NEW DELHI, April 19 (Reuters) - Expectations of a normal monsoon in India for a second straight year have raised hopes of higher farm output, which could tame high food prices and help persuade the government to free rice and wheat exports.
India is one of the world's top producers and consumers of a range of commodities such as sugar, grains, oilseeds and cooking oils.
The government on Tuesday forecast normal rains for the 2011 monsoon.
A bad monsoon can force India into the international markets as a buyer, as happened in 2009 after initial forecasts had called for normal rains.
WHAT DOES A "NORMAL" MONSOON MEAN?
A normal monsoon means the country receives rainfall between 96-104 percent of a 50-year average of 89 centimetres during a four-month season from June, according to the India's weather office classification.
WHAT DOES A "BAD" MONSOON MEAN?
Rainfall below 90 percent of the long period average will be treated as a bad monsoon, while rainfall above 110 percent of the average would mean an excess monsoon.
WHEN DOES THE MONSOON ARRIVE IN INDIA?
The southwest monsoon arrives in India on the southern coast and usually hits the southern state of Kerala on June 1. After hitting the southern tip, it takes about a week to cover the coffee, tea and rubber growing areas of south India.
HOW FAR AND FAST DOES THE MONSOON TRAVEL?
The monsoon spreads to the rice-growing areas of eastern parts of the country in the first 10 days. It usually covers half of the country in the first fortnight and enters the oilseed-producing areas of central India in the third week of June. Cotton-growing areas in the western region get rains by the first week of July.
By mid-July, the monsoon covers the entire country.
DOES A NORMAL MONSOON RULE OUT DROUGHT?
No. A normal monsoon indicates overall rainfall to be good but does not rule out drought in some areas.
Distribution of rains over key crop regions is important for the overall performance of the monsoon.
HOW DOES THE MONSOON IMPACT CROPS?
About 60 percent of farms depend on rainfall. Even in regions that have irrigation facilities, monsoon rains are beneficial for crops and help improve yields.
DOES THE MONSOON IMPACT OTHER SECTORS OF THE ECONOMY?
The farm sector's contribution to the overall economy is 14.6 percent. It is the key source of income for the rural population, which accounts for two-thirds of India's 1.2 billion people.
Normal rains help improve farm incomes and thus increase demand for cars, motorcycles and consumer goods. Farmers often turn to gold as an option to invest their extra cash in a good output year, boosting demand -- and prices.
Drought increases rural distress, prompting the government to increase expenditures on subsidies and welfare schemes for rural areas, which provide the bulk of its support.
DOES IT IMPACT MONETARY POLICY?
India is currently struggling with high inflation, driven in part by food and fuel prices. A normal monsoon would ease supplies and could rein in food prices. It would also help to support incomes and thus allow the government more flexibility on passing on high oil prices on to consumers and cutting subsidy bills.
Reducing inflation could prompt the central bank to ease monetary policy after eight successive interest rate rises.
HOW DOES THE MONSOON IMPACT THE ENERGY SECTOR?
Monsoon rains replenish reservoirs and increase ground-water levels, improving irrigation, which cuts the need for diesel in pumping water from wells. It also helps hydroelectric power generation.
If a drought means drinking water is scarce, the government can decide to cut supply to power generators or farms and provide more water to households. (Reporting by Ratnajyoti Dutta in NEW DELHI; Editing by Krittivas Mukherjee and Jane Baird)