October 8, 2010

India's grain stocks increase in October

India's grain stocks soared on bumper harvests at the start of this month and on banned exports of wheat and non-basmati rice, giving the government ample firepower to deal with high food inflation.

The food price index in the year to September 25 rose 16.24% from a year earlier, government data on Thursday (Oct 7) showed.

At 27.7 million tonnes, wheat stocks on October 1 were more than double the 11 million tonnes target, government sources said on Thursday (Oct 7). Last month, stocks of wheat were at 29.9 million tonnes.

State-run Food Corporation India, the main grain procurement agency, usually procures wheat between April and July.

High food prices are a political concern for the ruling Congress party, which faces key state elections this year and next.

Analysts say high food prices have dissuaded the government from lifting a ban on exports of wheat and common grades of rice despite overflowing grain bins.

The government buys wheat and rice from local farmers to build reserves for welfare programmes, emergency needs and help farmers avoid distress sale.