Govt Bans Export of Wheat Products to Tame Inflation.

New Delhi: In a series of measures aimed to tame spiraling food prices that have fuelled rapid inflation and increased pressure on an embattled ruling Congress party, the government may ban wheat product exports a media report said.

India currently allows upto 650,000 tonnes of wheat product exports until 31 March .

Prime Minister Manmohan Singh is expected to announce measures including banning the export of wheat products and removing essential commodities from the futures market after a cabinet meeting on Thursday, the Press Trust of India reported without naming its sources.

Traders say banning exports of wheat products would not help tame food inflation, as the country has huge wheat stocks.

On 1 January, India’s wheat stocks were at 21.5 million tonnes against a target of 8.2 million tonnes.

Analysts say food inflation is largely stoked by soaring vegetable and dairy prices.

“Not much is happening on the wheat product export front as inconsistency in its export policy hold us from entering into long-term export contracts,” Veena Sharma, secretary of the Roller Flour Millers Federation of India, told Reuters.

Food inflation in the year to 1 January, stood at 16.91%, data on Thursday showed, easing marginally from 18.3% recorded in late December, which was the highest in more than a year.

High food inflation is a major headache for a government already battling multi-billion dollar graft cases that have emboldened the opposition.

Rising prices of vegetables including onions and dairy products could threaten the Congress party’s chance in upcoming elections in states like West Bengal and Tamil Nadu that are key for Manmohan Singh’s coalition to keep a majority in parliament.

India, which has already suspended wheat exports, banned onion exports in December after prices rose by 83% since June, forcing the government to import the commodity from neighbouring Pakistan.

Source : livemint.com