Even as rising retail inflation is already posing concerns, managing surplus food grains stock which is much higher than the stocking norms is adding challenges for the Narendra Modi government, a report said. “As against the stocking norm of 21.4 million tonnes (7.6 million tonnes rice and 13.8 million tonnes wheat), the actual food grain stock in the month of January 2020 was 56.5 million tonnes (23.7 million tonnes rice and 32.7 million tonnes wheat)”, India Ratings & Research (In-Ra) report said. The stock is nearly more than three times the 21.4 million tons stock required to maintain operational stock as well as the strategic reserve as on January 1 each year. It is only going to increase in the coming days since the second advance estimate of the department of agriculture pegs the production for FY20 at 291.95 million tonnes (a new record), the report added.
“Any significant improvement in agricultural productivity, simply using MSP as a policy tool to incentivise farmers is not helping the cause lately. An increase in MSP to offset the rising input cost is triggering food inflation and not doing so is translating into rural distress”, Ind-Ra also said in the report.
As of the end-2019, the total storage capacity available with the FCI and state agencies stood at 75.85 million tonnes. In that, the covered godown space was 62.65 million tonnes and the balance 13.20 metric tonnes. Finance Minister Nirmala Sitharaman in budget 2020 provided for Rs 1,15,569.68 crore towards food subsidy excluding the FCI’s borrowings from the National Small Savings Fund (NSSF).
Meanwhile, the retail inflation rose to 7.59 per cent in January which is a 68-month. The inflation in January was at 13.63 per cent, slightly lower than 14.19 per cent in the preceding month. The CPI-based retail inflation breached the RBI’s upper band of tolerance limit for second month in a row in January 2020. The RBI in the latest bi-monthly policy had said that inflation would have to be watched closely to decide on its upcoming rate cut decisions.