Good wheat output can temper inflation

A robust wheat output can help offset some of the vagaries that this year’s monsoon is expected to bring

Last week ended with some good news on the wheat procurement front, when the government announced that it expects only a marginal loss in output due to a spell of untimely rainfall and hailstorms, and that India is still on track for a record harvest of 112 million tonnes. While the impact of the squall in Uttar Pradesh, Madhya Pradesh, Rajasthan and Punjab since the middle of March on the quality of the crop is yet to be determined, the damage on quantity of production will be very limited, said Union food secretary Sanjeev Chopra.

Last year, a prolonged heatwave in March crimped wheat output by 2.5% to 107 million tonnes, stoking shortages and food inflation, and increasing the country’s vulnerability amid a global cereal crisis due to the Ukraine conflict. (Raminder Pal Singh)

This is a welcome development. Last year, a prolonged heatwave in March crimped wheat output by 2.5% to 107 million tonnes, stoking shortages and food inflation, and increasing the country’s vulnerability amid a global cereal crisis due to the Ukraine conflict. The shortfall had plunged the Centre’s procurement of wheat to a 15-year low at just 18 million tonnes, which, though adequate, had sparked concerns of a looming shortage. To be sure, the situation is also different this year, given that the Union government has withdrawn its massive PM Garib Kalyan Anna Yojana, and decided to provide free ration under the food security act.

Though final procurement numbers are awaited, a robust wheat output can help offset some of the vagaries that this year’s monsoon is expected to bring, given the unusual weather patterns in April and the looming possibility of an El Nino hurting rainfall. Wheat stocks may, therefore, help alleviate some of the pressure created by a less than bumper rice production, should the monsoon be inadequate, patchy or unpredictable in geographical or temporal spread (as was seen last year). This will also help in releasing some food inflation pressures and help the Reserve Bank of India in its fight to control inflation as it sits in June to decide the course of the country’s monetary policy.