India to Extend Free Food Grains Program for 5 More Years, Announces Modi
Published on: November 5, 2023.
Filed under:
India Plans to Extend Free Food Grains Program
India is set to extend its free food grains program for another five years, according to Prime Minister Narendra Modi. The decision comes as the government aims to protect consumers from the rising prices of cereals before the general election early next year. While this move will provide relief to consumers, it will also increase government spending and require more wheat and rice procurement from farmers to sustain the welfare program. Currently, the program benefits over 800 million people in the country.
Modi confirmed the extension during an election rally in Durg, a city in the state of Chhattisgarh, where state elections are scheduled for this month. The grains program, estimated to cost the government around 2 trillion rupees ($24.06 billion) this year, was originally set to expire at the end of the year.
As India is the world’s second-largest producer of wheat and rice, export restrictions have been put in place to curb rising prices domestically. However, due to the need to purchase from farmers to support the welfare program, these export restrictions will likely be extended.
A Mumbai-based dealer from a global trade house explained that without export restrictions, local prices would exceed the government-set floor prices, making it difficult to procure enough grains.
India’s rice output is expected to decline this year for the first time in eight years, suggesting that export curbs may be extended to control food prices leading up to the elections. After India imposed restrictions on non-basmati rice varieties in July, global rice prices skyrocketed to a 15-year high. India is the largest rice exporter globally, accounting for over 40% of total rice exports.
Last year, India banned wheat exports following a heat wave that affected output in a surprising move.
Source: [Asia Nikkei](https://asia.nikkei.com)
