India is forecasting that annual monsoon rains, which are critical for the country's food grain production, will be normal. As Anjana Pasricha reports from New Delhi, India is one of the world's largest producers of grains such as rice and wheat, whose global stocks are running low.

An Indian commuter makes his way along a waterlogged street after a heavy downpour in Amritsar, 05 Apr 2008

Forecasts by Indian meteorologists indicate that monsoons rains, which come from June to September, will be sufficient for farmers to sow rice and lentils - the staple diet of many Indians.

The monsoons, which provide 80 percent of India's rains, have always been crucial for the country, because nearly two-thirds of the farmland is not irrigated.

But they are especially important this year when global reserves of grains such as rice and wheat are running low, triggering a jump in food prices.

India is the world's second largest producer of rice and wheat, and a decade ago it grew enough for its domestic needs. But in recent years, food production has stagnated while the population has jumped to over one billion, making it necessary for India to import food such as wheat, lentils and oilseeds.

Sumita Kale is chief economist at New Delhi-based research group, Indicus Analytics. She says food grain production in India this year will be carefully watched worldwide, because imports by India impact global prices.

"The minute the people, the traders know that India is in the market to import, it obviously raises the prices," said Kale.

A good monsoon could also help the Indian government's drive to control domestic prices, which have been rising dramatically. In just one year, prices of rice and lentils are up nearly 20 percent, wheat 30 percent and oil seeds 40 percent.

The high food prices have led to inflation of around seven percent. That is causing worries in a country where nearly one-quarter of the population lives on less than a dollar a day despite a growing economy.

Economist Kale says high food prices have a devastating impact on populous countries like India with large numbers of poor people.

"People in higher middle classes, they can afford to shift their expenditure from other items to food if necessary, it is the poorer people who have a larger share of their income spent on food, for the poorer people they really don't have a choice," she said.

The forecast of normal monsoon rains has raised hopes in India that food prices might stabilize. But observers say no one is breathing easy till the rains actually arrive because past predictions have not always been on target.