Central idea
The article scrutinizes government policies aimed at curbing food inflation, focusing on the restrictive measures on basmati rice exports and their repercussions on farmers. It delves into the broader challenges hindering the achievement of ambitious agri-export targets, emphasizing the need for a balanced approach that considers both consumer welfare and farmer well-being.
Export Restrictions on Basmati Rice:
- Minimum Export Price (MEP): Imposition of a high MEP ($1,200/tonne) limiting basmati rice exports.
- Impact on Farmers: Low buying interest, reduced prices in Punjab-Haryana mandis, affecting farmers negatively.
- Global Market Dynamics: Risk of losing export markets to Pakistan, the main competitor in basmati rice.
- Beyond Basmati Rice: Similar restrictions on broken rice, non-basmati white rice, and parboiled rice.
- Need for Stability: Call for a stable export policy over knee-jerk reactions to support India’s position as the largest global rice exporter.
| Prelims booster points
· Parboiled rice is a type of rice that has been partially boiled in the husk. · The process involves soaking, steaming, and drying the rice before milling it. · Unlike regular white rice, parboiled rice retains more nutrients, as the process allows nutrients to move from the husk to the endosperm. · Parboiled rice has a firmer texture and is less sticky than white rice, making it a popular choice in certain dishes. · The parboiling process also gives the rice a golden or amber color. |
Challenges in Achieving Agri-Export Targets:
- Policy Impact: Restrictions on wheat exports, 40% export duty on onions, hindering the goal of doubling agri-exports.
- Historical Performance: Comparison of UPA’s $43.27 billion agri-exports in 2013-14 with the current estimate of less than $50 billion in 2023-24.
Consumer Bias vs. Farmer Welfare:
- Implicit Tax on Farmers: Critique of policies favoring domestic consumers, indirectly taxing farmers.
- Urban Consumer Bias: Need for differentiated policies catering to the vulnerable sections rather than blanket measures.
Agricultural Competitiveness and Investment:
- Competitiveness Importance: Agriculture exports as a measure of competitiveness and surplus generation.
- Investment Gap: Low investment in agriculture R&D (0.5% of agri-GDP) as a hindrance to competitiveness.
- Populism Challenge: Balancing subsidies, loan waivers, and “revdis” with the need for substantial investments.
Environmental and Economic Sustainability:
- Impact on Soil Health: Excessive focus on subsidies and populist measures could lead to imbalanced fertilizer usage and soil degradation.
- Long-Term Economic Health: The article hints at the economic burden of subsidies, emphasizing the need for a sustainable economic model.
Global Image and Diplomacy:
- Export Market Dynamics: Consideration of global perceptions and diplomatic relations impacted by abrupt export policy changes.
- Positioning Against Competitors: The unintended consequence of favoring policies potentially benefiting competitors like Pakistan in the global market.
Way Forward:
- Policy Revision: Consideration to revise export restrictions for better market access.
- Investment Boost: Doubling or tripling investments in agriculture R&D for enhanced competitiveness.
- Balanced Policies: Striking a balance between populism and sector health for sustainable growth.
- Reflecting Power: A nation’s strength lies in innovation, production, and competitive exports.
- Call for Change: Urgent need to revisit policies for better-designed, outcome-driven agricultural strategies.
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