Soon, govt may allow wheat, rice exports

With its godowns overflowing with foodgrains on the back of a bumper crop in 2010-11, the government may finally allow wheat and rice exports, sources said.

The decision in this regard is expected to be taken by an empowered group of ministers headed by Finance Minister Pranab Mukherjee in the next two weeks, they said.

Even though food inflation remains above the comfort level of 4-5%, prices of wheat and rice have remained generally stable in the last one year.

Besides, the state assembly elections are also out of the way for the government to take a call, especially when the move for opening wheat exports is supported by the Ministries of Agriculture and Commerce.

Since the Food and Consumer Affairs Ministry still has reservations on inflationary concerns, the exports window may initially be opened with quantitative restrictions.

"EGoM is expected to meet soon on the issue," sources said.

The Agriculture Ministry has been supporting the proposal for permitting exports in the wake of bumper production.

According to official estimates, output would touch a record 84 million tonnes.

The Agriculture Ministry had recently pegged wheat production of the country, the world's second largest producer, at a record 81.47 million tonnes in 2010-11 crop year (July-June) against 80.71 million tonnes in the previous year.

Rice output is estimated to rise to 94 million tonnes this year from 89 million tonnes.

Food Corporation of India has 42 million tonnes of wheat and rice in its godowns against the buffer norm of 21 million tonnes as on April 1.

Agriculture Minister Sharad Pawar favours wheat exports to cash in on high prices and short supply in global markets. There have been reports that China's wheat crop might decline due to drought conditions.

The exports of wheat and non-basmati rice were banned in February 2007 and April 2008, respectively, to control high inflation.