Sunday 4 December 2022
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EconomyIndia to import wheat months after bragging about feeding the world

India to import wheat months after bragging about feeding the world

Less than four months after Prime Minister Narendra Modi boldly declared that India was ready to "feed the world" after ’s invasion of Ukraine, which had strained the to the rest of the world, the union government is considering grain imports. The effect of a record-breaking heat wave, which started in March, threatened Indian wheat output, resulting in reduced production. It also pushed up local prices.

The -induced situation made everyday more expensive for hundreds of millions of Indians, using wheat to make staple foods like naan and chapatis.

Citing a bumper wheat harvest was not going to follow, as the government restricted exports in mid-May.

The Corporation of India says that the reserves have declined in August to the lowest level for the month in 14 years while wheat inflation is running at close to 12%.

With the current situation prevailing, looming shortage and rising prices, authorities are mulling over buying wheat from overseas. Also, officials are discussing whether to cut or abolish a 40% import tax on wheat to help flour millers in some regions import grain, reported Bloomberg.

"Given a lot of the war risk premium has come off from global wheat prices, India can look at augmenting its domestic wheat via more imports. However, since domestic wholesale wheat prices are lower than global prices, a reduction in import duties will also be essential to make it a viable option," Bloomberg quoted Nomura Holdings Inc. economist Sonal Varma as saying.

With the current situation prevailing — looming shortage and rising prices, authorities are mulling buying wheat from overseas. Also, officials are discussing whether to cut or abolish a 40% import tax on wheat to help flour millers in some regions import grain, reported Bloomberg.

"Given a lot of the war risk premium has come off from global wheat prices, India can look at augmenting its domestic wheat via more imports. However, since domestic wholesale wheat prices are lower than global prices, a reduction in import duties will also be essential to make it a viable option," Bloomberg quoted Nomura Holdings Inc. economist Sonal Varma as saying.

As per authorities, the 2021-22 wheat harvest to come in at around 107 million tons, down from a February estimate of 111 million. However, traders and flour millers forecast 98 million to 102 million tons.

According to the ministry, the wheat imports by the government are expected to be less than half of the levels in 2021.

Meanwhile, the consumer wheat inflation rose to 11.7% in July and the wholesale prices were up even more, by 13.6% in July, showed official data.

Though wheat is India’s biggest winter crop, concerns over rice production may take a surge as it could be the next challenge for global supply.

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