Import of wheat effective rate of duty slashed to 5% from 50% till 31st December – is it another scam? “Why import when Indian wheat is eaten by rats?” asks Mani Shankar Aiyer

By Vijay Kumar

A PIB press release says,

“The prices of essential commodities especially sugar, pulses and wheat have been increasing in the domestic market. The increase in the prices of these products also has an influence on the inflation.

It has been decided to allow import of wheat at a concessional rate of 5% (as against 50% scheduled rate) with effect from today i.e. 28th June 2006. These imports will be allowed under OGL and quality standards will be the same as notified for public sector imports. The concessional rate is valid till 31.12.2006. This change comes in the wake of reduction of import duties on pulses and sugar earlier.”

We should have carried this yesterday, but nobody had the notification while PIB had issued the press release. Once a notification is ready, the government finds it difficult to part with it. It is with much reluctance that the notification is placed in public domain.

But why should we allow import of wheat? Is it to control prices? There is at least one discordant note within the cabinet in the form of that intellectual minister, Mani Shankar Aiyer. Aiyer said the country was importing wheat from Australia when "food corporation godowns feed rats with tonnes of food grains; the quantity of wheat import is the largest commercial purchase in the history of the country and that is larger than Kenya's wheat production.

Will the imports bring down prices? Traders don’t think so

Landed cost of imports will be the same as local prices and so there is no chance of any price decrease. The Government had earlier indicated that the imports will be duty free, but the 5% temptation could not be overcome. The price of wheat in South India is around Rs. 9500/- per tonne while the international price is around Rs. 8950/-. Add transportation costs and 5% duty, the imported wheat will be costlier than Indian wheat. How are the prices going to come down?

The July futures at the National Commodity and Derivatives Exchange and the Multi Commodity Exchange were at 831 rupees a 100 kg. Who will import when there is hardly any scope for profit?

CBI re-investigating wheat imports?

The wheat import scam is as controversial as the Oil-for-Food programme. The last time around when wheat was imported from Australia, there were allegations of bribes stashed away in foreign banks. The CBI which investigated the scam then had to file a closure report, as it did not get much co-operation from the Australian Government or the Australian Wheat Board, which had exported the wheat. CBI is all set to re-open that case. Recent investigation in Australia had revealed that AWB had documents to prove bribes to Indians paid into foreign bank accounts.

A little history:

The alleged amount of kickback is 11.75 Crores! Australian investigation showed that the Australian Wheat Board had paid 2.5 million dollars (11.75 Crores) as commission to somebody in the UF government in 1998 for export of wheat. CBI investigated the matter and in the FIR had named the Cabinet Secretary, the Food Secretary and the Chairman of the STC. The charge sheet alleged that wheat was procured at a price of $142.5 per ton and sold to Egypt at $135 per ton. As the CBI could not make any headway in Australia, the closure report was filed.

Surprisingly the same Australian Wheat Board has received an order for 5 Lakh tones of wheat from India in 2006!

The Supreme Court had told the Central and State Governments, in August 2001 that it was their primary duty to ensure that the food grains under the control of the Food Corporation of India reached the starving people instead of being wasted.

Pramod Mahajan angle

Mr. Madan Lal Khurana who ordered the CBI inquiry into the alleged anomalies in the wheat import from Australia, recently said that he had come under attack from his former party colleagues.

‘‘Mahajan called me up and said that Advani was upset about it. I told him that I had announced the probe on former Prime Minister AB Vajpayee’s insistence,’’ he said. The order to import wheat was placed when IK Gujral was the PM, but the consignments had come during the BJP rule, according to Khurana.

The DGFT has also allowed free import of wheat.

There may not be anything kala in the dal but there certainly is in the Roti

Notification No. 66 – cus Dated June 28, 2006 and DGFT NOTIFICATION NO. 16 (RE-2006)/2004-2009, Dated: June 29, 2006