Spot Wheat prices experienced a 0.62% increase on Tuesday, reaching 2,535 rupees. This marks the highest price since February. On Tuesday, Indian wheat prices reached a six-month peak due to restricted supplies and strong demand in anticipation of the festival season. The possibility of heightened prices has led to considerations in New Delhi about potentially removing import tariffs on wheat to ensure adequate supplies and manage prices, especially given upcoming important state elections and next year's general election.
Escalating wheat prices could contribute to food inflation, potentially posing challenges for both the government and the central bank in their efforts to curb inflation. To prevent potential shortages during the festive season, the government should release stocks from its warehouses into the open market. As of August 1, wheat stocks in government warehouses were recorded at 28.3 million metric tons, indicating an increase from the 26.6 million metric tons reported a year earlier.
India is contemplating a reduction or even elimination of the 40% import tax on wheat, along with lowering the limit on wheat stocks that millers and traders are allowed to hold. Sanjeev Chopra, the highest-ranking civil servant at the federal food ministry, made this announcement last week. According to the Ministry of Agriculture & Farmers Welfare, wheat production reached a record-breaking 112.74 million metric tons in 2023, a rise from the previous year's 107.7 million metric tons.
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