The government of India is planning to set up a price stabilization fund and a market intervention programme to control the agriculture commodities price.
In order to, control the agriculture commodities price, the government of India is planning to set up a price stabilization fund and a market intervention programme. Under this model government also plans to ban the export of agricultural produce like wheat, oil seeds and sugar, when, the prices are high. The Govt would revoke it when the demand in domestic market of these commodities becomes low, as per the news published by The Financial Express.
The Government of India, also said, that it would release 365,000 tonnes of grain to states for sale in open market in February and March to control the prices. The Food Ministry said the wheat would be released by the state-run Food Corp of India at 986.06 rupees per 100 kg, and would be sold to consumers, in news published by Daily Times.
In this year the wheat production has reduced. Moreover, because of inflation, the prices of all necessary commodities have increased. For example, the prices of wheat have increased by 11.74 per cent. So, the officials of Indian government are concerned about having a sufficient stock of wheat for its domestic consumption.
The ban on exports of agriculture produce intends to prevent any amount of grain crossing the nation's border. This is being done due to shortage of domestic consumption of wheat. However, with the harvest season just round the corner, the wheat market is expected to correct down.
To control inflation in 2007 and augment supplies, an estimated 40-to 50-lakh tones of wheat is expected to import. The import price could be as much as US$ 235-240 a ton (cost, freight, insurance) equal to land price of around Rs 10,800 a ton.
According to Daily Times in the year 2007, India has an estimated production of 72.5 Million ton wheat against the production of 69.4 Million ton in 2006, when it was forced to import 5.5 Million ton of grain. But the Indian Farm Minister Sharad Pawar said an improvement in the weather might bring better-than-expected crops.
As per the research Analyst at RNCOS, "Although the Indian government has taken a good step to overcome the shortage of wheat in its domestic market but to fulfill its domestic consumption Indian government would have to import sizeable quantities of wheat - as much as 40 to 50 lakh tonnes during 2007".
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