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Shvoong Home>Society & News>News Items>The Economic Times Summary

The Economic Times

Article Summary   by:Publicum    
  • Summary rating: 4 stars (6 Ratings)
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INDIA FACES A SERIOUS FOODGRAINS CRISIS for the first time since its green revolution days of the 1960s. Three million tonnes of wheat are to be imported at an approximate cost of 540 million US dollars. This is in addition to the 0.5 million tonnes of wheat already imported from Australia. This time there is intense pressure on the government to import the wheat from the United States, and some quarters question the relaxation of import norms in this context.
Winter wheat arrivals in the wholesale markets of the north, known as mandis, have been barely adequate through the month of April, when the first harvests begin to pour in. The government plays the dominant role in purchasing, storing and selling the wheat throughout the country. The subsidised costing is meant to look after the food needs of the poor. The main agency involved in this operation is the Food Corporation of India. The Corporation has been tasked to maintain a buffer stock of 4 million tonnes as on April 1, but this year it had barely procured half the amount as on that date. This would make the buffer stock target of 17.2 million tonnes to be attained by July 1 near impossible. This year wheat production is projected at 74 million tonnes.
The prices at which the government buys the wheat are meant to be rock bottom but generous. If the farmer can get a better deal he can always sell his harvest privately elsewhere. The government procurement price is also a political leverage. But this year the open market prices, or that which private traders are offering, reign much higher than those of the government and this is bound toaffect peak government procurement between mid-April and mid-May. Hence the hasty decision to import wheat, which normally should have been made only at the fag end of the procurement season.
The Food Ministry announced on April 20 that the imports would be made by another government company, State Trading Corporation. Last time there was strong criticism for not allowing private traders to import the wheat at cheaper prices than that offered by the government company. This time how much the government company quotes in its tenders will be known only when some quarters leak the figures to the public. The Food Minister has defended his decision to import wheat in the name of protecting the consumer.

Published: April 22, 2006   
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