Govt may import rice, has enough wheat: C Rangarajan

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The government expects wheat supply and prices to remain manageable but the country may decide to import rice after the size of the harvest is known in two months, a top adviser of Prime Minister Manmohan Singh said on Tuesday.

C Rangarajan, Chairman, Prime Minister's Economic Advisory Council, said the country's wheat stocks of 28 million tonne were adequate. "It is a very large quantity. And I think by judicious distribution of the stock, we should be able to control prices and we should make adequate quantity of wheat available," he said in an interview as part of the Reuters India Investment Summit.

Some traders in southern India have already imported small quantities of wheat. State trading firms had tendered to import 30,000 tonne of rice but rejected the bids because they were too costly.

Rangarajan said the government's only worry was rice. "On wheat, there is no problem. Rice we will have to see. We will see at the end of another one or two months," he said. "But by way of abundant precaution, one could think in terms of importing. But that picture will become clear in another month-and-a-half."

Food prices have risen sharply as India's agricultural output, particularly summer-sown rice, is expected to fall sharply after the worst monsoon in 37 years damaged crops. The food price index rose 14.55% in the 12 months to November 7, government data showed last week.

NO FUEL PRICE RISE
India is also facing a higher import bill for crude oil, which has risen by three-quarters this year, but Rangarajan said the country did not need to raise regulated fuel prices. India had increased petrol and diesel prices by 10% on July 1, the first rise in a year, helping state firms such as Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation increase their margins.

"If the oil-marketing companies incur huge losses, then the government will be forced willy-nilly to push the prices up. But at the moment, crude oil prices are remaining at a level where there is no compelling force to raise the prices," he said.

While prices of wheat and fuel are likely to remain steady, inflation remained the key short-term economic concern this year, when the economy was likely to grow 6.5%, he said. He said India's farm sector was likely to contract 2% this year, but in 2010-11, agriculture was poised to rebound from the low base, boosting demand for industry and services also.

"I think if monsoon is normal, and I hope it is, then there will be a positive growth in agriculture, which will be a turn around from what is happening in the current year," Rangarajan said.