Plan to step up subsidy on gram for states/UTs
3 min read . Updated: 17 Mar 2023, 11:21 PM IST
PremiumCurrently, the centre sells gram to states and union territories at a discount of ₹8 per kg on the market price. This discount is likely to go up to ₹15 per kg.
NEW DELHI : The Centre is likely to nearly double the discount on the gram it sells to states and union territories in a bid to clear central stocks ahead of the rabi marketing season, two senior officials said.
Currently, the centre sells gram to states and union territories at a discount of ₹8 per kg on the market price. This discount is likely to go up to ₹15 per kg.
Gram is currently selling in the range of ₹47.50-52 a kg in the wholesale markets of Madhya Pradesh, Maharashtra and Gujarat—key producing states.
The discounted gram is being offloaded by the National Agricultural Cooperative Marketing Federation of India Ltd for various welfare schemes such as public distribution systems, Integrated Child Development Welfare and Mid-day meals.
The centre in August had approved disposal of 1.5 million tonnes of gram to states and UTs to create warehouse space required for procuring gram from April 2023 onward.
“Till February, it has allocated a little over 350,000 tonne of chana to states like Gujarat, Uttar Pradesh and Chhattisgarh. To pace up chana disposal, the government is planning to offer the commodity a higher discount," one of the government officials said. The government has around 1.6 MT of gram in its stock.
Since the first week of February, fresh gram has been arriving in the markets of Madhya Pradesh, Maharashtra and Gujarat, enabling the Centre to begin its procurement drive for the 2023-24 rabi marketing season. So far, the government has purchased about 25,000-30,000 tonnes of gram.
The procurement is expected to gather pace from April when the daily supply is expected to increase to 15,000-20,000 tonnes, according to trade sources.
“To accommodate freshly procured gram, the government requires space in its storage. Additionally, gram cannot be stored for over one year due to its short shelf life," the official said. For 2022-23 (Jul-Jun) crop year, the government in its second advance estimate, pegged gram production at 13.6 MT against 13.5 MT last year. However, analysts estimate production at 8.9-10 MT this year because of lower acreage, falling yield and higher temperatures.
Gram accounts for nearly 45% of the total pulses basket, which in turn has a share of about 70% to India’s agricultural production.
In its second crop advance estimate, the government pegged pulses production at 27.8 MT for 2022-23 crop year compared with 27.3 MT. In key markets, tur, urad and moong are being traded higher than their minimum support price (MSP) due to concerns over supply shortage. The wholesale rate of tur is ₹6,600-7,4 00 per quintal, while urad and moong are being sold at ₹8,100-8,300 and ₹9,500-9,600 per quintal. The government had set MSP of pigeon pea and black gram at ₹6,600 per quintal and green gram at ₹7,755 a quintal.
“Though some of the pulses price has shot up, pulses inflation moderated marginally in February to 4.1% on year compared to 4.3% in January. As per government estimates, rabi crop output is expected to rise by 6.2% in FY23, supported by more than adequate reservoir levels. This should help keep pulses prices contained in coming months," said Gaura Sengupta, economist at IDFC FIRST Bank.
Pulses has a weightage of 2.4% in the Consumer Price Index (CPI). CPI is the price of a weighted average market basket of consumer goods and services purchased by households. Overall, on a CPI weighted basis, food prices are seen falling on a month-on-month basis in March, which should provide support in the near-term. For FY24, food inflation outlook remains uncertain with the risk of El Nino conditions, the economist said.