India planning to export two million tonnes of wheat

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India is planning to export two million tonnes of wheat from government stock involving a subsidy of Rs 1,000 crore and a decision in this regard is expected soon.

The proposal is to be taken up by the Cabinet Committee on Economic Affairs (CCEA) shortly as part of government's moves to offload food grains in view of storage crunch in the country, according to sources.

At present, the government has food grains stock of 82 million tonnes as of June one against the storage capacity of only 63 million tonnes.

Sources said the export of two million tonnes of wheat would entail a subsidy of around Rs 1000 crore as the cost of the food grain in international market is lesser than in India.

In an effort to test the interest of global buyers in Indian wheat stock, state-owned trading firm STC, under the Commerce Ministry, had recently floated a tender and about six-seven bids have been received.

The export proposal is based on the recommendation made by the Prime Minister's Economic Advisory Council (PMEAC) chairman C. Rangarajan.

The government is in the process of shedding some excess food grains rather than allow these to decay for lack of proper storage.

The Empowered Group of Ministers, headed by Finance Minister Pranab Mukherjee, recently decided to offload an additional eight million tonnes of rice and wheat to BPL families and bulk users at subsidised rates, costing Rs 10,000 crore to the exchequer.

Out of eight million tonnes, 5 million tonnes will be specifically for BPL families and three million tonnes of wheat will be sold through Open Market Sale Scheme.

Under public distribution system, BPL families get 35 kg of wheat and rice per month at Rs 4.15 per kg and Rs 5.65 per kg respectively. The decision would mean a windfall gain for bulk consumers such as flour millers and biscuit makers.

Against the procurement price plus other costs of Rs 1822 per quintal of wheat, the EGoM has fixed a price of Rs 1170 per quintal under the OMSS. On top of it, the government will bear freight cost.

The extra allocation of foodgrains to BPL families will cost the government Rs 8,500 crore, while the sale of wheat to bulk users will have an extra burden of Rs 1,900 crore this year, they said.

The EGoM had also considered release of two million tonnes of rice and wheat to APL (above poverty line) families but the proposal was not approved, the sources said.

With agriculture production and procurement witnessing substantial increase in the recent years disproportionate with the storage facilities, the government has sanctioned creation of 15 million tonnes of storage capacity in public-private partnership.

Out of this, 3-4 million tonnes capacity is expected to be created this year.