Wheat import now under CVC scrutiny

Food ministry submits a detailed report.

The government's decision to import wheat has run into more controversy with the Central Vigilance Commission (CVC), the statutory vigilance institution, asking the Union food ministry to submit a detailed report on wheat imports made this year.

Confirming this, a top CVC official said: "The issue was handed over to us for investigation following which we sought a detailed report from the department of food and public distribution."

The CVC is reportedly investigating whether wheat imports have been deliberately mishandled. The official said the food ministry had made its report available and it was currently under study.

"If we find something suspicious, we will decide on further action," he added.

The decision to import wheat to cover a 4-million-tonne shortfall in domestic procurement for the public distribution system and buffer stock has been questioned both by parties in the opposition and those that are part of the ruling United Progressive Alliance.

Earlier this month, Brinda Karat, Rajya Sabha MP and Politburo member of the Communist Party of India (M), which supports the government in Parliament, wrote to Prime Minister Manmohan Singh demanding a probe into wheat imports.

MPs have questioned wheat imports on two grounds. First, that the imports were contracted at prices that are more than 80 per cent the procurement price of Rs 8,500 a tonne paid to the domestic farmer.

Second, they have objected to the fact that the government cancelled a tender in May saying prices were too high, but contracted a fresh tender in June at prices that were 24 per cent higher than the May price.

The May tender was for 3,06,000 tonnes at $263 (Rs 10,520) a tonne at a conversion rate of $1= Rs 40. The June tender was for 5,11,000 tonnes at $325.39 (Rs 13,024) a tonne.

The government on its part said it had gone by a statement from the State Trading Corporation (STC), the chief canalising agency for wheat imports, that pointed to the possibility of prices softening in August.

"The STC while recommending [the] purchase of 3,06,000 lakh tonnes at $263 per tonne had in its letter mentioned: 'There are possibilities for softening of prices for arrival beyond August 2007 ... The Australian crop to be harvested during November-December, which is reported to be good as per International Grains Council report, may also have a softening effect on the wheat prices'," the official response read.

In August, however, the government contracted another tender to buy 7,95,000 tonnes at an average rate of $389.45 (Rs 15,578) a tonne, bringing the issue to the forefront again.