By NNN-Xinhua
New Delhi : The Indian government has decided to establish a strategic reserve of 5 million tons of food grains, over and above the buffer stock, to meet emergency situations due to domestic inflation and a tightening wheat and rice prices in the global market, according to the local newspaper The Hindu.
The government will bear the entire procurement and storage cost of this grain. It will also set up an Oversight Committee to monitor the purchases of imported wheat on weekly or fortnightly basis.
The strategic reserve will consist of 3 million tons of wheat and 2 million tons of rice. This will be met from surpluses of domestic stocks after meeting buffer norms and through weekly or fortnightly imports. This is to ensure that there is no cauterization and artificial jacking up of international prices as was done last year in the case of wheat.
The Empowered Group of Ministers headed by Pranab Mukherjee with Agriculture Minister Sharad Pawar and Finance Minister P. Chidambaram as members among others, advised this strategy. The issue was also discussed in the meeting of the Cabinet Committee on Prices chaired by Prime Minister Manmohan Singh last week.
In the last two years, India has imported about 7.3 million tons of wheat to build up buffer stocks and contain domestic prices that registered a steep hike.
International wheat prices also escalated by about 100 percent in one year following a drop in the output as Australia, a major wheat exporting country, suffered two successive droughts. At the same time, the exportable surpluses of rice in the world this year are said to be the lowest in recent years.
According to official estimates, the domestic wheat stocks next April will be merely 1 million tons more than the buffer norm of 4million tones. Rice stocks too will be on par with the buffer norm. Both the situations are vulnerable, with regard to availability for the Public Distribution System and the prices. At a time when the government has to face elections in crucial states, it cannot take chances with food security.