Although the southwest monsoon has covered most parts of India, the average rainfall in this vast nation has been 23 percent below normal prompting many farmers, especially those in the rural areas, to sell their gold belongings as they anticipate a crop failure.

A 38-year-old farmer Piyush Khanolkar from the Marathawada district in western state of Maharashtra in India has sold to the village jewelry shop 10 grams of gold which he had bought over the last five years.

He said he might need the money to feed his family if the harvest from his farm is bad.

A paddy farmer from the central Indian state of Madhya Pradesh Prabhu Rajput also sold some gold but his reason was different.

"I sold gold to buy farm inputs. I am expecting a good monsoon and if the crop is good I will again be able to buy back the gold that I just sold," he said over telephone.

Less rainfall has forced farmers, mostly from Maharashtra, Gujarat, Rajasthan, Madhya Pradesh, Uttar Pradesh and Bihar to sell the gold that they have accumulated over a period of time.

Most Indians, particularly in the countryside, believe that gold is a valuable asset since it seldom depreciates in value.

"Many farmers in small towns are selling their gold belongings to use the money to buy agricultural inputs or keep the money as contingency fund in case of crop failure. They are taking advantage of the high price of gold too," Ajoy Chandra of Jewellery Museum here said

According Bombay Bullion Association president Pritviraj Kothari, scrap gold sales in the market was already on the rise.

He said that last year, the volume of scrap gold sold in the market was to the tune of 130 tonne. This year, scrap gold sales may go up to 300 tonne and importation of the metal will be much less.

"The monsoon has been disappointing until now, damping our expectations of brisk gold purchases," Kothari said.

Kothari said that if the trend continues for over a month, farmers would not be able to buy gold or other metals. "Rather, there will be more sales of scrap gold by the farming community. Imports of gold, therefore, will be lower as availability in the market will be greater," Kothari said.

India had imported 878 tonne of gold in 2011.

In the fourth week of the season that ended June 27, rains that provide most of the water for 55 percent of arable land in India were 18 percent below average, reflecting a lull in agricultural activity across the oilseed-growing areas of central India.

India is sticking to its forecast of average monsoon rains this year despite a slow start, with the heaviest rainfall expected in July and August. This would help water the earth for sowing and for planted crops to mature.

Rains from June 1 have been 23 percent below average compared to a 10.7 percent surplus in June 1 to 29 last year.

Yogesh Kumar Dahiya, chairman of the Farmers Forum of Saharanpur in north Indian state of Uttar Pradesh said: "The cost- to-benefit ratio is going down in agriculture and therefore farmers are not in a position to buy farm inputs that have become costlier."

Dahiya said that in Saharanpur, many farmers have already sold their household gold and use the money to build small irrigation dikes in case the monsoon season is not good.