July 4, 2012 1:43:38 am
The Cabinet Committee on Economic Affairs (CCEA) on Tuesday approved a Food Ministry proposal to export two million tonnes of wheat from its buffer stock in an attempt to ease the storage crisis. The clearance came despite objections by the Department of Expenditure,which felt the proposal would involve an additional subsidy burden of Rs 1,260 crore.
Sources said the CCEA approved export of two million tonnes of wheat at a floor price of $ 228 (about Rs 12,400) per tonne.
The Food Ministry argued that by exporting the wheat,the government will be able to overcome the problem of storage space and reduce carrying cost being incurred by the Food Corporation of India. According to the ministry,a stock of 823 lakh tonnes of wheat is available in the Central pool as against buffer norms and strategic reserve of 212 lakh tonnes. While the ministry cited the overflowing godowns to push its proposal for export of wheat,the Department of Expenditure was not convinced. It opposed the proposal citing the growing subsidy bill and its negative impact of the governments fiscal health.
Giving the go ahead,the CCEA decided to immediately allow export of 90,000 tonnes of wheat from the bids received by the State Trading Corporation in its recent tender. For export of the remaining quantity,the CCEA has decided to set up a committee headed by the Commerce Secretary.
Export of wheat from the Central pool was stopped in 2003. Subsequently,the government banned export on private account in 2007 to contain price rise. In September last year,the government allowed wheat exports through private trade.
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