India has increased the price at which it will buy new season’s wheat from domestic farmers by 150 rupees, or 6.6 percent, to encourage them to expand their acreage and remove the need for imports in this country which is the second largest producer of this cereal in the world.
The revised procurement price of 2,425 rupees ($28.88) per 100 kg for 2025 is compared to 2,275 rupees the previous year, Information Technology Minister Ashwini Vaishnaw said at a press conference following a meeting of Prime Minister Narendra Modi’s cabinet.
India sets the price each year at which it will buy wheat and rice from local farmers to distribute free to the 800 million beneficiaries of the world’s largest food aid program.
A reasonable increase in support prices or guaranteed prices set by the state encourages farmers to increase their production.
Unlike rice, India does not have large stocks of wheat. Nonetheless, Modi’s administration has resisted calls to remove a 40% tax on wheat imports because facilitating imports is seen as an unfriendly move for farmers.
India’s millions of farmers are seen as an influential voting bloc and Modi’s ruling Bharatiya Janata Party lost 75 rural seats in this year’s general election.
After five consecutive record harvests, a sharp rise in temperatures has caused India’s wheat harvest to plummet in 2022 and 2023, prompting the world’s second-largest producer to ban exports.
India produces only one wheat crop per year, with sowing taking place in October and November and harvesting from April.
This year’s harvest was also nearly 6.25% short of the government’s estimate of 113.3 million metric tons, as a leading industry body said earlier this year.
Domestic prices remained above this year’s minimum procurement rate of Rs 2,275 per 100 kg, but New Delhi struggled to replenish the state’s wheat stocks.
The government purchased 26.6 million tonnes of wheat this year, below its target of 30-32 million tonnes.
However, he advised business houses to refrain from buying in order to allow the Food Corporation of India, which manages state stocks, to acquire large quantities.
Separately, Mr Vaishnaw said Mr Modi’s cabinet had approved a 3 per cent increase in inflation-linked allowance for government employees.
($1 = 83.97 rupees)
