Prime Minister Manmohan Singh's government has already been grappling with rising prices, a falling rupee and an industrial slowdown. A lack of expected rain isn't making its job any easier.
It was the last thing the Indian economy needed. Already in a slowdown, it is being further battered by a disappointing start to the annual monsoon.
Five weeks into the rainy season, farmers have been staring at parched fields. With the agriculture sector employing 52% of the country's 1.2 billion people, a bleak outlook in farming can have a massive impact on the country as a whole.
Food prices, which have been on the rise since 2007, now threaten to reach alarming peaks. The inflation rate, which is announced on a monthly basis, hit 7.55% for May. It is another severe test for Prime Minister Manmohan Singh, now halfway into his second five-year term. India's central bank, the Reserve Bank of India, has postponed an interest rate cut to revive the faltering economy.
"There are signs of panic in government because a failed monsoon will be the proverbial straw to break the camel's back. We already have a falling rupee, rising fuel prices and negative industrial growth," Sudhanshu Panda of Yes Bank told Khabar South Asia.
The monsoon is a phenomenon unique to South Asia that brings daily showers – often in volumes large enough to cause floods. Triggered by seasonal winds travelling from the Arabian Peninsula, it first hits the southwestern state of Kerala and then moves northeast, eventually reaching Pakistan and Afghanistan.
Rice is the most important staple for over 70% of Indians and its production is heavily reliant on the monsoon. Although it is grown year-round, the monsoon crop accounts for more than half of total output.
Montek Singh Ahluwalia, deputy-chairperson of the Planning Commission, said the government may have to intervene decisively if the country's farmlands and paddies remain dry.
"The government is still optimistic of a revival of the monsoon. But if the rains shortfall is not made up contingency plans will definitely be taken," he told Khabar.
Ayush Pandey, a Delhi University economist, said the authorities are limited in what they can do.
"The only thing the government can do is prevent a breakout of starvation deaths," he said. "Nothing can compensate the farmers for a ruined crop season and industry will be hit by low demand."
Andhra Pradesh already has taken a severe hit. "Farmers usually finish sowing their seeds by mid-June when the rains arrive, but this year it's already July and there is no sign of the monsoon", G.T. Prasad Rao, a senior Agriculture Department official of the state, told Khabar.
"The deficit is between 22% and 45% in Rayalaseema, north Telangana and the coastal region. The worst affected districts are Anantapur (71% deficit) and Nellore (52% deficit)," according to Rao.
The outlook in West Bengal is not much brighter. The monsoon arrived there nine days late in late June, a crucial delay which caused the death of seeds planted earlier in anticipation of timely rains.
According to Paritosh Bhattacharjee, the director of West Bengal's Agriculture Department, farmers were advised to plant their seed beds as close as possible to irrigation canals. The state, which is India's highest rice producer, has "drought conditions" in eight districts, he told The Financial Express.
Like rice, the production of oilseeds and cotton, has been impacted by the lacklustre monsoon.
A bumper cotton crop in 2011 drove optimism for 2012, and cotton farmers planted seeds on a record 29.65 million acres. But rainfall this season has been down more than 35% in the north and west, where most cotton is grown. Textile mill owners expect production to fall by 20% this year.
Exacerbating the misery is the prospect of the El Nino climate pattern – known for its disruptive influence on weather conditions -- hitting India with renewed force in 2012. A report by Columbia University's International Research Institute for Climate and Society found the probability of El Nino influencing the current monsoon season in South Asia is nearly 50%.
The government insists it is aware of the risk and prepared to respond.
"Thankfully, the country's reserve stock of food grains is more than adequate this time to meet the problem," Agriculture Minister Sharad Pawar said at a July 4th media briefing. "The states of India are also preparing for the shock."