Welcome viewers it comes
as a shock to everyone that India is thinking about purchasing wheat from
Russia. The decision by the Indian government to import wheat is supported by a
variety of factors. We'll talk about a few of these causes in our blog post
today. Amid a dramatic rise in world prices, India is
negotiating with Russia to import wheat at a reduced price, taking the unusual
step of expanding supplies and reducing food inflation before elections in
India the following year according to a report published by the news agency
Reuters.
The imports would enable
New Delhi to interfere in the market more effectively to reduce the price of
wheat, which in July drove inflation to a 15-month high.
India has not entered into
diplomatic arrangements to import wheat for many years. The last time India
brought in a sizable quantity of wheat was in 2017 when private dealers shipped
out 5.3 million metric tonnes of the crop.
One supply-side strategy
being investigated by the Indian government to lower the cost of essential
goods like petroleum, cereals, and pulses is the importation of Russian wheat.
This strategy is combined with an expansion of rural programs to lessen the
impact of inflation on the poor.
Although India only
requires 3 to 4 million metric tons of wheat to make up the gap, New Delhi may
think about importing 8 to 9 million tons of wheat from Russia to have a much
greater impact on pricing, according to a different source.
Due in large part to
discounts on the oil that New Delhi purchased, Russia has overtaken China as
the second-largest exporter of goods to India since the start of the conflict
in Ukraine last year.
India can easily
negotiate a reduction with Russia of $25 to $40 per ton. This will guarantee
that wheat's landed cost stays much lower than local pricing, according to a
Mumbai-based dealer who represents an international trading business.
Due to a shortage, wheat
wholesale prices rose by around 10% in just two months, peaking in August at
their highest level in seven months.
28.3 million Tonnes of
wheat were kept in state storage as of 1 August, which is 20% less than the
10-year average index.
India experienced
variable rains even this year. While some states are still waiting for rain,
others experienced flooding. Wheat production was already impacted by heat
waves during the previous growing season. The only goal of the Indian
government is to guarantee the local markets' access to food.