Government seeks to clear excess foodgrain stock

The empowered group of ministers (eGoM) on management of wheat and rice stocks, headed by finance minister Pranab Mukherjee, is weighing the pros and cons of increasing the foodgrain allocation for above poverty line (APL) people to clear the government warehouses and procure more foodgrain.

If the eGoM makes the recommendation and it is accepted by the government, the move may translate into a subsidy burden of Rs 470 crore per month.

The additional allocation could be considered for just six months with effect from July 1, 2010, the eGoM meeting is learnt to have discussed. The additional allocation could be made to those states where currently per APL family allocation is below 15 kg per month.  Also, the government is targeting prisons, school and colleges hostels and old age homes to clear the stocks from Food Corp of India.

Meanwhile, the eGoM has recommended extending the Open Market Sale Scheme (OMSS) till September 2010. The scheme, launched in October, 2009, is set to expire on June 30 this year. The government had allocated 42 lakh tonne of wheat to be sold under OMSS during October 2009-March 2010 to bulk buyers as well as states. Out of these 20 lakh tonne was allocated for the bulk buyers.

While the price of OMSS wheat in Delhi is Rs 1,254 per quintal, the market price is in the range of Rs 1,120-1,150 per quintal, sources said. This has led to bulk buyers lifting stock directly from the market instead of going for government tenders.
According to government estimates, the central pool wheat budget for 2010-11 as on April 1, 2010, stood at 161.25 lakh tonne. The expected procurement in Rabi marketing season 2010-11 is 22.67 lakh tonne, which will make the total availability of wheat stock at 423.92 lakh tonne.