india offers free food grains program to combat surging cereal prices- report
Published on: November 6, 2023.
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India Extends Free Food Grains Program to Tackle Rising Prices and Prepare for Elections
In an effort to protect consumers from the soaring prices of cereals and to prepare for the upcoming general election early next year, India has announced a five-year extension of its free food grains program, according to Prime Minister Narendra Modi. This extension aims to provide relief to consumers, but it will also lead to increased government spending and the need for New Delhi to procure larger quantities of wheat and rice from farmers to sustain the welfare program.
Currently, the free grains program offers assistance to over 800 million people and is estimated to cost the Indian government approximately 2 trillion rupees ($24.06 billion) this year. Prime Minister Modi confirmed this decision during an election rally in the city of Durg, located in the central state of Chhattisgarh, where state elections are scheduled for this month.
India, being the second-largest producer of wheat and rice, has implemented measures to limit the export of these cereals to control rising prices domestically. This move is necessary for the government to secure an adequate quantity of grains from farmers for the welfare program. Without these export restrictions, local prices would surpass the government-set floor prices, hindering procurement efforts.
According to a dealer based in Mumbai, affiliated with a global trade house, these export restrictions have significant implications. They prevent local prices from exceeding the government’s set floor prices, ensuring the smooth operation of the welfare program. India’s rice output is expected to decline this year for the first time in eight years, raising concerns that New Delhi may extend restrictions on rice exports to maintain control over food prices leading up to the elections.
India is the world’s largest rice exporter, responsible for more than 40% of global rice exports. As a result of India’s decision to limit non-basmati rice exports in July, global rice prices have reached a 15-year high.
Prime Minister Modi’s announcement to extend the free food grains program aims to alleviate the burden on consumers while addressing concerns about rising food prices. This move showcases the government’s commitment to ensuring food security for its citizens during challenging times.
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