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India has raised the price at which it will buy new-season wheat from domestic farmers by 150 rupees or 6.6% to encourage growers to expand acreage and remove the need for imports in the world's second-biggest producer of the grain.

The revised purchase price of 2,425 rupees ($28.88) per 100 kg for 2025 compares with 2,275 a year earlier, Minister for Information Technology Ashwini Vaishnaw told a news conference after a meeting of Prime Minister Narendra Modi's cabinet.

India sets a price each year at which it will buy wheat and rice from local farmers to distribute for free to 800 million beneficiaries of the world's biggest food welfare programme.

A reasonable increase in the state-set support or guaranteed prices encourages farmers to boost output.

Unlike rice, India does not have large stockpiles of wheat. Still, Modi's administration has resisted calls for removing a 40% tax on wheat imports, as facilitating imports is seen as an anti-farmer move.

India's millions of farmers are considered an influential voting bloc and Modi's ruling Bharatiya Janata Party lost 75 rural seats in this year's general election.

After five consecutive record harvests, a sharp rise in temperatures shrivelled India's wheat crop in 2022 and 2023, prompting the world's No. 2 producer to ban exports.

India grows one wheat crop a year, with plantings in October and November and harvests from April.

This year's crop was also nearly 6.25% lower than a government estimate of 113.3 million metric tons, a leading industry body said earlier this year.

Domestic prices have stayed above this year's minimum purchase rate of 2,275 rupees per 100 kg but New Delhi has struggled to replenish state wheat stocks.

The government has this year bought 26.6 million metric tons of wheat, falling short of its target of 30 million to 32 million tons.

That was despite its advice to trading houses to refrain from purchases to enable state stockpiler the Food Corporation of India to procure large quantities.

Separately, Vaishnaw said Modi's cabinet approved a 3% increase in inflation-linked allowance for government employees.

($1 = 83.97 rupees)