In recent years weather modification activities are being pursued in many countries through cloud seeding techniques to facilitate the increased and timely precipitation from the clouds. In order to induce and accelerate the precipitation process clouds are artificially seeded with suitable materials like silver iodide, sodium chloride or other hygroscopic materials. The success of cloud seeding can be predicted with confidence if the precipitation process involving aerosol, the ice water balance, water vapor content and size of the seeding material in relation to aerosol in the cloud is monitored in real time and optimized. A project on the enhancement of rain fall through cloud seeding is being implemented jointly with Kerala State Electricity Board Ltd. Trivandrum, Kerala, India at the catchment areas of the reservoir of one of the Hydro electric projects. The dual polarization lidar is being used to monitor and measure the microphysical properties, the extinction coefficient, size distribution and related parameters of the clouds. The lidar makes use of the Mie, Rayleigh and Raman scattering techniques for the various measurement proposed. The measurements with the dual polarization lidar as above are being carried out in real time to obtain the various parameters during cloud seeding operations. In this paper we present the details of the multi-wavelength dual polarization lidar being used and the methodology to monitor the various cloud parameters involved in the precipitation process. The necessary retrieval algorithms for deriving the microphysical properties of clouds, aerosols characteristics and water vapor profiles are incorporated as a software package working under Lab-view for online and off line analysis. Details on the simulation studies and the theoretical model developed in this regard for the optimization of various parameters are discussed.