In the midst of the flour shortages in neighboring Pakistan, the price of flour is increasing within India too. The cost of flour has been soaring twice during the first month of Jan. According to data from the government the flour is sold on the market at Rs.38 per kilogram, whereas its cost in packs is Rs.45-55 per kilogram.
In the study
the price of flour has gone up by 40% compared to the previous year. In January 2022 the price for loose flour was 25-27 for a kilogram, while the brand-name flour in packs was priced at around the price of Rs 35 per kg. The export ban and the rising costs of flour and wheat have intensified the tension. Why are the costs of flour rising in India despite it being the second-largest wheat producer worldwide? Let us know the answer in depth.
What are the effects of the rise in the cost of wheat?
1. The prices of semolina and maida are also growing rapidly. Meaning the inflation rate is also rising. Due to this the budget for kitchens of everyday people could be disrupted.
2. Earlier wheat and rice were given in equal amounts. As part of the free ration which was given in the Pradhan Mantri Kalyan Yojana. However, after the rise in the cost of wheat, it isn’t being provided or in lesser amounts in several states.
What is the reason why prices of flour or wheat increasing 3 factors
1. Production decrease due to climate change
India is the second largest country in the world with the highest production of wheat. Uttar Pradesh, Punjab, Haryana, Rajasthan, Madhya Pradesh, Gujarat, and Bihar are among the major states producing wheat However, as a result of the climate shift, wheat production dropped in 2021-22.
March 2022 month was the hottest month in the past 122 years. As per the Meteorological Department, the average maximum temperature during the month of March 2022 reached 33.10 degrees Celsius and the mean minimum of 20.24 degrees. Because of this, wheat production fell to just 106 million tonnes instead the 129 million tonnes.
In an interview with PTI, the media agency PTI an expert in agriculture Devendra Sharma said that due to the heat, not just the Rabi crop was damaged but because of this, but the crops are also damaged. Dwarfism was also seen in wheat fields in states such as Punjab and Haryana which could be the result of climate changes.
2. Government procurement is declining
wheat. Another reason for the rising prices of flour is the declining government purchases of wheat. In the years 2020-21, Indian government agencies purchased 43.3 million tonnes of grain. The figure was close to 18 million tonnes by 2021-22 i.e. just less than half.
Paramjit Singh who is an expert in agriculture, explains two reasons for this.
1. Reduced support price
2. Regulations and rules of the government agency for procurement. Paramjit Singh said that the Government of India had kept the support price of around Rs.23 for wheat, however, traders purchased wheat from people paying Rs.25-26.
The trader performs the purchase and weighs at the home of the farmer however laws and rules of government agencies can be very confusing. Due to this also farmers do not prefer to donate their wheat to agencies or the government. He also says that traders from Nepal buy wheat and then take it to border regions of states such as Bihar as well as UP. It is possible to consider Bihar as the main factor in the presence of Mandi.
3.The government’s strategy following the Russia-Ukraine conflict
In February 2022, a conflict that was brewing between Russia and Ukraine began. Following this, the trade of grain came to a cease-fire across the world. In spite of this, India continued to sell wheat to other countries around the world. The government also set up an assembly of seven representatives from the export of wheat and could also negotiate the wheat exports with nations. India exports 7.3 million tonnes of its wheat between 2021 and 2022 which is an increase from 2.2 million tons in 2020-21. Paramjit Singh claims that this is an outcome of the narrow-minded strategy of the federal government. There was a drop of 2.2 percent in the production of the country, and yet they increased their exports.
The government is engaged in reducing the cost, and will also sell wheat on the market.
In the wake of the steady increase in the cost of flour Central government officials have now come to the rescue. A senior official of the central government stated the government is working to reduce prices. made to lower prices across all levels. According to the news agency PTI, the central government plans to be able to sell 30 million tonnes worth of wheat on the market on February 1. E-tendering is also been proposed for this. In the wake of this decision from the state government could be a decrease of the amount of Rs. 10 per kilogram in the cost of flour sold in the market.
The government is working to try to drive down the cost of flour to below Rs.30 per kilogram. The primary reason lies also an election for the state assembly that will be held across nine states in 2023. Elections are already made public in three states: North-East, Tripura, Nagaland, and Meghalaya.
Read More: State Bank of India reduces lending rates by 30 to 40 bps, good news for home loans buyers
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