With polls round the corner, the country’s wheat stocks have fallen to a seven-year low of 9.7 million tones (mt), which is below the buffer norm of 13.8mt and raises questions whether the Modi government has the means to fulfil its free grain promise to voters.

However, officials are confident of robust procurement this season and expect to mop up 33.5mt sufficient to meet the requirements under National Food Security Act.

Analysts attributed the drop in stocks to low procurement over two years and a significant sale of the cereal in the open market to regulate prices. In the 2023-24 season, the government procured about 26.2mt of wheat against the target of 34.15mt.

In 2022-23, procurement stood at 18.8mt against the target of 44.4mt. The procurement was lower because of a fall in production.

The government is worried about inflation and has been selling wheat through open market sales and giving free grain through the public distribution system.

High food prices are a barrier to the RBI’s medium-term target to bring down inflation to 4 per cent even as core inflation has fallen in recent months, the central bank said in its monthly bulletin.

While retail inflation stayed almost flat at 5.09 per cent in February compared with the preceding month, higher food prices may broaden price pressure on the economy. Markets are not as optimistic as the government on procurement.

According to the second advance estimate, India is likely to produce 112mt wheat in 2023-24 (July-June), below the target of 114mt set by the government.

The market does not see wheat output exceeding 110mt. If weather conditions are favourable, output is likely to be around 102-105mt, analysts said. The next few weeks are crucial for procurement, the analysts said, adding the month of March has not been too kind to farmers.

In March 2023, untimely rain and hail hit the crop, while the year before, the crop wilted under a heat wave.

There are also concerns over farmer’s willingness to sell to the government at the minimum support price of Rs 2,275 per quintal (100 kg) as spot prices in some key markets are higher than the assured prices, traders said.

Currently, wheat prices are at Rs 2,355 to Rs 2,400 per quintal, higher than the government’s assured prices.