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Informist, Tuesday, Jun. 3, 2025

 

By Pallavi Singhal

 

NEW DELHI – The government's decision to reimpose wheat stock limits last week, nearly a month before the end of procurement, is aimed at preempting price volatility and tempering inflationary expectations, according to multiple senior government officials. The government is also sensitive about the price of the staple grain ahead of the crucial state assembly elections in Bihar later this year.

 

As per the official notification, wheat wholesalers and traders can stock only up to 3,000 tonnes and retailers are permitted to hold 10 tonnes per outlet. In the past, such limits were mostly issued after the government's wheat procurement season concluded in late June. 

 

The step was taken keeping multiple factors in mind, the officials said. "First and foremost, the prices of wheat and atta have gained on-year despite record output and good government procurement. This is making the government very uncomfortable," one of the officials told Informist. According to the Consumer Price Index, inflation in 'wheat/atta other sources' was ruling at 7.6% in April, despite the overall food price inflation falling to a 42-month low of 1.78%.

 

The government did not just want to signal the market and warn them against hoarding and price manipulation, but also find out if this was an artificial price rise, another official said. "Prices have not come down despite record output estimates and good government procurement. We understand 20-30% (23-35 million tonnes) of the total produce may be with the farmers who want to earn some profit, but even then, it leaves over 50 million tonnes for the market (traders and millers). Where did it go? This has sparked concerns of an artificial price hike," the second official said. 

 

Latest government estimates peg wheat production in 2024-25 (Jul-Jun) at a record 117.5 million tonnes, up from the initial estimate of 115.4 million tonnes. The government has already procured around 30 million tonnes of wheat.

 

The upcoming state elections in Bihar are also being viewed as a key reason for the government's price sensitivity. "After two years of high inflation, the government has finally been able to bring it under control, commodity by commodity. In such a scenario, and with elections looming, the government sees it as their loss that prices of wheat have remained higher on year. The government will do all it can to bring them down," a third official said. Elections in the state of Bihar are slated to be held in November this year.

 

The government's decision to impose stock limits aims to assess the actual wheat availability in the market and prevent traders from cornering the grain. With elections around the corner, the government is keen to keep prices under control, ensuring that the staple grain remains affordable for consumers.

 

The imposition of stock limits also suggests that the government is taking a cautious approach, anticipating potential price volatility in the coming months. Informist had reported last week that the government may be willing to begin open market sales of wheat in July in an attempt to increase supply in the market to control prices. End

 

Edited by Saji George Titus

 

 

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