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Govt probing sudden spurt in foodgrain prices

Source : BUSINESS_STANDARD
Last Updated: Wed, Sep 25, 2013 20:42 hrs

Amid the soaring prices of cereals and vegetables driving food inflation close to 20 per cent, Food Minister K V Thomas on Wednesday said the government was examining the reasons behind the sudden and sharp increase in foodgrain prices, despite a bumper harvest.

He added henceforth, small flour millers would be able to purchase foodgrains from Food Corporation of India (FCI) warehouses in any part of the country, not just Punjab and Haryana, by paying just the freight charge and the reserve price. About one million tonnes (mt) of wheat would be sold to small flour millers without any tender.


Earlier, it was reported massive stocking of grain by state agencies had raised the retail prices of wheat and rice.

According to the Wholesale Price Index (WPI), food inflation rose to 18.18 per cent in August, while general inflation increased to 6.1 per cent. WPI inflation for rice was 20.13 per cent, while it stood at 7.6 per cent for wheat. This is despite the fact that as on September 1, government foodgrain stocks were estimated at about 59 mt, 85 per cent more than the required quantity.

“Despite good production and storage in the last few years, the prices of foodgrains have been rising. We are analysing that; we will find out the reasons behind undue inflation in foodgrains,” Thomas said, while addressing the 73rd annual general meeting of the Roller Flour Millers’ Federation of India.

“I hope the measures taken by the government would keep market prices under control and help bulk consumers in maintaining operations, as they can source their wheat requirement from FCI at reasonable prices,” he added.

For bulk traders, the government has allowed the sale of about 10 mt of wheat from FCI godowns this financial year. Of this, the norms have been eased for 8.5 mt.

Thomas said a committee of secretaries would decide the base price and the applicable freight for wheat to be sold in the open market from government warehouses. Thereafter, the Cabinet would be apprised of this.

Last year, India’s foodgrain production stood at 255.36 mt, of which wheat accounted for 92.46 mt. It is expected this year, production would stand at a record level, owing to a better monsoon.

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