Finance Minister Nirmala Sitharaman’s announcement of giving 15 kg of wheat or rice free to 80-crore people over the next three months would require additional 12 million tonnes (mt) of grains.

This would be over and above the 5 kg foodgrains they already get through the public distribution system (PDS).

This move will not only help households that are impacted by the lockdown, but also liquidate foodgrain stocks available with public procurement agencies.

Liquidate foodgrain stocks

“This is a good decision by the government. It will help the Food Corporation of India (FCI) to clear a good part of the huge foodgrain stock it is currently saddled with,” said Siraj Chaudhry, MD and CEO of National Collateral Management Services Limited. “It will help procurement agencies to make space for fresh wheat stocks which, if everything goes well, will start coming in from the second half of April.

On the flip side, it may hit farmers who would sell in the open market, with prices going down owing to lower demand, Chaudhry added.

Nearly a third of wheat is sold in the open market by farmers. The government should also be careful to ensure that the bulk of grains being given away is not sold back to the FCI, the NCML official said.

Liquidating stocks is a good idea as it would bring down the carrying stock of these foodgrains, Chaudhary said.

As on March 1, the FCI had 30.97 mt of rice and 27.52 mt of wheat, totalling 58.49 mt. The FCI also has unmilled paddy stock of 28.70 mt.

The current stocks are close to three times the stipulated buffer and strategic reserves.

Assocham Secretary-General Deepak Sood lauded the package and said free ration for three months over and above the existing quantity under PDS, and making available cooking gas to the beneficiaries of the Ujwala scheme will help the poor.

FICCI President Sangita Reddy said the government will have to ensure last-mile connectivity of essential goods.

She also welcomed the announcement front-loading first PM Kisan Samman Nidhi instalment of ₹2,000 to 8.69-crore farmers.

Even though directives have been given to allow inter-State movement of essential goods, they are not clearly transmitted to check-points and, as a result, vehicles carrying essential goods continue to be held up in many places.