The government said a few reports show that there is a sharp increase in the profit margins being availed by wholesalers and retailers.

FILE – Image used for representational purposes only. (EPS Photo)

NEW DELHI: The Union government directed rice industry associations on Tuesday to ensure a reduction in the retail price of rice with immediate effect. The direction came after the Reserve Bank of India had flagged the rising price of rice by 12% year on year.

Department of Food and Public Distribution Secretary Sanjeev Chopra warned the association that undue means of profiteering would soon be dealt with strictly. “It was discussed in the meeting that the domestic prices of rice are increasing despite a good crop this Kharif, ample stocks with FCI and in the pipeline, and various regulations in place on rice exports,” he said, during a meeting with the leading rice processing industry representatives in New Delhi.

“The annual inflation rate of rice has been hovering around 12% for the past two years and is cumulating over the years, which is a cause for concern. The rice industry should ensure that the prices in the domestic market need to be brought down to optimal levels and efforts at profiteering are dealt with strictly,” Chopra remarked.

The government said a few reports show that there is a sharp increase in the profit margins being availed by wholesalers and retailers. It led to a gap between the maximum retail price (MRP) and the actual price. The government directed traders to bring down the price-profiteering gap to realistic levels to serve the interests of consumers.

The government has already taken measures to ensure the flow of rice into the domestic market.

It had placed a curb on the export of basmati rice and banned the export of two sub-categories of broken rice and non-basmati white rice in July this year. Besides, it has started selling rice in the market through OMSS-D to offset the rising price. The government has been able to sell off only less than 5% of the allocated rice in the past six months.

The government of India had allocated 25 lakh metric tonnes (LMT) under open market sale schemes in the domestic market (OMSS-D), but only 1.19 LMT of rice has been sold in the open market to private traders, despite FCI Regional Offices actively promoting this initiative through extensive advertising.

However, to encourage greater participation, bidders are now allowed to bid for any quantity of rice from 1 to 2000 MT. The government has fixed the reserve price for rice, ranging from Rs 2900 to Rs. 3100 per quintal. However, traders are not coming forward to participate in the auction, citing that cheaper and better-quality rice is already available in the market.

Regulating rice prices

• Centre issues directive to rice traders
  Immediate reduction in retail prices mandated or face strict action due to high-profit margins
• RBI’s concerns prompt government action
  Centre responds to 12% Y-o-Y surge in rice prices, directing traders to act swiftly
• Anomaly in rice prices despite good harvest
  Prices surge despite abundant Kharif crop and ample stocks with FCI
• Centre implements measures to stabilize rice market
  Export restrictions on Basmati rice, ban on two sub-categories, and introduction of OMSS(D) to counter price hike
• Limited success in rice sales despite government initiatives
  Only 5% (1.19 LMT) sold out of 25 LMT allocation in last six months; experts note availability of cheaper, higher-quality alternatives in market.

Published Date: December 19, 2023