India eyes bumper grains output, may dampen inflation

India eyes bumper grains output, may dampen inflation

New Delhi: India may harvest its second highest amount ever of food grains in 2010/11, including a record 81.47 million tonnes wheat, its agriculture minister said on Wednesday, which could help the government in reining in food inflation.

The cost of food for families in Asia’s third-largest economy has soared 17% over the past year, latest data showed, boosted most recently by gains in onions and other everyday vegetables as harvests are hit by unseasonal rains.

India is likely to harvest 232.07 million tonnes grains in 2010/11, sharply higher than the 218.11 million tonnes produced a year ago, Pawar said, when a severe drought hit India’s crops. Output hit a record of 234.47 million tonnes in 2008/09.

“We succeeded in raising food grain production because of higher support prices," Pawar said, highlighting a sharp rise in the level set by the government as a minimum for rice and wheat in the past few years.

India, the world’s second-biggest producer of wheat, plants the grain from October and harvests from March.

The production of winter-sown oilseeds is likely to rise by 5.5% on a year ago to 9.6 million tonnes, while lentil output will rise by 12.6% to a record high of 16.51 million tonnes, a statement from Pawar’s ministry said.

Output of rapeseed, the main winter oilseed crop, is expected to rise to 7.4 million tonnes in 2011 against 6.6 million tonnes in the previous year.

Pawar said the government should adopt a liberal approach in deciding on exports of food grains and vegetables. He stressed the need of exports of sugar to support local farmers and mills—a key concern in the farm portfolio.

“After protecting domestic consumers’ interest, one can think about sugar exports. Cane areas are rising and farmers are demanding exports to be allowed," he said.

The country has flip-flopped on sugar exports. In December, Pawar said mills could export 500,000 tonnes of sugar under Open General Licence (OGL). But the government, bowing to public pressure over food prices, has referred the issue to a panel of ministers, which is yet to make a decision.

The government should allow exports of onions and adopt a more friendly policy in exports of premium grade rice like basmati that middle and lower-middle class consumers don’t consume, Pawar said.