Govt may pay Rs 30 bonus for wheat procurement

The government is planning to provide an incentive bonus of Rs 30 per quintal for wheat purchases this year. The move is aimed at mopping up adequate wheat to replenish the depleted foodgrain reserves.

The Union Cabinet's approval is being sought for the decision. The decision may be taken shortly, given wheat procurement will begin from April 1 this year.

Sources said the bonus is expected to cost the exchequer an additional Rs 533 crore. The move is likely to get widespread political support.

Several farmers' organisations have been demanding a higher procurement price of as much as Rs 850 a quintal. Earlier this year a Rs 10 per quintal hike in the procurement price was announced.

The governments of the major wheat surplus states of Punjab and Haryana have supported the demand for a raise in the procurement prices.

However, the Centre has proposed to retain the minimum support price for wheat for the 2006-07 rabi marketing season at Rs 650 a quintal and provide an additional Rs 30 a quintal as bonus. This move will help keep the economic cost of procured wheat down as the market levies and local taxes are calculated on the procurement price and not on bonus.

In 1997-98 as well, the Centre had given a similar incentive bonus of Rs 55 a quintal on wheat to supplement the minimum support price. The state governments, too, have often been giving similar bonus price to farmers from their own resources.

An indication that the government could consider an incentive bonus for this years' wheat procurement was provided last week by Kanti Lal Bhuria, minister of state for agriculture in Haryana. However, Bhuria, had not provided any details.

The target for rabi wheat procurement for 2006-07 has been set at 16.3 million tonne, which is 1.4 million tonne higher than the actual purchases in 2005-06. The total stock of wheat in the central grain pool is expected to be less than two million tonne on the eve of the new crop arrivals which falls far below the buffer stocking norms.

The government had in February decided to import 5 lakh tonne of duty free wheat to meet the demands of the southern states.

The wheat surplus states, which contribute to the central pool, include Punjab, Haryana, Uttar Pradesh, Rajasthan, Madhya Pradesh, Bihar and Uttaranchal.