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The Indian government will decide next month if it should resume the open market sale scheme (OMSS) for wheat during January-March, or release some quantity through the public distribution system by restoring the previous quotas of states. There has been a continuous surge in wheat and atta (flour) prices despite a ban on exports.
However, either of these options will depend on the larger issue of continuation of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in the next quarter. Under PMGKAY, which was introduced during the outbreak of the Covid pandemic, the Centre issues foodgrains free to those living below the poverty line.
As the current OMSS policy is valid till December 31, the Food Ministry is likely to take a fresh look for 2023 only in February, sources said. However, prices have not come down despite higher sowing of wheat this rabi season, which should have prompted traders to release wheat stocks held back by them. Therefore, some intervention is required in the domestic wheat market, sources said.
Price surge
The retail inflation in cereals (rice and wheat) during November was at 12.96 per cent, the second highest after spices in the food basket. Consumer affairs ministry data show all India average retail prices of wheat surged by 13.4 per cent and atta by 18 per cent since January this year.
In February, the Centre announced the OMSS wheat policy, which fixed reserve prices — ₹2,200/quintal upto September 30 and ₹2,225/quintal during October-December. However, after wheat procurement dipped to a 15-year low of 187.9 lt in the 2022-23 rabi marketing season (April-March), the government suspended OMSS.
“It is difficult to say at what price wheat will be offered as the government will have to see if offering the grain under OMSS at lower than economic cost or subsidised rate will benefit the consumers,” an official source said, adding that flour millers have expressed willingness to buy even at the economic cost of ₹2,588.70/quintal due to lower availability.
Fate of PMGKAY
Ahead of festival season and assembly elections, the Centre in September had announced the continuation of PMGKAY during October-December, entailing an expenditure of ₹44,762 crore, with the free distribution of an estimated 119.62 lakh tonnes (lt) of foodgrains (21.01 lt wheat and 98.61 lt rice) among 79.75 crore beneficiaries under the National Food Security Act (NFSA).
If the PMGKAY is extended for the remaining period of the current fiscal, a similar additional 119.62 lt of grains will be required, which may bring down the stock to 92 lt of wheat and 137 lt of rice as on April 1, 2023, against buffer norms of 75 lt for wheat and 136 lt for rice, leaving little scope for OMSS, sources said. Without the extension of PMGKAY, the government can reallocate the same 21 lt under OMSS, the sources said.
Rice vs wheat
However, as the government had in May cut the monthly allocation of wheat by over 11 lt, by reallocating the entitlements in the form of rice, there has been a demand by some states such as Uttar Pradesh, Madhya Pradesh and Gujarat for its partial restoration to meet the requirement of the population that eats roti (flat bread). The government will have to consider the demand, too, while deciding on OMSS.
Besides, there was also increased allocation of rice by cutting the monthly wheat allocation under NFSA by 37,000 tonnes in Gujarat, 6 lt in Uttar Pradesh and over 2 lt in Madhya Pradesh. If these NFSA allotments were to be restored, the scope for OMSS wheat may reduce further, the sources said.
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