Avoid this stop-go-stop approach to exports…
Indian expatriates account for around 51 per cent of Dubai’s population of around 12.4 million. Pakistanis (17 per cent), Bangladeshis (9 per cent) and Filipinos (3 per cent) account for another 29 per cent. The native population is just 15 per cent of the total.
The desert kingdom is dependant on imports for all its requirements of commodities and manufactured goods. With Indians in majority, a good portion of these are imported from India.
Open UAE market to Pakistan…
The sudden ban on export of wheat has severely impacted Dubai and other countries in the neighbourhood with strong Indian expatriates. Especially after the recent visits of Prime Minister Modi and TN Chief Minister M K Stalin, with emphasis on the free trade agreement and closer economic cooperation, this ban, combined with restrictions on sugar exports, are intriguing.
Indian expatriates pointed to the twin damage: the easy access to familiar Indian wheat and, more importantly, to the opportunities seized by Pakistan and to a lesser extent by Iran, in increasing their exports of wheat. Once they expand their foothold, it will be difficult for India to regain custom from this prosperous kingdom.
Large production of rice, wheat…
In recent years India has been registering a high level of production of foodgrains and other agricultural products. Significant has been the sustained high growth of these products from the Hindi belt, apart from the traditional large producer of Punjab.
Foodgrain production in the last year was estimated around 315 MT with rice production close to 130 MT (an increase of 5.29 MT) and wheat production of 106 MT (a drop of around 3 MT). But stocks have been at comfortable levels ~55 MT of rice (nearly four times the buffer stock norm of 13.5 MT) and wheat stock of 19 MT (against a buffer norm of 7.4 MT). There is thus the question on why the sudden decision to ban export of wheat.
The reasons are two-fold: a huge increase in international prices of wheat from a level of around Rs 12/kg in 2018 ($ 160/t) to Rs 40/kg (around $ 500/t). This huge spurt is caused by the Russia-Ukraine war. The two countries are estimated to account for 25 per cent of global wheat exports. An immediate consequence is the decline in the flow of wheat for government purchase at the minimum support price of around Rs 20/kg; traders and established exporters have been offering much higher prices, procuring wheat from the farmers and making handsome profits through exports; the second factor is the decline, of around 3 MT estimated in production in the last season.
A major concern for the Union government is inflation. This has been contained to around 5-6 per cent since last year, but has spurted to 8.5 per cent plus now. There is the urgency to contain this. This explains the Union government offering sizeable reductions in the retail price of petrol and diesel through lower excise duties.
With frequent elections there is the imperative for the ruling party to ensure stable prices.
Farm law reforms did provide fervour for marketing
The farmers’ lobby has shown its power by the prolonged, year-long blockade of Delhi through 2020-21. This torpedoed the efforts of the Central government on reforming the agriculture sector. This did provide the farmer the choice to sell his produce across the country and realise higher prices. Today the agri lobby complains that the ban denying it the opportunity to make money when global prices are so much higher.
India recorded all time high exports exceeding $400 billion during 2021-22. There is a need to sustain exports at an increasing level. But this demands stable policies and not the stop-go-stop-go approach of earlier regimes that has caused damage to India’s reputation and reliability. Remember such restrictions imposed on basmati rice exports that opened the opportunities for countries like Thailand and Vietnam?
A more selective approach could have been made by giving preferential treatment to those countries with which India has free trade agreements like the UAE as also to poorer countries in Africa and Asia. India has assisted countries like Afghanistan and Sri Lanka with free supply of food grains.
There is huge potential for export of several agro products like sugar, milk… for which India has huge advantages. Even while some efforts are made in expanding exports of these, effort should be made to set apart an increasing share of these for exports on a stable, reliable basis.
Please click the following links to read other articles of June 2022:
Russian petrol for western Europe and even the US!
A sleepy township morphs into an industrial hubA sleepy township morphs into an industrial hub
Everything gigantic in Dubai – Dubai Travel by SV
Sweet News on the Sugar Sector
Conference with New CII President Sanjiv Bajaj
Women forge ahead – Recent civil services examination
