India grain stocks suffice if monsoon bad - Virmani

NEW DELHI (Reuters) - India's overflowing grain bins will help tide the country over any food shortage even if the annual monsoon rains fail again next year, a top economic adviser to the government said on Tuesday.

Two consecutive bumper harvests have helped India, the world's second-biggest producer of wheat and rice, buy record quantities of grains from domestic farmers, helping it withstand this year's weak monsoon rains, which were the worst in 37 years.

The June-September monsoon rains are vital for the country, where only 40 percent of the farms are irrigated and about two thirds of the people live in villages.

Arvind Virmani, chief economic adviser at the Finance Ministry told Reuters in an interview that next year India's grain stocks would be higher than the target, which is called "buffer stock norms".

Asked whether India would be able to meet its food demand if the monsoon failed in 2010, he said: "Of course we can. When we say the stock is above the buffer stock, you can cope with another bad monsoon."

On Sept. 1, India had 30.1 million tonnes of wheat stocks, up from 23.2 million tonnes a year earlier, and rice stocks had doubled to 17.2 million tonnes from 8.5 million tonnes.

Virmani said the government could free some stocks from its warehouses to check rising food prices.

"That destocking will occur," he said.

Domestic food prices have risen 15.45 percent by the end of September, pushing up the headline inflation rate.

(Reporting by Alistair Scrutton and Rajkumar Ray, editing by Anthony Barker)