New Delhi: Expressing concern over high food inflation, Food Minister K V Thomas on Wednesday said the government is examining the reasons for "undue" rise in prices of foodgrains despite high production.
As per the WPI index, food inflation rose sharply to 18.18 percent in August, while the general inflation increased to 6.1 percent 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," 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 percent, while it stood at 7.6 percent in wheat during last month.
To control prices and clear space in Food Corporation of India (FCI) for new crop, 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, 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.
To a suggestion made by Roller Flour Millers' Federation of India (RFMFI) on supplying fortified wheat flour under the food law, Thomas said: "There are provisions in the law to provide nutritional security to pregnant women and children.
"We have taken the first step. Once it is done, we propose to provide nutritional security to all," he said, adding that foodgrain production would be sufficient to meet the requirement under the law.
The ambitious food law aims to provide a legal right over cheaper foodgrains to 82 crore people in the country. Delhi, Haryana and Uttarkhand have announced its roll out.
Asking flour millers to modernise their operations, Thomas warned them of "serious actions" if they are found purchasing PDS wheat diverted for sale in the open market.
"One of problem that the government is facing is PDS leakage which is 35-40 percent. Of this, a large quantity (wheat) is coming to you. I request not to encourage. ...We will take serious actions," he said.
The Minister said that efforts are being made to plug loopholes in the PDS and strengthen storage capacity for smooth implementation of the food law across the country.
Echoing views, Food Secretary Sudhir Kumar said the Centre is in favour of supplying fortified wheat flour, instead of wheat, under PDS. There is a provision in the law.
"We have left this decision to states. I request you to get in touch with states as there are logistic issues," he told flour millers adding that this can be done as the cost of fortifying wheat flour is minimal at three paise per kg.
On Federation's demand for zero state tax on wheat, Kumar said the Centre is in touch with major wheat growing states like Punjab and Haryana as well as rice growing state Andhra Pradesh for bringing down the state taxes.
"It is a state subject. We have asked Punjab and Haryana to reduce taxes on wheat for flour millers," he said adding that millers should modernise and improve quality.
Presently, indirect tax on wheat is in the range of 9-11 percent in these two states.
The Federation also urged the government to incentivise exports of value-added wheat products in terms of freight subsidy and duty draw back.
Currently, there are more than 1,200 flour mills in the country processing 20 million tonnes of wheat per annum. It is a Rs 20,000 crore industry.
PTI
