INDIA’S BAN ON WHEAT EXPORT

WHY IN THE NEWS?

In the month of May 2022, the Government of India announced a sudden ban on the export of wheat, a few days after Prime Minister Narendra Modi stated “when the world is facing a shortage of wheat, the farmers of India have stepped forward to feed the world”.

STATUS

• Wheat is a major cereal crop in India after rice. It is the main food crop, with high protein and high gluten content.
• Indiais the world’s second-largest wheat producer after China. But it accounts for less than 1% of the global wheat trade. India is not a traditional exporter of wheat.
• The domestic consumption of wheat production in India is through Market procurement and Government procurement under the National Food Security Act.
• For the past five years, India has exported around 2% of the wheat produced while the US exported 30% of its production.

WHY DOES INDIA BAN WHEAT EXPORTS?

1. Diversion of food grains- Rise of private parties to procure food grains directly from the farmers due to high market price for wheat.
2. Pressure on Food security –Farmers feel reluctant to sell their produce to Government under NFSA at lower prices.
3. Heatwaves-Estimated wheat production comes down due to the influence of heatwaves.
4. Inflation- The consumer price index reached a high of 7.79 percent in April, driven by rising food and fuel prices.
5. Benefit Traders-Wheat prices have been rising on international demand which is benefiting traders at the cost of farmers.

 ISSUES WITH THE BAN POLICY

1. Higher exports –Increased exports would help India to bring down inventories in stock.
2. Better price- Framers would get better prices from the market as private traders could procure goods at higher prices.
3. Policy of liberalization-The government played the role of regulator than the facilitator.
4. Lack of consensus- Government favored consumers at the expense of farmers.
5. Doubling farmers’ income-It is still a dream for the farmers with the current policy.
6. International wrath-G7 countries criticized India’s unilateral policy in times of food crisis.
7. Global hunger- The world is starving on the sidelines of the Ukraine-Russia war and the ongoing pandemic.
8. Opportunity cost- India can diversify its exports by capturing foreign markets.

IMPACT ON INDIA

1. Goodwill diplomacy- It was the best time to utilize the opportunity to strengthen the ties with several nations through wheat diplomacy.
2. Policy Assurance-Global community may lose credibility and reliability on India’s policies.
3. Inertial issues- lack of initiatives from domestic exporters in the future.
4. Global responsibility- India will lose its credibility, if it fails to act in times of need and may make its UNSC eligibility at stake.

WHAT COULD HAVE BEEN DONE

1. Facilitator role-The role of the Government could only be a facilitator, not a regulator.
2. Market forces- Allow the functioning of market forces- demand and supply. Had the market forces not been suppressed by the government, farmers would get better prices for their production.
3. Dual existence- Minimum support price and private procurement to be sustainable balanced. In case of mismatch between MSP and market prices, the excess amount beyond MSP is to be paid by the government to maintain buffer stocks.
4. Minimum export price and tariffs –It can arrest the rising domestic market prices for the commodity.
5. Gradual step- Rather than a sudden withdrawal or exit from the policy, better alternatives are to be devised through discussions and deliberations with the stakeholders.

CONCLUSION

The recent step taken by India is based on genuine grounds to ensure food security and stabilize domestic prices in the market. However, “to enter the Growth zone, one must leave the comfort zone”. Focusing on the growth zone can only help India to achieve her dream of “Doubling the farmers’ income” in the near future.

QUESTION

Convergence of Commerce Ministry and Agricultural Ministry is essential for improving the income of farmers. Comment.(250 Words, 15 Marks)