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August 22, 2008

Finally Centre plans to offload wheat in the open market

As the inflation for the week ending August 9, 2008 touched 12.63 per cent (as released on 21st August 2008), government was caught with a tricky situation. How to tame the rising prices? The Centre has now decided to offload 60 lakh tonnes of wheat from the central pool in the open market to enhance availability during the coming festival season and to contain prices. According to the government, this would be done after meeting the requirements of the targeted Public Distribution System (PDS) and setting aside 40 lakh tonnes of buffer stock (on April 1) and 30 lakh tonnes of reserve stocks that were made possible through a record procurement this year at over 225 lakh tonnes against 111 lakh tonnes last year.

At the same time, the Centre has also decided to extend till April 4, 2009 the order imposing limits on stocks and free movement of wheat, pulses and rice. This order will now cover paddy also, as there had been reports that millers in some States were hoarding paddy in the hope that they may gain if the Minimum Support Price (MSP) is enhanced to Rs. 1,000 a quintal as demanded.

Out of 60 lakh tonnes of wheat to be offloaded, 10 lakh tonnes would be allocated to States for the Above Poverty Line (APL) population. The rest would be for retail sale through the State governments and for bulk consumers (bread, biscuit manufacturers and roller flour millers) through open tendering.

Timing of open sale of wheat is yet to be decided. But, as the festivals are nearing and with increasing demand for various commodities, it is believed that the open sale will start from the first week of September. The prices for the open sale of wheat would be above Rs.1000 per quintal plus transportation cost. The Centre is yet to decide on the open sale of rice though, the procurement of rice was higher than last year at 267 lakh tonnes.

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