Rajasthan set to offer ₹125/quintal bonus for wheat procurement

The Centre does not see a problem in Rajasthan after the State announced a bonus of  ₹125/quintal on wheat procurement over and above the MSP of  ₹2,275/quintal as the its purchase is likely to be lower than the actual requirement for the public distribution system.

While the Rajasthan government needs 27 lakh tonnes (lt) of wheat annually to distribute among the beneficiaries under the National Food Security Act (NFSA), the State Government is likely to buy about 20 lt under the procurement plan, official sources said.

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PM-KISAN scheme top-up

As promised before the assembly poll by the BJP, the Rajasthan government last week announced a purchase price of wheat at  ₹2,400 per quintal for the next season starting April 1. It also announced a top-up of  ₹2,000 to farmers under the Centre’s flagship scheme PM-KISAN scheme over and above ₹6,000/year paid now.

In 2014, the Centre had issued an order prohibiting States from announcing bonus over and above the MSP at which it purchased wheat and paddy from farmers. However, it stipulated that if any State announces the bonus, the procurement of the Centre would be limited to the actual requirement of the State for a year.

In 2023-24, the Centre had procured 4.38 lt of wheat from Rajasthan against 0.1 lt in 2022-23. Due to lower production and crop damage, open market prices of wheat ruled higher in the last two years resulting in lower than targeted procurement by the Centre across the country. However, in 2021-22, there was a record wheat procurement and the Centre bought 23.4 lt from Rajasthan.

Traders’ strategy

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After the announcement of bonus, private traders and millers expressed confidence that the government will continue to release wheat under open market sale scheme as it will be a disadvantage for them to match the government rate if open market rates in other States rule around MSP. “We will wait to see how the market rates are this year as a good crop will not allow prices to flare up. But, in case there is yield drop and production goes down, rates may even go up above  ₹2,400/quintal as seen in the past,” said a flour miller. Once the government procurement stops, the market price may come to normal level and traders will take a call at that time, he said.