New Delhi! The Centre will soon finalise a policy for open market sale of wheat from its stocks.
“The Committee of Secretaries (CoS) is working out the details of a policy for market intervention through sale of wheat from the Food Corporation of India’s (FCI) godowns.
It will be finalised in the next 10 days and forwarded for the Cabinet Committee on Economic Affair’s (CCEA) approval in the coming week”, official sources told Business Line.
The policy, the sources informed, would broadly spell out various options for offloading up to 60 lakh tonnes (lt) of wheat from FCI stocks annually through channels outside of the regular public distribution system (PDS).
These channels would include cooperative stores and various Government-owned outlets and the wheat sold through them will not be confined to ration card holders.
“The idea is to make wheat available at prices that are higher than the below-poverty line/above-poverty line (BPL/APL) rates, but below the market rates.
Creating these intermediate pricing layers would not only enable more effective market intervention, but will also help reduce leakages from the PDS to the open market”, the sources added.
The Centre issues wheat to BPL families at Rs 415 a quintal, while this is Rs 610 in case of the APL segment.
In the wholesale market, wheat is currently ruling at Rs 1,050-1,110 a quintal in Delhi and Rs 1,260-1,280 a quintal in the southern States.
Another channel of intervention would be to make available wheat to roller flour mills as has been done in the past under the open market sale scheme.
“The policy will have this component as well, but unlike in the old times, there will be transparent open tendering and not ad hoc, zone-wise price fixing by FCI”, they said.
Wheat stocks in the Central pool amounted to 57.94 lakh tonnes (lt) as on April 1, which was more than the prescribed minimum buffer of 40 lt.
Moreover, during the current rabi marketing season (April-June), the FCI and State agencies procured roughly 225 lt — twice the 111.28 lt mopped up last year.
As a result, the July 1 stocks of around 250 lt are way above the normative minimum buffer of 171 lt for that date.
“We have an additional 70-80 lt cushion that can be used for market intervention, especially from the festival season. Once the policy (including that relating to pricing and extent of subsidy) is ready and gets the CCEA’s nod, the intervention can be done keeping in view market conditions”, the sources pointed out.
The Centre’s worry is over whether the all-time-high procurement levels this time have depleted supplies in the open market, given that the country’s wheat production has gone up only marginally from 75.81 million tonnes to 78.40 million tonnes.
As of now, there seems to be no problem, with open market rates ruling easy.
Prices may firm up from around November, and that is when market intervention by the Centre would be required...The Hindu (B-Line)
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