more than half the country’s landmass experiencing some degree of drought. The result is growing scarcity of potable water in villages even as commercial bottling units and multinational beverage operations continue extraction and distribution with minimal disruption. This asymmetry underscores a deeper inequity: household and small-scale needs compete with industrial demand under increasingly stressed hydrological conditions.

Dairy farming reveals a similar structural divide. Large dairies, with better access to feed markets, storage facilities and transport networks, have greater capacity to absorb cost increases or source alternatives from distant markets. In contrast, rural smallholders who rely on rain-fed fodder and local crop residues confront acute shortages. Feed already accounts for 60–70 per cent of milk production costs in most regions.

Deficient monsoon years routinely trigger sharp fodder price spikes, herd reductions and lower milk yields. Industry executives have warned of further milk price increases of 3–4 per cent if rainfall remains below normal in key producing regions. Early reports from drought-affected clusters already show milk collection volumes falling sharply in several districts, directly squeezing both producer incomes and consumer budgets at the same time.

For the salaried middle class, fixed nominal incomes meet rising real costs of food, cooking fuel, water and electricity. Rural households are even more exposed: food accounts for approximately 42 per cent of the rural consumer price index basket compared with about 30 per cent in urban India. Real rural wage growth has historically slowed to just 0.5–0.9 per cent per annum during rainfall-deficit and El Niño years — roughly a quarter of the 1.8 per cent growth seen in normal years. Reduced food-grain output simultaneously lifts prices while shrinking rural incomes, creating a classic squeeze that slows consumption and deepens distress across the countryside.

Power systems face parallel strain as hydropower generation falls — by as much as 16 per cent in peak monsoon months in some assessments — while cooling demand rises with elevated temperatures, further pressuring household electricity bills and adding another layer of cost for families already stretched by food inflation.

The Super El Niño’s influence is expected to extend well into 2027, raising the risk of warmer winters, depleted soil moisture for rabi crops and continued pressure on water and power systems. While government contingency plans, buffer stocks and targeted relief measures can mitigate some of the immediate effects, the structural vulnerability of rain-fed agriculture and the limited adaptive capacity of lower- and middle-income households mean the human and economic costs will not be evenly distributed. Rural demand, which accounts for a significant share of consumption for many consumer goods companies, is likely to weaken, with potential second-round effects on overall growth.

This year’s Super El Niño is far more than a temporary climatic disruption. It is a stark reminder of how climate shocks systematically widen existing inequalities. Salaried households, the middle class and the rural poor are being forced to absorb rising prices of essential commodities, dwindling access to drinking water and shrinking incomes, while better-resourced commercial interests in bottling and organised dairy continue operations with far greater resilience.

Unless India accelerates investment in climate-resilient farming, decentralised water security, reliable fodder systems and fairer allocation of scarce resources, such events will continue to impose their heaviest costs on those least equipped to bear them. Equitable adaptation is no longer optional; it is an urgent necessity for social and economic stability.

ABOUT THE AUTHOR

P V Kondal Rao

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