India unlikely to ease ban on wheat export - Hindustan Times
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India unlikely to ease ban on wheat export

By, New Delhi
Feb 24, 2023 10:52 AM IST

Stocks of the grain in the world’s second-largest grower plunged after a heatwave cut output by 2.5% to about 106 million tonnes in 2022

India will not be removing its ban on wheat export anytime soon and the government will have sufficiently higher quantities of state-owned emergency reserves as on April 1 than is required under rules, the head of India’s main grain-handling agency said on Thursday.

India’s decision not to reopen export, at least until its own wheat purchases for state-held stocks are over, comes amid higher overall consumer inflation. (Sameer Sehgal/HT Photo)
India’s decision not to reopen export, at least until its own wheat purchases for state-held stocks are over, comes amid higher overall consumer inflation. (Sameer Sehgal/HT Photo)

“We are not going to allow wheat exports...even after auctioning the full quantity of wheat under the open market sales scheme, we will still have more than what is required under buffer norms,” Ashok K Meena, chairman of the Food Corporation of India (FCI), told reporters. He did not say till when the ban would continue.

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Stocks of the grain in the world’s second-largest grower plunged after a heatwave cut output by 2.5% to about 106 million tonnes in 2022, even as exports continued to rise due to a global shortage triggered by the Russia-Ukraine war. In May last year, the government halted overseas sales to plug shortages and avert a crisis.

The fall in output and high market prices led to a sharp 58% decline in the government’s wheat purchases, or procurement, to 18.8 million tonnes from the previous year’s 43.3 million tonnes. Procurement is onerous because the government is statutorily required to provide subsidized grains to 800 million people under the National Food Security Act, 2013. This year, the government will provide the grains free of cost.

India’s decision not to reopen export, at least until its own wheat purchases for state-held stocks are over, comes amid higher overall consumer inflation, which hit a three-month high of 6.52% in January, mainly because of higher food prices. An inflation rate higher than 6% is considered to be above the Reserve Bank of India’s tolerable range of 4-6%.

“As on April 1, we will have approximately 11.3 million tonnes. Even if we auction all the wheat we have decided to auction, we will still be left with about 9.3 million tonnes against a buffer norm of 7.5 million tonnes,” Meena said. He declined to comment on a widely anticipated heatwave in March, when farmers will harvest wheat, and its impact on output.

To control rising prices, the Centre last month decided that the FCI will sell 3 million tonnes in the market through various channels through e-auctions. On Feb 21, the government said it would auction 2 million tonnes more. On Feb 12, HT d first reported that the government was likely to continue with a ban on the grain’s export.

The top official said prices were gradually coming down. Citing data from the ongoing auctions, he said the weighted average price of wheat had come down from 2,474 a quintal (100 kg) to about 2,172 a quintal. “Retail prices come down with a transmission lag,” he said. referring to the time wholesale rates take to impact retail prices.

The auctions aim to increase supplies so that prices come down. Wheat still remains pricey, with consumer cereal inflation touching rising 16.1% in January 2023 year-on-year against 13.8% in December 2022.

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  • ABOUT THE AUTHOR
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    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.

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