India Weather Office Predicts Normal Monsoon

INDIA: April 21, 2005


NEW DELHI - India's weather office on Wednesday forecast normal monsoon rains this year, suggesting brisk growth for the farm-dependent economy and a boost to business confidence.


The southwest monsoon is vital to the economic health of Asia's fourth-largest economy, with the farm sector generating about a quarter of the country's gross domestic product.

Science and Technology Minister Kapil Sibal told reporters the exact date when the June-September rains would hit the coast would be known in the second week of May.

"The India Meteorological Department's operational long range forecast for the 2005 southwest monsoon season is that the rainfall for the country as a whole is likely to be 98 percent of the long period average with an error of five percent," Sibal said.

"On the basis of the parameters available, we believe this year's monsoon is going to be normal."

The forecast will be updated at the end of June.

Nearly two-thirds of India's billion-plus people earn money from agriculture, so a timely arrival and an even distribution of rain are key indicators of eventual demand in the economy.

Last week, the Bangalore-based Centre for Mathematical Modelling and Computer Simulation said the monsoon would arrive early and bring above-normal rain for most of the country.

Analysts and economists said the monsoon as forecast by the weather office would boost growth in the farm sector and the $600 billion economy as a whole.

"If the monsoon turns out normal, we are expecting 3 percent agricultural growth. Then overall growth should be around 6.6 percent," said Riyaz Khan, economist with the Centre for Monitoring Indian Economy.


GROWTH MOMENTUM

Erratic rains in July-September last year caused farm output in October-December to fall 1.1 percent on the previous year, slowing overall annual growth in the quarter to 6.2 percent -- the weakest expansion in more than a year.

Economists expect momentum in the broad economy to be sustained this year, with growth forecast between 6.5 and 7.0 percent, marking a third straight year of robust expansion.

They said the spread of rains would also crucial.

"But this forecast is bound to have a positive impact for business confidence," said A. Prasanna, economist with ICICI Securities at Bombay.

India's weather office had forecast 100 percent of long period average rains in the 2004 season. But the crucial month of July was virtually dry and dragged down seasonal rainfall.

Weather officials said deficient rainfall in 2004 was caused by El Nino, the warming of the Pacific currents.

Sibal said: "At the moment El Nino conditions are neutral but that can change in June."

Commodity traders said a normal monsoon forecast was positive for agriculture, especially sugar and edible oils.

S.L. Jain, secretary general of the Sugar Mills Association, said: "It should help boost production next year to at least 17.5 million tonnes."

India had a bad cane crop in 2004 after poor rains and is currently a major raw sugar importer.

"The news brings a lot of relief to the vegetable oil industry," said Sandeep Bajoria, president of the Central Organisation of Oil Industry and Trade.

About 70 percent of the oilseed crop is grown in rainfed areas of India, the world's largest edible oil importer.


Story by Hari Ramachandran and Naveen Thukral


REUTERS NEWS SERVICE