ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Wheat Price Inflation in Recent Times: Causes, Lessons and New Perspectives

In this paper we demonstrate that the high level of wheat procurement during 2008-09 and 2009-10 at a higher minimum support price was necessitated by the difficult circumstances that the government faced, characterised by a precarious buffer stock position from 2005 to 2008. Hence, blaming larger procurement and a higher msp alone for the soaring wheat prices between 2008 and 2010 is an oversimplification of the problem. The experience with wheat procurement in the recent past suggests that foodgrain procurement at a lower msp may not always be feasible. Finally, it is shown that the inability of the government to utilise the abundant wheat stocks for the benefit of the consumers during the recent phase of high foodgrain prices was due to the poor offtake of the grain allotted to the states, not to the operations of private trade via the government's open market sales window.

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