India to offer 2-3 million tonnes of wheat to flour millers, biscuit makers
Two government sources said that India is going to offer 2 to 3 million tonnes of wheat to large buyers like flour millers and biscuit makers. This is part of an effort to bring down record-high prices, even though state reserves have dropped to their lowest level in six years.
This year, India’s wheat prices have gone up because a sudden rise in temperature hurt crop yields and output.
As a result of Russia’s invasion of Ukraine, exports went up, which drove up local wheat prices. In May, India, the world’s second-largest producer of wheat, banned exports, but that hasn’t stopped domestic prices from going up.
Wheat purchases by the government have dropped by 53% this year, to 18.8 million tonnes, because prices on the open market rose above the price at which the government buys wheat from domestic farmers.
One of the sources said, ‘We’re planning to sell wheat on the open market to keep prices down because we can’t afford to buy less for another year.’ Buying will start again in March/April 2023. ‘When it comes to stocks, we have room to step into the market.’
The government buys rice and wheat from farmers at prices set by the government in order to run the world’s largest food welfare programme. About 800 million people are eligible to get 5 kg of rice and wheat every month for 2 rupees ($0.02) and 3 rupees a kg.
Sources say the plan is to free up 2–3 million tonnes of wheat to sell to bulk users. India’s wheat reserves are going down, and the price of this staple food is going up. This is a big change from the past, when granaries were so full that the country could export a record 7.2 million tonnes of wheat in the fiscal year that ended in March 2022.
‘We’re sure that prices will go down when 2 to 3 million tonnes of wheat are put on the open market,’ said the second source. Officially, the two people who knew the most about the situation didn’t want to be named.
They also said that the government will decide later this month whether or not to continue the food programme that gives the poor free rice and wheat.
In April 2020, Prime Minister Narendra Modi added the free food programme to the government’s COVID-19 relief measures. This was on top of the government’s main food aid programme.
In September, before some important state elections, Modi’s government added three months to the programme. This added $5.46 billion to government spending and made it harder to get the fiscal deficit under control.
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Along with the cost, government officials have said that there aren’t enough wheat stocks to keep up with the free food plan, which needs between 95 and 100 million tonnes of rice and wheat every year.
A trader with a global trade house in New Delhi said, ‘The government is in a tight spot because stocks are low. Because of this, it would be hard to keep the free food programme going without any cuts.’