Cabinet extends open market sale deadline for wheat

The Cabinet Committee on Economic Affairs (CCEA) today extended the tenure of the open market sale scheme (OMSS) for wheat by a month. Traders now have time till March 31, to purchase wheat from state-run warehouses.

The CCEA, however, did not take any decision on reducing the price of the grain. The food and agriculture ministries wanted to reduce the price of wheat sold through OMSS to enable faster liquidation of grains stored in state-run warehouses. However, the finance ministry opposed it saying it would further inflate the subsidy bill.

According to officials, the food ministry had moved a proposal to include either freight or transportation charge in the minimum support price (Rs 1,285 a quintal) for wheat sold in non-producing states.

At present, the Central government sells wheat from its warehouses at a rate equivalent to MSP, plus the freight charges and local taxes for non-producing states and only local taxes for producing states.

Officials said slashing price would have helped in faster liquidation of wheat stocks. Till date, bulk consumers and flour mill owners have purchased just around 50 per cent of the total 6.5 million tonnes of wheat allocated for OMSS.

“Extending the deadline for OMSS will not have much impact in encouraging traders to purchase more government wheat, as by that time, new crop would start coming in from many parts of the country and no one will prefer to purchase old wheat from state warehouses,” said a senior official with a global trading house.

Meanwhile, experts have expressed the fear that unless government manages to liquidate wheat inventories through domestic sales and export, India’s foodgrain stocks will climb to a mind-boggling 100 million tonnes by June 1, 2013. Grain stocks as on February 2013 was estimated to be around 66.31 million tonnes, more than the double the required the quantity. Of this, 47 per cent is wheat stocks.