The Modi-government is mulling the import of 9 million tonnes (mt) of wheat from Russia to cool down retail inflation, which spiked to a 15-month high of 7.44 per cent in July.
“The possibility of imports is being discussed at the highest levels,” officials said.
Sources said the government is considering importing wheat at a discounted rate so that it can intervene in the market effectively and contain prices.
The last time India imported a significant amount of wheat was in 2017 when private traders shipped in 5.3mt.
N.R. Bhanumurthy, vice-chancellor, Dr BR Ambedkar School of Economics University, said: “The government would be forced to micro-manage prices and could use buffer stocks and import cereals and pulses to tame the inflationary pressure in the economy.”
India needs only 3mt to 4mt of wheat to plug the shortfall. The country might consider importing 8mt to 9mt from Russia to have a far bigger impact on prices, the sources added.
Data showed wholesale wheat prices have surged around 10 per cent in over two months to a seven-month high in August on limited supplies.
Wheat stocks at government warehouses were at 28.3mt as of August 1, 20 per cent below the 10-year average. A combination of low production, declining stocks and rising demand has fuelled the price rise.
Controlling inflation is a top priority for the Union government as high prices pose a challenge to growth and macroeconomic stability.
Elevated food prices, especially cereals, pulses and vegetables, have hammered household budgets even as the ruling BJP-led government faces a general election in early 2024, apart from a string of state polls later this year.
The government had imposed a limit on the amount of wheat stocks traders can hold in June for the first time in 15 years.
However, the move seems to have not resulted in the desired effect on prices.
Sources said the government is studying allowing wheat import with a 15 per cent duty or reducing it to zero. At present, a 40 per cent customs duty is imposed on wheat imports.
