Wheat price rise inevitable in India when global rates are high: NITI Aayog
NITI Aayog on Thursday said that one cannot attribute the wheat price rise in India to lower production and that the increase is unavoidable when the international rates of the commodity are on the rise.
NITI Aayog on Thursday said that wheat price rise in the country is unavoidable when the international prices of the commodity are on the rise as Indian economy cannot be insulated from global developments. The public policy think tank said that one cannot attribute the wheat price rise in India to lower production.
"Price (international price) over one year has increased by 30-40 percent and in case of India, in case of wheat you find, it (the rise) is not more than 6-7 percent. Even if wheat output was 111 million tonne, prices of wheat would have definitely increased in the country. After all, there is some relationship between international prices and domestic prices," said Ramesh Chand, Member, NITI Aayog, in a discussion with CNBC-TV18.
According to Chand, the expected wheat production for the current financial year is about 106 million metric tonnes (MMT), nearly 5 MMT lower than the estimates, but considering the buffer stock and the demand-supply situation in the country, there is no deficiency of wheat for India.
Earlier this month, India banned wheat exports with immediate effect as part of the government’s efforts to control rising domestic prices and as heatwave across the country affects the domestic output.
The government on Wednesday argued that India's decision of banning wheat export is unlikely to impact the global supply of the commodity as the country has an insignificant — less than 1 percent — share among the wheat exporting nations.
Ashok Gulati of Indian Council for Research on International Economic Relations (ICRIER) told CNBC-TV18 that the government should allow the farmers to take advantage of higher prices.
"International prices are on an upswing... If the farmer is getting a better price, why the government doesn't want the farmers to take advantage of that?" asked Gulati.
"If the government wants to fill up its own godowns and coffers, they should offer an even better price to the farmer. Announce a bonus of Rs 300 a quintal and wheat will start coming to your kitty," he added.
According to Gulati, many farmers are holding stock in expectation of a better price.
“I fully endorse what Dr Chand was saying that many of the farmers are still holding their stock in an expectation of a good price. But if you block so suddenly as a kneejerk reaction, it's not good domestically for farmers, it's not good for traders, and it’s not good internationally," he said.
Gulati suggests the government should substitute rice and wheat with cash transfers to help poor and allow them to buy what they want. "If you want to help the poor, give them cash and let them choose what they want to buy, whether they want to buy milk or egg or wheat or any other cereal."
He added that agriculture incomes and wages had seen the fastest rise in 2013-14 with the highest exports the country had seen before 2021-22.
"In fact, the drop in poverty was the fastest during that period, but if you try to suppress the prices for the farmers, the farm wages will collapse," he said.
First Published: May 26, 2022 12:40 PM IST
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