Food price inflation, impact on purchasing power: IMF flags Super El Niño risks to India

India continues to be an engine of global economic growth, supported by robust domestic demand and strong services activity, IMF Communications Director Julie Kozack said at a press conference on Thursday. "So these are risks that we see that India faces, but right now those risks have not materialised," Kozack said. The IMF expects to review its projections in the January update of its World Economic Outlook (WEO) if the risks associated with the weather event materialise.

(Image generated via AI) Earlier this month, the IMF raised its growth forecast for India to 7% for both FY27 and FY28. In its July projections, the lender had estimated growth of 6.4% for FY27 and 6.7% for FY28. The revised outlook shows the resilience of domestic demand and the strength of the services sector, even as weather-related uncertainties pose a potential risk to the growth trajectory. Crude, drought or both?

"So, we see it really as a risk going forward, and of course depending on whether that risk materialises, we will reassess our growth projections for India the next time in our January WEO update," Kozack said. "But for now what we see is quite strong growth momentum in India, and it continues to be an engine of growth," she added. The IMF has identified several possible channels through which a Super El Niño could affect India's economy.

Lower agricultural yields could push up food prices, while rising inflation could erode household purchasing power. These risks could weigh on consumption if they translate into higher costs for households. For now, however, the IMF has not incorporated a change in its growth outlook on account of these potential weather-related effects. The January WEO update will provide an opportunity to reassess the outlook in light of how the situation develops.

Kerala regulator approves Rs 131 crore power purchases amid deficit Separately, the Kerala State Electricity Regulatory Commission (KSERC) on Thursday granted partial approval to the Kerala State Electricity Board (KSEB) to procure electricity worth Rs 131.26 crore between November 2026 and March 2027 to address a power deficit in the state. A commission bench comprising Chairman TK Jose and member B Pradeep approved the purchase of 164.16 million units (MU) at an average rate of around Rs 8 per unit through the Discovery of Efficient Electricity Price (DEEP) portal operated by the Union Ministry of Power.

KSEB had sought approval to procure 356.63 MU between October 1, 2026, and April 30, 2027, at a total cost of Rs 336.25 crore, with an average rate of Rs 9.43 per unit. India meets record 270.8 GW peak power demand amid El Niño heat, but grid bottlenecks cause gaps (AI Image) Noting the commission's order, PTI reported that KSEB can procure 145 MW in November at Rs 7.44 per unit and 120 MW in December at Rs 7.99 per unit.

For January and February 2027, the board has been permitted to purchase 240 MW in each month at Rs 6.99 per unit. 98 to Rs 10 per unit. However, the commission did not approve the proposed procurement for April 2027, citing the small quantities of electricity offered during both night off-peak and peak hours and the high rates quoted. KSEB had proposed purchasing 115 MW during night off-peak hours at Rs 13.89 per unit, along with 75 MW during peak hours.

According to the commission, Kerala's power deficit has worsened because of reduced hydel generation following the El Niño effect and a poor monsoon, alongside a sharp increase in electricity demand across the state. The regulator said purchases during night off-peak hours were approved primarily to conserve water in reservoirs, allowing it to be used for hydel power generation during the upcoming summer months.