Rice stocks at central pool hit highest level in two decades
The government’s rice stocks have reached 31.23 million tonnes, the highest in two decades, surpassing the October buffer of 10.25 million tonnes. This surge results from higher procurement, with over 50 million tonnes expected for the 2024-25 season. However, rising stocks may lead to increased carrying costs and a projected food subsidy bill of ₹2.05 lakh crore for FY25.
The government’s rice stocks have reached 31.23 million tonne (MT), highest level in the last two decades, and three times more than the buffer for October 1 because of higher procurement against allocation under the free ration scheme.
The grain stocks are expected to swell further with the government aiming to procure more than 50 MT of rice in 2024-25 season (October-September) while the food corporation of India (FCI) distributes 38 MT of rice free annually to 800 million beneficiaries under Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)
In the 2023-24 season, agencies purchased 52.54 MT of rice from more than 10 million farmers at minimum support price (MSP) and it had spent over Rs 1.76 lakh crore on grain purchase.
As on Tuesday, the FCI holds 31.23 MT of rice which excludes 7.3 MT of grain receivable from millers. The stock is against the buffer of 10.25 MT for October 1. However, the corporation has 23.85 MT of wheat which is against the buffer of 20.52 MT.
An official said that because of the average MSP purchase of in excess of 55 MT of rice in the last four seasons, around 10-12 MT of surplus rice stock annually added to the central pool leading to surge in stock.
Sources said that if rice stocks are not brought down to a comfortable level, the carrying cost of grain will steadily rise and may lead to a spike in food subsidy expenses.
The Centre has estimated the food subsidy bill for FY25 at Rs 2.05 lakh crore, against Rs 2.12 lakh crore as per the revised estimate for 2023-24.
For the government, the economic cost of rice, including MSP, storage, transportation and other costs at the beginning of the current fiscal was estimated at Rs 3,975/quintal which may see an increase due to surplus rice stock.
Rice stocks have been rising because of the lukewarm response to open market sale scheme (OMSS) of rice to bulk buyers at subsidised rate in the last couple of years.
Under the OMSS this fiscal, the FCI has sold only 0.16 MT of rice so far through weekly auctions to private traders at a discounted price of Rs 28.kg.
In FY24, only 0.19 MT of rice was offloaded through OMSS to bulk buyers at Rs 2900/quintal. In addition, the government has allowed grain deficient states to directly buy rice under OMSS without participating in the electronic-auction (e-auction) from August 1 for distribution for their own welfare programme.
In August, the government had allowed ethanol manufacturers to buy 2.3 MT of rice from FCI’s stock through participating in the weekly auction at Rs 28/kg. However, sources said that there has been much interest from ethanol makers on purchasing rice.
Under PMGKAY, 813 million people are currently being provided 5 kg each of specified grains per month free of cost. The free ration scheme is being extended till the end of 2028 and it would cost the exchequer Rs 11.8 trillion.
Source Link : https://www.financialexpress.com/policy/economy-rice-stocks-at-central-pool-hit-highest-level-in-two-decades-3628798/
