Wheat purchase by UP could incur Rs 8,000-crore loss to exchequer

Govt's decision to purchase 8 mt of wheat from farmers could mean a financial burden of Rs 8,000 cr

The Uttar Pradesh (UP) government’s decision to purchase eight million tonnes (mt) of wheat from farmers could mean an additional financial burden of at least Rs 8,000 crore.

The earlier Akhilesh Yadav government had planned to purchase three mt from farmers in 2017-18. The new Yogi Adityanath government scaled this up to eight mt, half in the first phase, at its first Cabinet meeting on Tuesday.

Assuming all this additional wheat is purchased at the centrally-set minimum support price of Rs 1,625 a quintal, it would mean either the state or Centre has to immediately arrange for an extra Rs 8,125 crore. Purchase would be from a network of 5,000-odd purchase centres. 

Officials said of the eight mt, around seven mt is expected to be purchases by state agencies and the rest by the Food Corporation of India.

Till now, the UP government has never bought more than four or five mt in a year. In 2016-17, it had bought only 0.8 mt from farmers.

That apart, buying an extra five mt has challenges. Experts said this would entail the state arranging for that much more payment to farmers, extra sacks and storage space. “All this requires huge effort,” said a former bureaucrat of the UP cadre, who’d also served in the Union government. 

The state has reportedly directed all district magistrates to oversee the procurement operation.