India May Receive Near Normal Rains, Driving Growth

April 17 (Bloomberg) -- India’s monsoon, critical to the country’s $1.2 trillion economy, will probably be near normal, helping counter the slowest economic growth in six years.

Rains in the June-September rainy season may be 96 percent of the 50-year average, the New Delhi-based India Meteorological Department said. The forecast is among the most widely watched indicator because the country’s 235 million farmers represent about a fifth of its economy.

Adequate rainfall will help sustain the record 4.3 percent average growth in farm output Prime Minister Manmohan Singh has presided over since 2005, raising incomes among the 742 million Indians who live in the countryside. That may help the Congress party-led government, seeking re-election in polls that started yesterday, to fight the slowest growth since March 2003.

“It’s good news coming amid a plethora of bad ones,” said Sonal Varma, a Mumbai-based economist at Nomura Securities Ltd. “The country definitely needs strong rural demand to boost the economy and good rains hold the key to a higher farm output.”

India, the world’s second-biggest grower of rice and wheat, depends on the June-September rains to water its farms because about 60 percent of arable land isn’t irrigated. Farmers rely on the timing of the monsoon to decide which crops to grow. The season typically starts on June 1.

Shares of fertilizer makers and producers of farm chemicals gained in Mumbai. Coromandel Fertilisers Ltd. added 6.5 percent to 106.65 rupees, Chambal Fertilizers and Chemicals Ltd. climbed 0.6 percent to 44.8 rupees and Rallis India Ltd., a producer of hybrid seeds and pesticides, rose 3.5 percent to 547.65.

Turn Around

Premier Singh told editors in New Delhi on April 15 that he expects the economy to begin turning around in September and that, if returned to power, would strive to achieve economic growth of 9 percent to 10 percent. India’s five-phase polls end on May 13, with counting of votes set for May 16.

Asia’s third-biggest economy may have grown at less than 7 percent in the year ended March 31. Gross domestic product may expand by about 6.5 percent in the year started April 1 as the global recession cools exports and saps consumer demand, Montek Singh Ahluwalia, deputy chairman of India’s Planning Commission, said yesterday. Overseas sales make up 15 percent of the economy.

“I don’t think the monsoon will be huge boost because the macro factors are weighing heavily on the economy,” said Bharat K. Rekapalli, a director with Global Financial Markets in the southern city of Hyderabad. “People will wait 30-40 days for a more accurate picture about the monsoon.”

Long-Period Average

Actual rainfall can be five percent more or less than the forecast, the bureau said. It considers rains to be near normal if they are between 96 and 104 percent of the long-range average. Today’s forecast will be updated in June, the bureau said.

Last year, rains were 98 percent of the long-range average, compared with a forecast of 100 percent. In 2007, showers were forecast to be 93 percent of the average, and actual showers were 105 percent of the mean.

The weather agency uses experimental forecasts prepared by agencies including the Indian Institute of Tropical Meteorology and the Centre for Mathematical Modelling & Computer Simulation, and estimates from overseas agencies such as the U.S.-based National Centers for Environmental Prediction and International Research Institute for Climate and Society.