``We don't have a view on the rupee,'' Chidambaram told reporters in Mumbai today. ``It is market-determined. The rupee's appreciation or otherwise gives rise to stress in some sectors. We will address those problems.''
The government, which said capital inflows have caused the rupee to strengthen, wants exporters to be more competitive and productive to cope with the effects of the rising rupee. A higher rupee makes Indian goods more costly overseas and erodes the revenue of the South Asian nation's exporters. The Indian government is considering the refund of some duties as a relief measure for exporters. It has also cut customs duty on some products and has also announced subsidized loans and tax breaks to try to help exporters.
``You must also see the real effective exchange rate,'' Chidambaram said. ``The rupee has risen against a basket of six currencies by about 6 percent.''
India was the world's third-biggest wheat buyer last year, and the government has now indicated that local supplies will determine the extent of imports.
``It's not a factor of prices alone, it's a factor of food security,'' Farm Minister Sharad Pawar said in New Delhi today. ``We won't compromise on food security.''
India, the world's second-biggest wheat user, has imported 1.79 million tons since July, helping support the doubling in prices this year on the Chicago Board of Trade.
The government said Dec. 18 it is confident of meeting an output target of 75.5 million tons as favorable weather spurs planting. Farmers may sow wheat on 27.5 million hectares (68 million acres), compared with an average 26 million hectares, the farm ministry said. A harvest of 75.5 million tons would be the biggest since 2000.
State warehouses held 9 million tons on Nov. 23, enough to meet demand for nine months, Food Corp. of India, the nation's biggest buyer of grains, said last month. Prices have more than doubled in the past year as drought and increased demand eroded global inventories.
Agriculture Minister Sharad Pawar also said that India's sugar industry faces low prices and demand because of ``unprecedented'' output, cutting income for the sugar industry and farmers, To cope with excess supplies, the government will keep 5 million tons of the sweetener in storage, he told the annual meeting of the Indian Sugar Mills Association in New Delhi today. Compensation for farmers is also being worked out, he said.
A global glut has slashed refined sugar prices 12 percent in the past year, making the sweetener the worst-performing agricultural commodity over that period. World output may exceed demand by 11.1 million tons this year, led by a record output in India, the International Sugar Organization has said.
``Indian sugar industry is today faced with a situation of very high stocks, low prices of sugar and lack of demand,'' Pawar said. ``Depressed prices of sugar have resulted in accumulation of cane-price arrears'' of 26 billion rupees ($657 million) for farmers in the year that ended on March 31.
To give the sugar industry liquidity, the government plans to ask state-run banks and lenders to give loans against the expected production for the year ending Sept. 30, 2008. The loan will be repayable in four years. The plan will give sugar producers about 38 billion rupees.
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