UPDATE 1-India sees 2017 monsoon rains at 98 pct of long-term average

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NEW DELHI, June 6 (Reuters) - India's crucial monsoon rains are expected to reach 98 percent of the long-term average this year, the state-run weather office said on Tuesday, 2 percentage points higher than its previous forecast, potentially boosting farm incomes and economic growth.

The monsoon delivers about 70 percent of India's annual rainfall, critical for crops such as rice, cane, corn, cotton and soybeans because nearly half of the country's farmland lacks irrigation.

Monthly rainfall across the country is likely to be 96 percent of its long-term average during July, and 99 percent of the average during August, both with a model error of 9 percent, the India Meteorological Department (IMD) said in a statement.

Reuters reported in May that India was likely to receive higher monsoon rainfall than previously forecast as concern over the El Nino weather pattern eased.

El Nino, a warming of ocean surface temperatures in the eastern and central Pacific that typically occurs every few years and was linked to crop damage, fires and flash floods, faded in 2016.

India's forecasting systems currently indicates neutral El Nino conditions until the end of this year, the IMD said, in contrast to the outlook from other global climate centers which see a 60 percent probability of weak El Nino conditions developing during the second half of this year.

In April, the IMD forecast this year's monsoon rains at 96 percent of the 50-year average of 89 centimeters.

(Reporting by Sudarshan Varadhan; Editing by Sherry Jacob-Phillips and Mark Potter)