Govt to offload additional wheat, rice via open market to tame prices

To check grain prices, which have stubbornly remained high despite multiple measures, the Centre on Wednesday decided to offload an additional 5 million tonnes of wheat and 2.5 million tonnes of rice in the open market.

In its bid to tame inflation, the government also reduced the reserve price of rice by Rs 200 to Rs 2,900 per quintal for the open sale scheme. This would push up the off-take, which has seen a tepid response so far from traders.

Data showed that in the first open market sale scheme (OMSS) that started from June, out of the allocated 1.5 million tonnes of wheat, around 0.82 million tonnes (55 per cent) has been purchased by buyers. In the case of rice, it is even worse — just 0.38 per cent of the offered 0.5 million tonnes has been bought.

The government also said that it has around 28.7 million tonnes of surplus wheat and rice with over and above the requirement for PDS and other welfare schemes. This will help it to intervene in the market when required to cool down prices.

On likely cut in wheat import duty, the government said it will take action based on the requirement as things are dynamic and evolving.

State owned Food Corporation of India (FCI) is selling wheat and rice from the central pool to bulk buyers like flour millers and small traders under the OMSS since June 28 through an e-auction.

Briefing the media, food secretary Sanjeev Chopra said, “Prices of the two commodities have been in the news for the past couple of months because of the rising trend that we are noticing.”

The offtake of wheat under the OMSS has been good so far.

However, the weighted average price of wheat has been going up in the past two-three auctions. For rice, there has not been much off-take, he said.

Chopra said the government felt that tweaking the reserve price of rice may bring better results.

He also said that the Centre is aggressively following up with states to ensure that stock limits in wheat are not violated.

Sharing details about the sale of foodgrains, FCI chairman and managing director Ashok K Meena said the OMSS operation was started early this year on June 28. This was in view of the increasing trend of wheat and rice prices.

Till now, seven e-auctions were conducted, including Wednesday’s.

Initially, wheat offered for sale used to be 4 lakh tonnes, and now, it has been reduced to 1 lakh tonnes during Wednesday’s e-auction. About 8 lakh tonnes of wheat has been sold till date, he said.

Meena also said that initially, the weighted average selling price of wheat on June 28 was Rs 2,136.36 per quintal. It has now gone up to Rs 2,254.71 in Wednesday’s e-auction.

“This shows that there is an increase in the market demand for wheat,” he added.

July inflation may have breached RBI’s 6% upper tolerance limit: Economists 

The retail inflation likely accelerated to 6.40 per cent in July on surging food prices, breaching the upper end of the Reserve Bank of India's (RBI's) 2-6 per cent tolerance band for the first time in five months, a Reuters poll of economists found. Food prices, which account for nearly half of the inflation basket, have soared in the last two months due to an erratic monsoon throughout the country, pushing tomato prices at wholesale markets up more than 1,400 per cent in the past three months. That will hit the vast majority of India's population who make up the poor and middle classes. Reuters