INDIA- In a bid to address the surging grain prices and food inflation affecting its population, India has announced extending its free food grains program by five years, according to a recent report by Reuters.

This program, which currently supports over 800 million people, will require increased government spending and the procurement of more wheat and rice from farmers in the coming years, Reuters noted. 

The initiative, estimated to have cost US$24 billion this year, was initially set to expire at the end of 2023.

India, the world’s top rice producer and exporter and the second-largest wheat producer has implemented export bans on wheat and certain rice varieties to secure ample supplies for its citizens.

Oscar Tjakra, a senior research analyst at RaboResearch Food and Agribusiness, Asia, emphasized that despite the government’s efforts, food inflation remained a concern. 

He pointed out that the government had not only been supplying heavily subsidized wheat but also initiated free wheat distribution to millions of beneficiaries during the COVID-19 lockdowns in April 2020. 

This strategy led to a depletion of the government’s food stocks, and lower wheat output in 2022 and 2023 resulted in slower replenishment of inventories in state warehouses.

Tjakra explained that while government wheat stockpiles on September 1, 2023, increased by 1.2 million metric tons compared to the previous year, reaching 26.04 million metric tons, they remained lower than the 10-year average. 

Despite banning wheat exports, domestic wheat prices in India soared in 2023, reaching their highest point in nearly eight months in September 2023,” he added.

The decision to ban wheat and rice exports is not solely based on supply and demand dynamics; political considerations also play a significant role. Tjakra suggested that the Indian government is unlikely to lift these export bans until after the upcoming elections next year.

This extension of the free food grains program reflects India’s commitment to addressing the ongoing challenges of food inflation and ensuring the food security of its massive population. The program’s success and effectiveness in achieving these goals will be closely monitored in the years to come.

Meanwhile, India, the world’s biggest rice exporter, is likely to experience a decline in rice output this year, which could prompt Prime Minister Narendra Modi’s administration to extend its restrictions on rice exports. 

The government’s goal is to manage food prices, an issue that has gained significant attention since the government prohibited the export of non-basmati white rice in July, which drove global prices up.