India forecasts near-normal monsoon rains in 2008

By Biman Mukherji and Mayank Bhardwaj

NEW DELHI (Reuters) - 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.