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Govt's wheat, rice storage bill up 76%

Ajay Modi  |  New Delhi 

The central exchequer is forking out an estimated Rs 132 crore every month on wheat and rice storage, thanks to the burgeoning stocks of these commodities. This is a jump of 76 per cent over what is estimated to have been incurred last year this time.

With another wheat procurement season round the corner, this cost is all set to move up and also add to the storage woes of the government. Moreover, export of both these grains is banned and private interest is limited.

As on February 1, the central pool had wheat stocks of 16.8 million tonnes and rice stocks of 20.2 million tonnes making for a total of 37 million tonnes (compared with 21 million tonnes on the corresponding date last year). The stocks of both the grains are much higher over the buffer stock norm for the period — 8.2 million tonnes for wheat and 11.8 million tonnes for rice. The grain in the central pool is distributed under various public distribution schemes.

“The huge grain stock implies stable open market prices as it allows the government to intervene in the market. However, it also implies large-scale storage losses,” said an analyst.

The government spends Rs 3.58 on storage and preservation of one quintal of grain every month or Rs 35.80 on every tonne. This is the rate approved by the Ministry of Consumer Affairs for payments to various warehousing corporations.

(in million tonnes)

Feb 1,2008

Feb 1,2009

Wheat 7 16.8
Rice 14 20.2
Total 21 37.0

Going by this calculation, the monthly expenditure incurred on storage of 37 million tonnes comes to Rs 132.46 crore.

For 21 million tonnes grain (as on February 1, 2008), the monthly storage cost is estimated at Rs 75.18 crore.

The rice procurement in the ongoing kharif marketing season is already at 23.22 million tonnes, up over 19 per cent from the 19.46 million tonnes in the corresponding period last year. Wheat procurement in the last rabi marketing season was at an all-time high of 22.5 million tonnes on account of bumper crop and handsome procurement prices.

Notably, export of both these grains has been banned. At the same time, there is a quantitative restriction on the storage of both these grains by private traders.

On February 20, Union Food and Agriculture Minister told Parliament that the government would decide on lifting the wheat export ban and relaxing stock limits for private trade in the next 10 days.

First Published: Tue, February 24 2009. 00:37 IST