Govt reduces reserve price of wheat up to 31 March to check inflation
2 min read . Updated: 17 Feb 2023, 10:00 PM IST
Premium- Wheat prices have been on the rise ever since the Ukraine war broke out in February last year as Russia and Ukraine accounted for nearly one-fourth of the global wheat production
To check inflationary trend in food economy, the union government on Friday decided to further reduce reserve price of wheat up to 31 March, 2023.
Wheat prices have been on the rise ever since the Ukraine war broke out in February last year as Russia and Ukraine accounted for nearly one-fourth of the global wheat production. The surge in international prices prompted India to ban wheat exports in May in order to check the rise in domestic prices.
Later, the government also prohibited exports of wheat flour (atta), flour, semolina and wholemeal atta.
The reserve price under Open Market Sale Scheme (Domestic) has been fixed at ₹2150 per quintal (pan India) for wheat and ₹2125 per quintal (pan India) for wheat (under relaxed specifications) of all crops including Rabi Market Season (RMS) 2023-24 for sale of wheat to private parties.
HDFC Bank said in a note, “The inflation fight is not over yet and the moderation seen at the end of 2022 was neither broad-based nor durable. While we know that government interventions—like offloading of wheat stocks in January—coupled with healthy rabi output could help ease pressures on cereal as well as protein inflation over the coming months, controlling core inflation could be much tougher.“
States may be allowed to purchase wheat from Food Corporation of India (FCI) for their own scheme at above proposed reserve prices without participating in e-auction.
According to the Ministry of Consumer Affairs, Food & Public Distribution, the reduction in reserve price will help in reducing market price of wheat and wheat products for consumers.
Food inflation rose sharply to 6.19% in January from 4.58% in December, led by rising prices of most segments.
While vegetable prices eased to 11.7% in January from 15.08% in December, inflation hardened in the case of cereals, eggs, meat and fish, milk products, and oils and fat.
Mint reported on 12 February that India may extend its ban on wheat exports beyond March and continue to curb shipments of non-premium rice to tamp down local prices while expanding purchases of cereal stocks that are at their lowest in five years.
According to the ministry, FCI will float third e-auction for sale of wheat at these revised reserve prices on 17 February which will be opened on 22 February.
The Committee of Ministers decided to release 30 LMT wheat from FCI stock through Open Market Sale Scheme (OMSS). It included 25 Lakh Metric Tonnes (LMT) to be offered through the e-auction route to traders, flour mills, etc as per the usual process followed by FCI.
Bidders can participate in e-auction for a maximum quantity of 3,000 MT per region per auction, two LMT to be offered to State Governments for their schemes at 10,000 MT per state without e-auction and three LMT to be offered to Government PSUs and cooperatives such as Kendriya Bhandar, NCCF, NAFED etc without e-auction.
Subsequently, the department made allocation of 3 LMT of wheat to Kendriya Bhandar, NAFED and NCCF as per their requisitions. Kendriya Bhandar, NAFED and NCCF were allocated 1.32 LMT, 1 LMT and 0.68 LMT respectively.
Further, the rate of wheat on 10 February has been reduced to ₹21.50/kg for sale to NCCF, NAFED, Kendriya Bhandar and State governments as well as community kitchen, charitable NGO subject to stipulation that they will convert wheat to atta and sell it to consumers at MRP ₹27.50/kg.
Amid worries over availability of wheat, the government last year had allocated 5.5 million tonnes of rice in place of wheat under the free ration scheme, PM Garib Kalyan Anna Yojana.