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UPDATE 1-India's monsoon rainfall seen average in 2013 -minister

Source : REUTERS
Last Updated: Fri, Apr 26, 2013 12:00 hrs

* First official forecast points to bumper grain supplies

* Rainfall expected to be 98 pct of long-term average

* Situation in drought-hit southern states to clear by June

* Monsoon arrival date forecast to be issued May 15

By Ratnajyoti Dutta and Mayank Bhardwaj

NEW DELHI, April 26 (Reuters) - India expects total monsoon rainfall to be average in 2013, a minister said on Friday, strengthening prospects for one of the world's biggest grains producers to avoid widespread drought for a fourth straight year.

India's first official forecast confirms a call by global experts last week, and points to bumper grain supplies that would swell huge current stockpiles and hold down world food prices.

"I've very good news for farmers as well as others, the monsoon is likely to be normal this year," Earth Sciences Minister S. Jaipal Reddy told a news conference in the Indian capital.

Monsoon rains are vital for the 55 percent of the country's farmland that lacks irrigation facilities, and can make the difference between India being an exporter or importer of staples such as rice and sugar.

Rainfall is expected to be 98 percent of the long-term average during the June to September season, Reddy said. Rains between 96 percent and 104 percent of a 50-year average of 89 cm for the entire season are considered normal, or average.

The last time there was a drought with rainfall below this range was in 2009 and prior to that, in 2004.

Southern states already parched by their worst drought in four decades should see some relief, but their exact situation will be clear in June, India's weather office head L.S. Rathore added, easing fears their rice and sugar cane harvests could be hurt again.

The Indian Meteorological Department (IMD) will forecast the probable arrival date for the monsoon on May 15, Rathore added. Its next forecast for monsoon rainfall will be in June.

Agriculture accounts for 15 percent of gross domestic product in Asia's third-largest economy, where more than 800 million people live in rural areas. Ample harvests also help keep a lid on inflation, now running near 9 percent.

"Normal monsoon rain can ease food inflation from stubbornly high levels," said Harish Galipalli, head of research for commodities at JRG Wealth Management in Hyderabad.

"It can boost grains production and allow India to maintain its position as a leading exporter in the world."

Rain last year fell only about 7 percent below average in the season, but drought ravaged an area in India's southern and western states that is roughly the size of southern Europe, and which is still suffering.

A normal monsoon also helps boost the rural economy and with it consumption, especially gold buying, a traditional form of investment in large areas of the countryside with few banks.

"The whole cycle of money depends on the monsoon," said Kumar Jain, vice-chairman of the Mumbai Jewellers' Association. "If there is good agricultural production, it will benefit the whole value chain. There could be higher gold imports due to a fall in prices along with normal rains."

India will issue its final monsoon forecast in June, the IMD's Lahore said, after the southwest monsoon has typically covered half the country.

The El Nino weather phenomenon, which can trigger drought in South Asia, so far looks unlikely to have any impact.

"An El Nino neutral condition is likely to continue this monsoon," said Shailesh Nayak, the earth sciences secretary.




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