The chapatti on your plate and the jam sandwich in your child's lunch box are set to cost more. With prices of wheat soaring and the government deciding to import nearly eight lakh tonnes of wheat at a whopping Rs 16 a kilo, wheat flour is going to get dearer this festive season.
An Empowered Group of Ministers (EgoM) headed by External Affairs Minister Pranab Mukherjee approved the decision to buy wheat from the international market at $390 (Rs 16,000) per tonne on Monday. The decision is bound to cause political heartburn because the government paid the farmer nearly half the price (Rs 850 per quintal) as minimum support price during the last procurement and had earlier cancelled the decision to buy 10 lakh tonnes of wheat at $263 per tonne.
Economists say spiralling wheat prices aren't going to be easy for the common man to digest either. When a big player like India, which is a foodgrain-sufficient nation, goes to the market and buys wheat stocks, prices in the international market are bound to rise further, they add.
“Between the time the government floated the first tender in March and by the time the decision was taken, prices had gone up further. The difference in prices between then and now is Rs 2,000 crore,” economist Dr Jayati Ghosh said. “It is extremely unfortunate and a result of bad planning that this is happening,” she added.
Federation of Indian Chambers of Commerce and Industry (FICCI) chief economist Dr Anjan Ray said: “The government’s move can raise prices in the international market further but we do have enough forex reserves for the current import. As a one-time measure, it is fine to import wheat.”
The move is aimed at building stocks, Minister of State for Food Akhilesh Prasad told the Hindustan Times. “We have to import wheat because the stocks have fallen short of our requirements. The buffer stocks will ensure that prices do not go up,” he said.
This claim is contested by players in the market. “If prices in the international market are going up, how can the prices in the local market remain unaffected,” asked O.P. Jain, president of the Delhi Grain Merchants' Association.
Wheat prices are expected to go up from the current Rs 10.5 a kilo to around Rs 12 by Diwali.