UPDATE 2-India monsoon strengthens further, crops to gain

* Monsoon rains revive sharply, boost soybean, cane crops

* Favourable rainfall likely to continue

* August rainfall important for crops (Adds details, quotes)

By Ratnajyoti Dutta

NEW DELHI, July 29 (Reuters) - India's monsoon surged in the past week to deliver its highest weekly rainfall this season, raising hopes of strong harvests in the world's leading consumer of rice, cooking oils and sugar.

Revived monsoon rains and higher food output would spur the government to lift a ban on wheat exports, which would calm prices that surged to a 13-month high on Wednesday on worries of dwindling supplies from drought-hit Russia.

Adequate monsoon rains would also encourage India to lift a ban on exports of non-basmati rice and levy a tax on sugar imports, which it freed of duty after drought hit domestic output last year.

Monsoon rains, crucial for a rebound in farm output after last year's drought, were 38 percent above normal in the week to July 28, bouncing back from a 17-percent deficit the previous week, data from the India Meteorological Department showed on Thursday. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^ For a Q+A on the impact of monsoon rains, see [ID:nSGE66R0M1] For a graphic on weekly rainfall, see: here For a Q+A on Indian policy on wheat exports, see [ID:nSGE66S0A4] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^

Heavy, well-distributed showers in the past week cut the shortfall in monsoon rains from the start of June to 5 percent on Wednesday from 16 percent 10 days ago.

This is expected to boost planting and production of oilseeds, rice and cane in the world's top vegetable oils buyer, biggest sugar consumer and leading rice consumer if rainfall is normal in coming weeks.

"Rainfall in August will still be very important. If rains continue to be like this in August, then agricultural productivity would be very good," said Gurbachan Singh, India's agriculture commissioner.

The weather office said in its latest forecast that widespread rainfall was expected in most parts of India, particularly in the cane- and rice-growing northern regions in the next five days.

"Heavy rains in the past week can be credited to developing La Nina effect on the Indian monsoon," D. Sivananda Pai, director at the western city Pune-based National Climate Center, told Reuters.

Pai, a leading forecaster at the India Meteorological Department, last week said the gap in the monsoon rains in the June-September period would narrow despite a lean patch in the middle of July. [ID:nSGE66K0IL]

India's policymakers hope good monsoon rains will help rein in soaring inflation, which has stood in double digit figures for five consecutive months.

India's opposition has stalled proceedings in parliament for the third straight day over rising prices, attacking the federal government on what is proving to be a major policy challenge. (Reporting by Ratnajyoti Dutta; Editing by Himangshu Watts)