India Expands Free Food Grain Program to Address Soaring Cereal Prices, Reveals Report
Published on: November 6, 2023.
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India Extends Free Food Grains Program to Tackle Rising Prices
In an effort to protect consumers from soaring cereal prices and in preparation for the upcoming general election, India has announced a five-year extension of its free food grains program. Prime Minister Narendra Modi unveiled the decision during an election rally in Durg, Chhattisgarh, where state elections are set to take place this month.
The extension of the program is expected to provide relief to consumers. However, 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 program offers free grains to over 800 million people.
India, being the world’s second-largest producer of wheat and rice, has implemented measures to restrict cereal exports in order to control rising prices within the country. This action is crucial for the government to support the welfare program by purchasing from farmers.
According to a dealer based in Mumbai, who is affiliated with a global trade house, these export restrictions are essential to prevent local prices from exceeding government-set floor prices. Without these restrictions, it would hinder the government’s ability to procure an adequate quantity of grains.
For the first time in eight years, India is anticipating a decrease in rice output, raising concerns that the government may extend restrictions on rice exports further to maintain control over food prices leading up to the elections.
Following India’s decision to limit exports of non-basmati rice varieties in July, global rice prices have reached a 15-year high. India, being the largest rice exporter globally, accounts for over 40 percent of total rice exports.
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