Monsoon rains seen above average in 2016 - weather office

By Mayank Bhardwaj and Sankalp Phartiyal

NEW DELHI (Reuters) - India's crucial monsoon rains are expected to be above average in 2016, the weather office said on Tuesday, easing fears over farm and economic growth after two straight droughts hit rural incomes and agricultural output.

Rains in 2016 would be 106 percent of the long-term average, Laxman Singh Rathore, chief of the India Meteorological Department, told a news conference.

Rathore said the monsoon rains could be above average as El Nino - a warming of the eastern Pacific Ocean that can lead to dry spells in South Asia - is fading and giving way to La Nina in which the same waters cool.

The July-to-September monsoon delivers 70 percent of India's annual rainfall. It is critical for the country's 263 million farmers and their rice, cane, corn, cotton and soybean crops, as nearly half of its farmland lacks irrigation.

Bumper rains can spur farm and economic growth and boost rural demand for gold, cars, motorcycles, refrigerators and fertiliser. Two-thirds of India's population depends on farming for its livelihood.

Plentiful rains could also encourage the Reserve Bank of India to cut interest rates after the central bank this month eased its repo rate by 25 basis points to its lowest in more than five years.

"If indeed we end up having a better-than-normal monsoon, and spatial distribution of monsoon and production indicators point to a normal year, then the RBI's comfort for another rate cut will increase," said Gaurav Kapur, senior economist at Royal Bank of Scotland in Mumbai.

A normal or average monsoon means rainfall between 96 percent and 104 percent of a 50-year average of 89 cm during the four-month season from June, the weather office says.

Two straight years of drought in India - for only the fourth time in over a century - have sparked anger among farmers against Prime Minister Narendra Modi.

They blame his government for being slow in reaching out to them after drought ravaged their crops in 2014 and 2015, making a mockery of his election promise that they would make a 50 percent profit on their cost of cultivation.

The farm vote will be critical in determining the fortunes of Modi's nationalist Bharatiya Janata Party (BJP) when the big rural states of Uttar Pradesh and Punjab go to the polls in the first half of next year.

(Reporting by Mayank Bhardwaj and Sankalp Phartiyal; Editing by Rajendra Jadhav and Douglas Busvine)