India to release 10 million tonnes more wheat into open market

The government has allowed the Food Corporation of India (FCI) to sell 10 million tonnes of wheat in the open market in order to boost domestic supply and check prices. The decision was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi.

''The CCEA has cleared sale of about 10 million tonnes of wheat via the Open Market Sale Scheme (OMSS) to bulk buyers,'' food minister Ram Vilas Paswan said on Thursday after a cabinet meeting.

FCI has fixed the reserve price of wheat under OMSS at Rs1,500 per quintal plus freight charges for old crop and five per cent premium for new crop, he said.

FCI, the official grain procurement agency of the government, said the sale of wheat would be through e-tendering.

The proposed wheat sale by FCI, while improving domestic availability of wheat and checking prices, is also intended to ease storage pressure on FCI.

Domestic prices of wheat have firmed up in the last few days following a rise in international wheat prices. The wholesale price of wheat has increased to Rs19 per kg in the domestic market in July, against Rs16.10 per kg in the same month last year, according to official data.

FCI had a wheat stock of 40 million tonnes at the beginning of this month, against the requirement of 20 million tonnes.

The country had produced a record 95.60 million tonnes of wheat in the 2013-14 crop year.

The government had last year announced the sale of 8.5 million tonnes of wheat via OMSS, but was able to sell only 5.8 million tonnes, earning about Rs9,310 crore.

The government, which buys rice and wheat from local farmers through the FCI, uses it partly to build a food grain reserve and partly to sell it to the poor at subsidised prices.

India's retail food inflation eased to 7.97 per cent in June against 9.56 per cent in May after the government took steps to check hoardings and curb exports of onions and potatoes.