The Indian government’s open market sale of wheat has yielded positive results. It has not only ensured adequate supply and affordability but also reduced the borrowings of the Food Corporation of India (FCI) by Rs 21,000 crore. The government decided to intervene in the market to keep prices under check and to meet the demand for wheat and atta. As the availability of wheat with flour mills was low, the government undertook the sale of a record 100 lakh tonnes of wheat. This move was crucial as the government did not want to take any chances ahead of the general elections. FCI would have had to undertake borrowings of over Rs 1.7 lakh crore but ended up borrowing a little under Rs 1.4 lakh crore. This reduction in borrowings was possible because FCI raised almost Rs 21,000 crore through the open market sale of wheat and also received equity support of Rs 10,700 crore from the Centre.

This reduction in FCI’s borrowings will translate into an annual interest saving of around Rs 375 crore. FCI sources have stated that the agency is on track to have more than sufficient stocks to intervene in the market and boost supplies if required. Procurement of wheat for this year has been promising as 196 lakh tonnes have been procured until Monday. Although this figure is 10% lower than the previous year, it is more than the quantity required for the distribution of free foodgrains to 80 crore poor and other welfare requirements for the entire year. FCI is confident that it will be able to procure 300-310 lakh tonnes of wheat this year with an additional 100 lakh tonnes to be used for open market sales. Last year, the government had purchased 261 lakh tonnes of wheat.

Punjab and Haryana have witnessed a good arrival of wheat, and procurement in these two states alone is expected to generate around 200 lakh tonnes for the central pool. FCI CMD Ashok K Meena stated that the annual requirement of Prime Minister Garib Kalyan Anna Yojana and other welfare schemes is 186 lakh tonnes. However, wheat procurement in Madhya Pradesh has been slow, with only 34.6 lakh tonnes procured so far despite commencing MSP operations early. It is unlikely that the state will achieve the initial target of 80 lakh tonnes. In Uttar Pradesh, wheat purchase has seen a significant increase of 250% compared to last year, with 5.6 lakh tonnes already procured. These developments come amid claims by agriculture ministry officials that the overall wheat production will reach 1,150 lakh tonnes, surpassing the earlier estimate of 1,120 lakh tonnes.