Rare Move to Boost Supplies and Ease Inflation Concerns Ahead of Elections
India is engaging in discussions with Russia to import wheat at a discount as a strategic move to increase supplies and control food inflation in anticipation of upcoming state and national elections, according to reliable sources.
This unconventional step aims to provide the government with better market intervention capabilities to lower wheat prices. Which contributed to a 15-month high in July’s inflation rates.
While India hasn’t commonly relied on diplomatic deals for wheat imports. The government’s contemplation of importing Russian wheat signifies a proactive approach to manage essential commodity costs.
Reportedly, the potential Russian wheat imports are part of a broader strategy to alleviate inflation’s impact on staple commodities like fuel, cereals, and pulses. These measures also include extending rural initiatives to mitigate inflation’s effects on lower-income segments.
While insiders confirm the discussions, anonymity prevails due to the private nature of the talks. And official spokespersons from India’s finance, trade, and government sectors have yet to comment.
While last month’s statement by a senior civil servant at the federal food ministry suggested no immediate plans for Russian wheat imports, sources indicate that a larger quantity of wheat may be considered—potentially 8 to 9 million tons—beyond the initial shortfall of 3 to 4 million tons.
Given Russia’s newfound prominence in India’s trade landscape since the Ukraine conflict. There’s a willingness to extend discounts on prevailing market prices, thereby facilitating significant cost differences in landed wheat prices.
Amidst limited domestic supplies and a 10% surge in wholesale wheat prices over two months. This initiative could alleviate the strain on India’s wheat stocks, which are already below the 10-year average.
With India’s wheat output anticipated to be at least 10% lower than government estimates, discounted Russian imports could provide a vital solution to the supply-demand imbalance.