* Prime minister says country facing a drought
* Finance ministry sticks to growth target for FY10
* India's hydropower supply falls 10 pct yr/yr
* For full monsoon coverage see [ID:nMONSOON]
By Krittivas Mukherjee and C.J. Kuncheria
NEW DELHI, Aug 18 (Reuters) - Meagre monsoon rains have pushed India to the brink of drought, putting pressure on food prices and energy supplies and imperiling economic growth, but bulging stocks of wheat and rice will provide a buffer, top officials said on Tuesday.
"We are staring at the prospect of an impending drought," Prime Minister Manmohan Singh told a meeting of environment ministers of Indian states.
India's vital monsoon rains have been 29 percent below normal since the beginning of the June-September season, hurting crops such as rice and cane and triggering a sharp rise in food prices in India and sugar futures abroad.
Monsoon rains revived in the past few days, particularly in the cane-producing Uttar Pradesh state, where the local government has declared a drought in most of the districts, but this has not eased concerns of government and trade officials.
A central bank deputy governor said erratic monsoon rains may put pressure on prices, but the deputy chairman of India's Planning Commission said India had enough stocks of food to counter inflationary pressures.
Trade Secretary Rahul Khullar, meanwhile, said the government was not considering a ban on exports of corn and soymeal.
Finance Minister Pranab Mukherjee said on Tuesday he expects economic growth in 2009/10 to be over 6 percent, as forecast earlier and in line with a central bank estimate, despite the monsoon shortfall. .
He earlier said that "the ground reality was that the drought has set in," according to a government statement late on Monday.
Some private economists have said poor rains could trim economic growth by as much as 2 percentage points in the fiscal year that ends in March. Investors, meanwhile, are growing nervous that a poor harvest could crimp rural spending and erode profit growth for sellers of consumer goods.
Farming accounts for just 17 percent of the Indian economy but rural consumption makes up more than half of domestic demand.
India's economic growth slowed to 6.7 percent in its most recent fiscal year after three straight years of growth of at least 9 percent.
POWER SUPPLY
Low rainfall has slowed the refilling of India's main water reservoirs, threatening the supply of hydropower, which accounts for a quarter of India's generation, and reducing availability of water to irrigate winter-sown crops such as wheat and rapeseed.
Hydropower generation in India had fallen 10 percent from last year, Central Electricity Authority Chairman Rakesh Nath told reporters.
The weather office has forecast widespread rains in the key cane-growing areas in north and northwest India as well as the central Indian state of Madhya Pradesh, the main soybean-growing region.
India's farm minister, Sharad Pawar, said on Monday that the country needed to raise planting of winter-sown crops and improve irrigation to make up for the damage to farms. [ID:nDEL454082].
Monsoon rains are vital for India's summer-sown crops such as rice, sugarcane and soybeans because the majority of the farmers do not have access to irrigation facilities.
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