To clear space for new crop, a Committee headed by PMEAC Chairman C Rangarajan has suggested export of two million tonnes of wheat from the government stocks, which would lead to a subsidy outgo of Rs 1,500 crore.
In a report submitted to Prime Minister Manmohan Singh yesterday, Rangarajan has also recommended export of another one million tonnes of wheat export via private agencies with some assistance to make shipments viable.
Noting that exports alone will not solve the problem of plenty, the Prime Minister's Economic Advisory Council chief said in the report: "We need to supplement the decision to export with release of additional wheat to BPL and APL families and also in the open market".
He suggested offloading of additional 13 million tonnes of wheat through ration shops and in the open market, which would entail subsidy of Rs 15,500 crore.
At present, the government godowns are overflowing with granaries of 71.12 million tonnes, which is higher by 20% from last year period.
Stating that huge stocks call for an appropriate policy for disposal, the Rangarajan report said: "There are many options available to deal with this. One obvious choice is to allow the export of wheat out of public stocks. However, even exports will entail subsidies".
While wheat export of two million tonnes from government stocks would cost Rs 1,500 crore in the form of subsidy, if one million tonnes of wheat export is permitted through private trade, the subsidy is estimated to be only Rs 150 crore, the report said.
It also noted that release of wheat, except for export and in the open market, can be done in phased manner.
Rangarajan observed the subsidy per tonne of export of wheat is far less than the subsidy entailed in release of stocks through ration shops.
The committee was set up by the Prime Minister on May 2 to suggest ways to handle excess foodgrain stocks.
Currently, wheat exports have been unviable and volumes of shipments have not picked up since September 2011. So far, only 8,00,000 tonnes of wheat exports have taken place.
The government stocks are increasing due to bumper production and procurement in the last few years. This year wheat production is expected to reach a record 90.2 million tonnes.