Poorly timed

The government's decision to import wheat at this time of year defies logic. That this decision was taken in a haste is clear, as it came barely hours after Prime Minister Manmohan Singh emphatically stated in his press conference last week that there was no need to import foodgrains. It is untenable because the food and agriculture minister, Sharad Pawar, while announcing the decision, also echoed the assertion that the government had adequate wheat inventories to meet the requirements of the public distribution system (PDS) and foodgrains-based welfare schemes, till the new crop starts arriving in mandis next month. The Central grain pool had 4.7 million tonnes of wheat on February 1, and the PDS and other schemes together need 1.3 million tonnes of wheat in a month. Unless the statistics on stocks are bogus, the government's kitty would have some wheat left when the new harvest comes in. Though the carry-over may be below the stipulated buffer stocking norm of 4 million tonnes on April 1, that should not cause concern since the government expects procurement of over 16 million tonnes from the next crop.

What is notable is that the present grain crunch is the consequence of flawed government policies. The PDS grain entitlement was raised to 35 kg per household for all categories of PDS users, including the non-poor, as an ad hoc measure designed to prune foodgrain inventories, which had become so large as to be physically unmanageable and financially unsustainable. So were the liberal grain allocations for welfare schemes. But these norms have not been reviewed and revised, despite the target of bringing down inventories to manageable levels having been achieved long ago. When finally pushed to the brink, the Cabinet Committee on Economic Affairs took the decision a couple of weeks ago to reduce grain entitlements, but the step was retracted even before it could be implemented because of a political outcry.

This aside, the import move is ill-timed. It has come at a time when the market prices of wheat have begun declining in most states, barring Kerala and Karnataka. Even in these states, wheat prices have ruled generally lower than those of rice, the traditional staple food of the region. The poor scheduling of imports is apparent as the shipments will arrive only after the new crop begins hitting the market, and just when government agencies will be busy buying about a million tonnes of foodgrains every day. Moreover, the landed cost of wheat is bound to be far higher than the prevailing domestic prices which would, by then, drop to the official procurement price level, at least in the northern wheat belt. Furthermore, the STC, which has been asked to import wheat at zero duty, might not have the necessary expertise in this trade as the last import on official count was done way back in 1998-99. Thus, it is still not too late for the government to reconsider its ill-conceived move. Indeed, the quantum of imports being considered is so small that it is impossible to believe that such a small consignment from overseas can be used to break the mood of the traders.