Amid surge in food inflation, the central government on Wednesday announced that it will sell an additional 50 lakh tonnes of wheat and 25 lakh tonnes of rice from the central pool in the open market in order to control price rise.
Prime Minister Narendra Modi government has also decided to reduce the reserve price of rice by Rs 2 per kg to Rs 29 per kg. The reserve price of wheat remains unchanged.
“We hope these measures will bring down food inflation,” said Sanjeev Chopra, Secretary, Department of Food and Public Distribution.
The cost on account of reduction in the reserve price will be borne from the Price Stabilisation Fund maintained by the Department of Consumer Affairs, according to an official statement released by the Ministry of Consumer Affairs, Food & Public Distribution.
The government will offload additional wheat and rice through e-auction in a phased manner under the Open Market Sale Scheme. The Food Corporation of India (FCI) conducts such e-auctions.
The new decision is over and above the earlier announcements of offloading 15 lakh tonnes of wheat and 5 lakh tonnes of rice. So far this fiscal, the FCI has sold 8 lakh tonnes of wheat and 1,900 tonnes of rice through e-auctions. The decision to reduce the reserve price of rice has been taken due to poor response from bidders in the recent auctions.
According to FCI Chairman Ashok Meena, even after the fresh market intervention, 87 lakh tonnes of wheat and 270 lakh tonnes of rice will remain available in the central pool. This is in addition to the requirements for PDS and other schemes.
Chopra expressed hope that the government’s decision to offload extra wheat and rice from its stocks would lead to a fresh sale of these key cereals by some big farmers and hoarders who were waiting to dispose of stocks in the market.
As of August 7, 2023, in one year, the wheat prices have gone up by 6.77% in the retail market and 7.37% in the wholesale market. During this same period, the prices of rice have surged by 10.63% in the retail market and 11.12% in the wholesale market, the Ministry of Consumer Affairs, Food & Public Distribution data showed.
As per the latest National Statistical Office (NSO) data, cereals became costlier by 12.71% year-on-year in June. High cereals and vegetable prices pushed the headline retail inflation up to 4.81% in June. Food inflation, which accounts for nearly half of the Consumer Price Index (CPI) basket, surged to 4.49% in June from 2.96% in the previous month.
In July, CPI-based retail inflation is estimated to have crossed 6%, the upper end of the Reserve Bank of India (RBI) tolerance band, for the first time in five months. July CPI data is scheduled to be announced on August 14.