India forecasts near-normal monsoon rains in 2008

India's monsoon rains are likely to be near normal this year, the government forecast on Wednesday, promising robust harvests which could bolster growth in Asia's third-largest economy and soothe global food worries.
This year, the rains will be more closely watched than ever, with global commodity markets watchful for any glitch in wheat or rice supplies that could put more strain on low stocks.
Fast rising food prices, largely driven by global factors, have contributed to building price pressures around the world and this year have become a social issue for nations facing shortages of staple foods, most notably rice.
New Delhi is battling its highest inflation in three years, and food prices have been a major driver.
"Good monsoon means good growth. Agriculture production will go up, prices will fall. There will be more water, which means increase in productivity. Farm income will go up," Science and Technology Minister Kapil Sibal told reporters.
Farm output has lagged growth in the economy in recent years, and rises and falls depending on the strength of the monsoon rains, which provide most of the water for crop growth from June to September.
Sibal said rainfall would be 99 percent of the long-term average and the government would regard the monsoon as near normal if rainfall was 96-104 percent of that average.
The government will update its forecast in June.
With only 40 percent of India's cultivatable land irrigated, the monsoon is an important influence on rural output and farm incomes. About two-thirds of India's people and a fifth of its economy dependent on agriculture.
Good rains mean sufficient soil moisture for crops, mainly wheat and oilseeds, sown in the winter and harvested from March.
India had to import millions of tonnes of wheat in 2006, the first overseas purchases for six years, after a poor harvest, and went back to global markets again last year, contributing to a spike in world prices.
Last year's wheat output was around 75 million tonnes, helped by good rains and India's farm minister has said he expects a similar harvest this year.

OFF THE MARK
The government's forecasts have often been off the mark in the past and Sibal said the forecast had a 5 percent margin of error.
Last year, the monsoon exceeded the average by 5 percent, despite initial forecasts for a 5 percent shortfall.
"The jury is still out on how monsoons will finally pan out, but if we do get near-normal monsoons, then it is good news both from the inflation and growth perspective," said Sonal Varma, economist at Lehman Brothers in Mumbai.
Rising food prices have become a hot political issue in India and a real headache for a government which must face the electorate at national polls within the next 12 months and will be tested by a series of local elections this year.
Analysts say the distribution of rainfall in the country of more than a billion people was a critical factor in determining the impact on farm output.
"More important than the numbers, the spread and distribution are key elements here," said Amol Tilak, research analyst at Kotak Commodity Services Ltd in Mumbai.
"We can expect an increase in acreage in oilseeds primarily due to the fact that the Indian farmer has made a huge profit. We can expect acreage under cotton to stagnate, slight improvement in groundnut and a drop in acreage under sugarcane cultivation," he said.