High retail cereal inflation
- Retail cereal inflation, at over 11.5 % year-on-year in September, is at its highest since end-2013.
- Also, total stocks of wheat and rice in government godowns have depleted to a five-year low.
Current scenario
- 2021-22 - not only an unprecedented 105.6 million tonnes(mt)of grain got channelled through the PDS, the country also exported a record 28.4 mt of the two cereals.
- Public policy's focus is to make agriculture market-led, resource-efficient and environmentally-sustainable.
- Set back by the war in Ukraine and the effects of climate change.
- In the case of wheat, a single harvest failure has resulted in public stocks plunging close to the normative minimum buffer.
- While rice stocks are comfortable, there is uncertainty overproduction in Uttar Pradesh, Bihar, Jharkhand and West Bengal.
What should the government do?
- It may be worth contracting 2-3 mtof such imports for replenishing public stocks and undertaking open market operations to keep a lid on prices.
- The government should not have extended the free-grain Pradhan Mantri Garib Kalyan Anna Yojana scheme till December.
- It shouldn't compound the mistake through a huge MSP hike.
- Farmers don't need special incentives to plant wheat.
- Cereal inflation can be managed and does not weaken the case for cropping diversification.
Prelims Takeaway
- PDS
- Pradhan Mantri Garib Kalyan Anna Yojana