Economy
Centre rejigs plan for sale of Bharat rice and wheat
Summary
- The new plan is in the works after only 7.2% of Bharat rice, compared to a high 84.6% of Bharat atta that were lifted from government warehouses by three agencies managed to sell
NEW DELHI : Dismal sales of ‘Bharat’ rice, a subsidized grain aimed at helping curb its market price, have made the Centre changed its strategy. The government’s new plan is to take subsidized rice as well as atta (wheat flour) to markets where their intake is high in a targeted attempt to increase their consumption and cool prices, two senior officials aware of the matter said.
The new plan is in the works after only 7.2% of Bharat rice, compared to a high 84.6% of Bharat atta that were lifted from government warehouses by three agencies managed to sell, the first of the two officials said on condition of anonymity. The three agencies involved are National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), National Cooperative Consumers' Federation of India Ltd. (NCCF) and Kendriya Bhandar.
“Till 13 February, sales of Bharat chawal were only 1% of the allocated quantity while those of wheat was around 80%," the second official said, also requesting anonymity. “Therefore, the government had requested the three agencies to indicate if they were facing any difficulties amid poor sales. Accordingly, we changed our strategy to enhance sales of these two Bharat products and in the last fortnight, sales have increased."
“We are now targeting the regions where the consumption of these two products is higher. As far as rice sales are concerned, we are trying to push it more in southern and eastern states such as Andhra Pradesh, Tamil Nadu, Kerala, Odisha, Bihar and West Bengal," the second official said, adding that for wheat, the Centre is aiming more at northern states.
Queries sent to the consumer affairs, food and public distribution ministry remained unanswered till press time.
In the first phase, the government allocated 390,000 tonnes of wheat and 500,000 tonnes of rice to be retailed as Bharat atta and rice to bring down inflation. Though the Centre announced the pilot sale of Bharat atta in February 2023 to offload about 300,000 tonnes of wheat from the warehouses of Food Corp. of India (FCI) to Kendriya Bhandar, NAFED and NCCF and sell flour as Bharat atta at ₹29.50 per kg, it slashed the price to ₹27.5 per kg in November and officially launched it amid poor offtake and sales. In the case of Bharat rice, the government announced its sales at ₹29 a kg in February this year.
These prices are lower than prevailing market rates for these two grains. As of 2 March, all-India average retail wheat and rice prices were at ₹30.98 and ₹43.87 per kg, respectively. Although prices shrank a tad month-on-month, they were 12.8% higher from a year ago for rice and 1.7% up on-year for wheat, data from the consumer affairs ministry showed.
As per the first official cited above, NAFED has sold around 120,000 tonnes of Bharat atta and 8,000 tonnes of rice. NCCF sold nearly 110,000 tonnes of atta and 16,000 tonnes of rice. And Kendriya Bhandar has sold 100,000 tonnes of atta and 12,000 tonnes of rice. These are estimated figures and may not be absolute, the official informed. The sold quantity for atta is from November till date and from February up to 2 March for rice.
While India's food inflation has moderated, rice is the only product in the cereal basket that continued to weigh on the consumer price index.
In January, food inflation, comprising nearly half the overall consumer price basket, was 8.3%, down from 9.53% in December 2023. However, rice inflation was 13% in January against 12.3% in December and 10.4% in January 2023.
Meanwhile, wheat inflation has significantly moderated from 25% in January 2023 to 4.7% in December and then to 2.3% in January 2024.
Not everyone is impressed with the government’s approach. Ashok Gulati, distinguished professor at the Indian Council for Research on International Economic Relations, said that the moves showed a clear bias in favour of consumers, “but often it costs farmers because when prices went up, growers of wheat, rice and onion could not take full advantage of it. So, in a way you are transferring resources from farmers to consumers, which is not a great policy".
“The real policy should be protecting the most vulnerable and the remaining ones should be aligned to the market," Gulati said. “If the government must enter, it should be only a marginal intervention. If you are saying poverty has come down to 5%, why are you giving free foodgrain to 60% of the population? That’s where the conflict is. Farmers want higher prices, and that’s why there is a demand for raising the MSP (minimum support price) while consumers want everything at a very low price or preferably everything free. Balancing the interest of producers and consumers is a job of the political masters."
“My feeling is it is election time, and consumers, especially urban consumers, always get priority because they are larger in number," Gulati added.
The agriculture ministry on Thursday estimated India’s foodgrain production to be 6.1% lower at 309 million tonnes in the 2023-24 crop year (July-June), potentially adding to inflationary pressures ahead of the general elections. Production of wheat, the main rabi crop, is pegged at a record 112 mt, against last year’s 110.55 mt. Rice output, however, is estimated lower at 123.8 mt from last season’s 135.7 mt.
