The government on Sunday ruled out any move to import wheat and said there is sufficient grain stock to meet domestic demand as well as for public distribution.
“There is no such plan to import wheat into India. The country has sufficient stocks to meet our domestic demand and Food Corporation of India (FCI) has enough stock for public distribution,” said a tweet by the department of food and public distribution in response to a media report.
The government last week had estimated wheat production to have dropped almost 3% to 106.84 million tonne (MT) in the 2021-22 crop year (July-June). However, the overall foodgrain output is expected to have hit a record 315.72 million tonne, buoyed by a record rice harvest.
The drop in wheat output is attributed to the heatwave between March and June that hit the crop in the northern states of Punjab and Haryana. This eventually forced the government to impose restrictions on wheat exports in May to keep local supplies steady.
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Of course, trade sources estimated that the actual wheat output could have been below 100 MT. The United States Department of Agriculture (USDA) had projected India’s wheat production at 99 MT.
As reported by FE recently, wheat stocks in the central pool held by the FCI and state government agencies had fallen to 26.6 MT at the beginning of this month, the lowest level since 2008. According to estimates, the wheat stock is expected to be around 22. 9 MT by October 1, against the buffer norm of 20.5 MT.
Depletion in wheat stocks is attributed to a more than 56% drop in procurement in the current rabi season to only 18.8 MT against 43 MT purchased by FCI and agencies in the 2021-22 season (April-June) because of lower production and the free ration scheme being implemented since May 2020.
Sources had earlier said that to contain the rise in domestic wheat prices, which could accentuate inflationary pressures, the Centre is likely to scrap the 40% import duty on wheat soon.
Wheat inflation rose by 11.66% in July 2022. Prices at key mandis across the country are currently ruling around 14%-19% above the minimum support price (MSP) of `2,015 a quintal for the current rabi season (2022-23), as traders are holding on to stocks in anticipation of a further rise in prices in the build-up to the festive season, industry sources said.
However, a duty cut may not be very effective in the current context to cool local prices as domestic prices are much cheaper than the current global prices. “Domestic prices are around `23-24/kg, the landed cost of imported wheat currently is around `33-34 a kg,” an official said.
Besides scrapping the import duty, the Centre is also looking at imposing stockholding limits on wheat and voluntary disclosure of wheat stocks held by stockists, traders and millers.
In April 2019, India raised the import duty on wheat to 40% from 30%, as domestic prices had dropped, to discourage cheaper wheat imports.