The government has decided to offload 0.3 million tonnes (MT) under the open market sale scheme (OMSS) by the Food Corporation of India (FCI) in its weekly e-auction from next month, against 0.2 MT currently being offered for the bulk purchaser to cool down the prices.
Sources told FE that because of surplus stocks held by the FCI, the government may offer more quantity of wheat through weekly e-auctions so that prices do not spike during the current festive months.
As per the new bidding norms, the maximum quantity a bidder can purchase under OMSS weekly e-auction has been increased to 200 tonnes from 100 tonnes. However, to avoid the possibility of hoarding, traders participating in bidding without a wheat processing facility will not be allowed to participate in the OMSS.
FCI has sold more than 2.75 million tonnes (MT) of wheat from its stock in the open market through weekly e-auctions being held since June so far, thus, curbing the increase in the retail prices, a food ministry official said.
On Thursday, the corporation sold 0.19 MT of wheat, against 0.2 MT offered on the e-auction, and the target is to sell 5 MT of grain to the bulk buyers by the end of the year.
At present, FCI had 22.4 MT of wheat stocks against the buffer of 13.8 MT for January 1.
In August, to contain the rise in cereal prices, the government had announced the sale of 5 MT of wheat. Earlier food Secretary Sanjeev Chopra had stated that the government is considering several measures, including cutting import duty on wheat.
“We may sell more wheat in the open market, if needed to cool down the prices,” Chopra recently said.
The official said that the weighted average selling price of wheat under open market sale scheme on Thursday’s auction rose to a high of Rs 2,310.69/quintal against the reserve price of Rs 2,127.7/quintal.
Overall cereals retail inflation last month was still at double digits (10.95%), a marginal decline from 11.85% in August because of some softening of wheat prices.
The rate of increase in wheat prices declined to 7.93% last month on the year from 9.3% in August on the year.
To boost output, the government recently announced a 7% increase in the minimum support price (MSP) of wheat, to Rs 2,275/quintal for the 2024-25 marketing season (April-June) compared to the previous year.
In April 2019, India raised the duty to 40% from 30% as domestic prices had dropped, to discourage cheaper wheat imports.
Last month, the government reduced stock holding limits for wheat for traders, wholesalers and retailers to 2000 tonne from 3000 tonne, imposed three months back.
In the last couple of months, the government has announced a series of measures to check price rise, including a ban on white rice exports, initiating open market sale of wheat, rice from the central pool, and the imposition of stock holding limits, a measure last initiated in 2008.
Source: The Financial Express