Government Steps In to Control Retail Rice Prices
Published on: January 11, 2024.
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The soaring retail inflation in rice has prompted the Indian government to consider various measures to ease the situation. These include selling grain from its stocks and urging retailers to reduce their profit margins. To assess the rice supply in the country, Food Minister Piyush Goyal will hold a meeting with stakeholders, including processors, exporters, and traders, on January 15.
In line with the previous Bharat dal and Bharat atta schemes for pulses and wheat, the government is discussing market interventions to control retail rice prices. This could involve offloading surplus rice stocks held by the Food Corporation of India (FCI) and taking steps to curb the high margins of retailers. Currently, chana dal and atta are being sold at subsidized rates through Nafed, NCCF, and Kendriya Bhandars stores under the Bharat Dal and Bharat Atta initiatives.
Despite a good crop and sufficient stocks with the FCI, domestic rice prices remain high. Various restrictions and duties on grain exports have also been imposed. The upcoming meeting with the rice industry will address concerns such as the lukewarm response to subsidized rice sold by the FCI and the overall supply situation.
The food ministry has emphasized the need for the rice industry to bring down domestic prices and tackle any profiteering attempts. Wholesalers and retailers have been reported to be enjoying increased profit margins, which requires regulation.
The FCI has sold only 0.14 million metric tonnes (MT) of rice under the open market sale scheme, significantly lower than the allotted 5 MT. The rice was sold at Rs 2900/quintal, below the economic cost of grain for 2022-23. As of January 1, the FCI still had 18.05 million MT of rice in stock, with 33.27 MT yet to be received from millers. The buffer stock stands at 7.61 MT.
Since October 2022, retail inflation in rice has remained in double digits, with a price increase of 11.81% in November 2023 compared to the previous year. The modal retail prices of rice have risen to Rs 40/kg, an 18% increase year-on-year. Rice falls under the “cereals and products” category, which holds a weightage of 12.35% in the consumer price index.
In the previous year, the government prohibited the export of non-basmati white rice but allowed shipments for the food security needs of developing countries. It also imposed a 20% export duty on par-boiled rice to improve domestic supplies.
The estimated rice production for the 2022-23 crop year was a record 135.75 MT. In the first advance estimate for the 2023-24 crop year, Kharif crop output is projected to be 106.3 MT, slightly higher than the previous year. Kharif crops contribute to more than 80% of total rice output.
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