This Article is From Sep 25, 2013

Government examining high inflation in foodgrains: Food Minister

New Delhi:

Expressing concern over high food inflation, Food Minister K V Thomas today said the government is examining the reasons for "undue" rise in prices of food grains despite high production.

As per the WPI index, food inflation rose sharply to 18.18 per cent in August, while the general inflation increased to 6.1 per cent in the same period.

"Prices of foodgrains have been rising despite good production and storage in the last few years. We are analysing that. We will find out reasons behind undue inflation in foodgrains," Mr Thomas said.

He was addressing the 73rd annual general meeting of Roller Flour Millers' Federation of India.

"There is always some increase in prices of agri- commodities with regular hike in the minimum support price (MSP) of these commodities every year. But the inflation in foodgrains should not be this sharp when there is sufficient supply," he added.

As per the official data, WPI inflation in rice was at 20.13 per cent, while it stood at 7.6 per cent in wheat during last month.

To control prices and clear space in Food Corporation of India (FCI) for new crop, Mr Thomas said the government has eased norms for selling 8.5 million tonnes of wheat to bulk traders like flour mills under the open market sale scheme (OMSS).

Earlier, bulk traders were allowed to buy FCI wheat only from Punjab and Haryana under OMSS at the reserve price of Rs 1500 per quintal through the tender process. Now they can also buy it from FCI depots in respective states by paying the reserve price plus freight charges from Ludhiana, he said.

Also, the government has decided to set up a Committee of Secretaries (CoS) to review the reserve price of wheat and freight charges regularly for OMSS sale, keeping in view the fluctuation in wheat prices. The decision taken by the CoS will be ratified by the group of ministries, Mr Thomas added.

As on September 1, foodgrain stock with FCI was at 58.93 million tonnes. Of this, wheat stood at 38.3 million tonne and rice 20.5 million tonne. FCI is the government's nodal agency for procurement and distribution of foodgrains.

Country's foodgrain production was at 255.36 million tonnes last year, of which wheat stood at 92.46 million tonnes.

Foodgrain production is expected to be at a record level this year on account of a better monsoon.