You are here: Home » Economy & Policy » News
Business Standard

Govt plans to lower grain price for open-market sale

Sanjeeb Mukherjee  |  New Delhi 

As the government prepares to procure rice from farmers during the coming crop marketing season, beginning October, the food ministry is working on a proposal to lower the price of grains allocated to states for sale in the open markets.

It also plans to lower the price of grains allocated to states over and above the normal quantity supplied for the public distribution system (PDS). Officials said this would not only help in improving lifting of grains allocated to states for the open market sale but would also help in clearing state warehouses of grains procured from previous seasons.

The proposal to lower the price of grains for open market sale comes on the heels of a similar move by the food ministry to sell wheat and rice through PDS at Rs 2 and Rs 3 per kilogram respectively as proposed in the

“The price which is being worked out will be based on the minimum support price of wheat and rice, but will be lower than the current rate,” a senior food ministry official said. Officials from the food ministry have also met with their counterparts in the finance ministry to discuss the financial implications of the proposal.

The central government had allocated 1 million tonnes of rice and 1 million tonnes of wheat to states for sale in the open markets to retail consumers. The allocation made in January this year is valid till September. However, till July, just 40 per cent of the total rice and wheat allocated to states was lifted.

Wheat was sold to states at Rs 11-12 per kg, while the grade ‘A’ rice was sold at Rs 15.85 a kg and common rice at Rs 15.41 per kg. Despite the Centre selling the grains at a highly subsidised rate, without passing on the interest cost on storage, states didn’t show any inclination to lift the grains.

Food Minister had written to all states in June to improve lifting of grains meant for sale in the open markets and even allowed them to sell the grains in jails, old-age homes and educational institutions, etc.

In spite of this, states complained of high prices. In a recent meeting with the central government, representatives from Madhya Pradesh, Orissa, Uttar Pradesh and Andhra Pradesh said high price of the grains allocated to them for open market sale and also that made over and above normal PDS allocations was a main deterrent in lifting of grains.

“When we supply, say seven kg rice to a beneficiary at the below poverty line (BPL) rate of Rs 5.65 per kg, how can we ask him to pay an extra Rs 3-4 per kg for another kilogram?” a representative from Uttar Pradesh asked during the meeting.

The issue of high price also dogs the special ad hoc allocations, which the central government makes over and above the normal quantities supplied for distribution through PDS.

In fact, in 2011 alone, 15 million tonnes of wheat and rice has been allocated for BPL and above poverty line (APL) families over and above the normal quantities supplied for both these targeted beneficiaries. However, till June, states have lifted just 54 per cent of the ad hoc additional allocation made for BPL and 21 per cent of that made for APL families.

The problem is more acute in case of additional allocation made for APL families, as their price is more than the ration card rate. “We are thinking of bringing it down to improve the lifting,” the official said.

First Published: Tue, August 16 2011. 00:02 IST