New Delhi, Aug. 8: MMTC has floated a tender to import some 1.2 lakh tonnes of wheat. The consignments will be shipped to Calcutta and other ports next month.

Senior officials said though this was an individual initiative by the state-run trader and was not part of an official attempt to bring in cheaper grain to beat down domestic prices, “it is expected to have the same impact”.

However, officials are worried that the attempt to beat down prices through imports may not work out all that well. MMTC’s rival, State Trading Corporation, received bids for its tenders quoting prices between $210 and $239 a tonne, or roughly an average of Rs 10,000 a tonne, which is way above the reigning domestic price of Rs 8,500 a tonne in most mandis.

Ajay Singh, a commodity trade analyst, said it is unlikely that MMTC would be able to get quotes below $220 for September wheat tenders, which would make its imports (at 5 per cent duty) a little difficult to market.

The government has been importing wheat even at rates which have been higher than domestic prices in the past because of two fears — traders here would push up the price of wheat, creating problems for the Congress-led government; and the fear that there may be a real shortage of wheat in the country.

The government is the single largest buyer of grain in the country. It buys and stores grain for its nation-wide public distribution system and holds some in reserve to be sold or distributed during scarcity.

The problem for the government arose early this year when it realised that its wheat stocks had depleted drastically.

Wheat prices shot up 40 per cent over the last 12 months, mainly because private traders had cornered most of the stock and the government had very little in its buffer stocks. As on April 1, against a norm of keeping 4 mt of wheat, the government had just 1.8 mt.

However, it did have sufficient rice in stock. It had 13.6 mt against a norm of 1.22 mt.

India produces between 90 and 100 million tonnes of rice a year and consumes between 80 and 85 mt. This possibly saved the day for the country.

But the government is not taking any chances now and is not only importing grain to beef up stocks but has also announced an incentive plan for paddy growers to enthuse them to produce larger stocks.

Analysts say the government's new incentive plan may actually not be needed if rains are normal.

However, the government’s incentive plan and the decision to import are being viewed as a buffer against any embarrassing rise in prices.