Wheat became the object of the government’s food price intervention as production and procurement this year are both expected to suffer on account of a severe heatwave across the country. Crop estimates for this season are below earlier projections. And procurement is likely to halve from a year ago. This follows an extended period of drawdown in the country’s grain stockpile to subsidise food to over half of the population over the course of the pandemic. The special subsidies on rice and wheat will run till September. The subsidies could have been optimised by switching one for the other. Higher procurement prices would also have helped bring in wheat stocks that farmers and traders are sitting on as international prices rise.
The move by India, the world’s second-largest producer of wheat, has had an effect on international prices, which reached a fresh record high immediately after the decision was announced. Exporting food inflation during a global crisis does not add to the country’s reputation as a reliable trading partner. It also does not go down well with farmers whose livelihood is being squeezed at a time of rising prices.