India to extend free food grains programme by five years, says Modi

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MUMBAI, Nov 4 (Reuters) – India plans to extend its free grains program for five years, Prime Minister Narendra Modi said on Saturday, as the government tries to protect consumers from rising grain prices ahead of a general election early next year. .

The expansion will provide relief to consumers but will also lead to higher government spending and require New Delhi to buy more wheat and rice from farmers to maintain the welfare program, which provides free grains to more than 800 million people.

Modi confirmed the move during an election rally in Durg, a city in the central state of Chhattisgarh, where state elections are due to take place this month.

The grain program, which is estimated to have cost the government about 2 trillion rupees ($24.06 billion) this year, was due to expire at the end of the year.

India, the world’s second-largest producer of wheat and rice, has restricted exports of both grains to curb rising prices at home.

A Mumbai-based dealer of a global trading house said the government would be forced to maintain export restrictions for a longer period as it has to buy from farmers to implement the programme.

“Without export restrictions, local prices would rise above minimum prices set by the government and they would fail to purchase enough,” he added.

For the first time in eight years, India’s rice production is expected to fall this year, raising the prospect that New Delhi will restrict exports of the grain to control food prices ahead of the elections.

Global rice prices rose to a 15-year high after India, the world’s largest rice exporter, which accounts for more than 40% of global rice exports, restricted exports of non-basmati rice varieties in July.

India banned wheat exports last year, a surprise move after a heat wave curtailed production.

($1 = 83.1400 Indian Rupees)

Reporting by Rajendra Jadhav; editing by Clelia Oziel

Our Standards: Thomson Reuters Trust Principles.

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