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Inflationary pressure may see a marginal increase in the minimum support price of wheat in the rabi season. The Commission for Agricultural Costs and Prices (CACP) is expected to announce the MSP for rabi crops shortly.
According to sources, the wheat prices are higher in India than in global markets. In India the prices range between Rs 1,600-1,700 per quintal, compared with the MSP of Rs 1,400 per quintal. In the international markets, the prices have fallen over the past one year from Rs 1800 per quintal to around RS 1,500 per quintal ($313 per tonne to $250 per tonne), and continue to fall further.
Official sources are of the view that the prices may go up marginally by 1-3 per cent not only for wheat but for other rabi crops such as barley, gram, lentil and mustard as well to contain the inflationary pressure. For wheat, the MSP is expected to be around 1,420-1,450 per quintal. For the marketing season 2014-15, the MSP for wheat was raised by 3.7 per cent from Rs 1,380 per quintal to Rs 1,400 per quintal.
Recently, the government approved the sale of 10 million tonne of wheat from FCI stock in the open market in order to boost domestic supply and check prices. This is to be done through the open market sale scheme (OMSS) to the bulk buyers.
The reserve price under OMSS has been fixed at Rs 1,500 per quintal plus freight charges for old crop and five per cent premium for new crop, the sources added.
In 2013-14, the government had announced sale of 8.5 million tonne of wheat via OMSS, but was able to sell only 5.8 million tonne, earning about Rs 9,310 crore.
Till early this month, the FCI had a wheat stock of 40 million tonne, against the requirement of 20 million tonne.
In the 2013-14 crop marketing season (April-March), the CACP had recommended freezing of wheat MSP at the existing level of Rs 1,285 a quintal. The commission had said the huge wheat stocks with the government did not make raising MSP a feasible option.
However, following strong opposition from various quarters, it had to review its decision. The government later fixed the wheat MSP at Rs 1,350 a quintal - an increase of Rs 65 a quintal.
Wheat is usually sown from November and the crop harvested around March. India produces 90-95 million tonnes of wheat every year.
The wholesale price inflation in June eased to a four-month low of 5.43 per cent, helped by slower increases in food and fuel costs, government data showed on Monday.
Food prices rose 8.14 per cent in June this year as compared to a jump of 10.27 per cent in the same month last year. The reading for April WPI inflation was revised to 5.55 per cent from 5.20 per cent earlier.
