Government to increase sugar supply, step up wheat procurement

Mumbai: The government is planning to flood the market with sugar supplies and increase wheat procurement even as it reduced import duty on edible oils and oilseeds to contain a spurt in the prices of essential commodities.

The agriculture and food ministry has decided to release two million tonnes of sugar from the buffer stock starting next month in a bid to contain inflation that has touched a 13-month peak.

The government also proposed to increase procurement of wheat, demand for which has risen due mainly to a shift to wheat consumption in traditionally rice consuming areas.

"We are going to take precautions...We have to procure maximum (quantity of wheat)," agriculture minister Sharad Pawar said, adding that the government would take care of the public distribution system.

The Food Corporation of India was able to procure only 11 million tonnes of wheat last year as against the target of 15 million tonnes, forcing the government to import 1.8 million tonnes to boost buffer stock.

The Cabinet Committee on Prices also proposed various other steps to increase availability of essential commodities:

Rice: There will be a ban on the export on non-basmati rice. In respect of basmati rice, the MEP will be increased to $1,200 per metric tonne.

Edible oils: In the case of all edible oils, crude form of the edible oil will be allowed to be imported at zero duty and the refined form will be at a duty of 7.5 per cent. This will apply to among other oils, palm oil, sunflower oil, soyabean oil, coconut oil, groundnut oil.

Hydrogenated vegetable fats and oils will also be allowed to be imported at 7.5 per cent customs duty. Wherever tariff values have been fixed, those tariff values will continue until any further revision is announced.

Pulses: The ban on export of pulses will be extended for one more year beginning 1 April 2008.

Other food items: The customs duty on butter and ghee will be reduced from 40 per cent to 30 per cent. The customs duty on maize will be reduced from 15 per cent to 0 per cent under the Tariff Rate Quota of 5 lakh metric tonnes.

The cabinet also decided to keep the Order on removal of licensing restrictions that applies to edible oils, oilseeds and rice in abeyance for one year in order to enable imposition of stock limit by state governments.

However, inter-state movement in imports will be excluded from the proposed order in stock limits.

Export of castor oil, coconut oil and all oils produced out of minor forest produce except sesame oil will be allowed. However, coconut oil export will be allowed only from Kochi port. The export quantities will be monitored and this permission to export will be available until further orders.

The cabinet deferred a decision on iron and steel prices since the minister for steel is traveling abroad.