To quell rising prices of wheat and rice during the ongoing festival season, the government has cleared sale of an additional 6.5 million tonnes (mt) of wheat in the open markets to bulk consumers and 1 mt of both wheat and rice to retail buyers.
In total, the government has till now allocated more than 10 mt of wheat and some quantities of rice in the open market during this financial year. In June, it had allocated 3 mt of wheat for only bulk consumers.
These allocations are above the normal allocation it makes to states every year for distribution at cheap rates through the public distribution system (PDS).
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According to a statement released on Saturday, the cabinet committee of economic affairs in a recent meeting approved sale of 6.5 mt of wheat to bulk consumers like flour millers and biscuit makers and 500,000 tonnes each of wheat and rice to National Agricultural Cooperative Marketing Federation of India (NAFED), National Cooperative Consumers' Federation of India (NCCF) and Kendriya Bhandar for sale to retail consumers.
“The sale of wheat and rice to retail use will increase the availability of these commodities in the market and will have moderating influence on prices of wheat and rice in the open market,” the statement added.
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To bulk consumers, the wheat will be sold in small tranches of 2.5 million tonnes in every month till the end of this financial year.
The government has been accused of hoarding unsual quantities of wheat and rice in its stocks causing an artificial shortage in the retail markets leading to spurt in prices.
A senior official said the step will also help in easing the bulging grain stocks as procurement of rice picks up. In the last one month, the average retail price of wheat flour has risen by Rs 2-3 per kg to around Rs 21 per kg because of low supplies from flour mill owners. Rice prices have risen by Rs 1-2 per kilogram.
India harvested a bumper wheat crop of 93.9 mt in the 2011-12 crop year (July-June) with government procurement hitting a record 38.1 mt.
The stocks of wheat in the central pool stood at 40.58 mt at the end of October 2012 against a requirement of around 21 mt.
Market players said the government might sell the wheat at Rs 1,285 plus taxes (in wheat-growing states) and Rs 1,285 plus transportation costs in non-wheat producing states for bulk consumers.