In addition, inflation risks remain elevated due to below-normal monsoon rainfall. Although cumulative rainfall has been 13% below normal, sowing activity was down only 1.2% year-on-year. However, strong sowing may not necessarily translate into higher output, as uncertainty around crop yields and the winter crop outlook persists. On growth, we do not believe a 50-75 bps rate-hike cycle will materially derail household consumption. Instead, we see external headwinds—higher-for-longer global oil prices and weather disruptions—weighing on consumer sentiment, real incomes and spending, while squeezing industrial margins in some sectors.
