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There was no need to ban wheat exports

Swaminathan Aiyar
The government’s decision to impose a sudden ban on wheat exports has cast a shadow over the Ukraine war over the Gujarat Assembly elections in December this year. The government has defended its decision, saying it would help maintain food security. But the biggest undeclared reason for this is the political need so that skyrocketing food prices do not weaken the BJP’s chances in the Gujarat elections. There, the BJP has consistently won the last five assembly elections. Naturally, he is facing anti-incumbency sentiments.

Popular tricks
In the 2017 elections, it won 99 of the 182 Assembly seats (although it later increased to 112). This means that a loss of just nine seats this time around will remove him from power. She would like to avoid this situation at all costs. The ban on wheat exports is just the beginning of the popular steps we are going to take in this election race.

Russia and Ukraine typically account for about 25 percent of the world’s wheat trade. In 2018, the global price of wheat stood at $ 160 per tonne, much lower than the domestic price in India. As a result, India could not export even though it wanted to. The government’s foodgrains surplus exceeded 80 million tonnes as government procurement far exceeded the requirements of the public distribution system. However, during the year 2020-21, due to the difficult global situation, wheat prices continued to rise in the world market. This put Indian wheat in competition and India could export 7 million tonnes of wheat that year. Russia then invaded Ukraine and world wheat prices multiplied to 4 450 per tonne (approximately Rs. 40 per kg).

Initially, the government’s focus was on the possibility of exporting 15-20 million tonnes of wheat, or about 10 10 billion. However, rising exports and adverse weather conditions have affected the rabi wheat crop, pushing up prices in the domestic market. The BJP suddenly realized that if exports continued like this, domestic market prices would reach the level of the global market, which would mean double the current rate. Out of fear, the government has banned the export of wheat.

The decision drew sharp criticism from inside and outside the country. Anil Ghanwat, head of the farmers’ association, criticized the government for refusing to give farmers a rare golden opportunity. The country’s farmers are mostly exposed to floods, droughts, pests and low prices. It happens once in a decade that crop prices go up. The farmer can immediately make up for those unhappy years. The Prime Minister had earlier promised to double the income of farmers. But when that became possible, the government lost the opportunity to the farmers. Farmers are angry that the BJP is being forced to pay the price for its electoral prospects. Not all farmers sold their crops. Many stockpiled it thinking they would sell it at a higher price in the future. Now they are suffering.

Traders are also worried. He bought wheat at a much higher price than the MSP of Rs 2015 per quintal so that he could export and make a profit. Their stock will remain low due to export ban. Many of these merchants will not be able to pay the banks and warehouses because of their fault. Such exporters were sometimes awarded gold medals. Today the government is calling him Bhandari.

World leaders are criticizing India for making the international situation more difficult. Many poor countries are burdened with debt and cannot pay the 500 per tonne price. India has huge surplus reserves. But he wants to store it for domestic consumption instead of selling it to needy countries abroad. Clearly, India wants to control prices in the domestic market, even if it leads to further rise in prices in the international market.

This ‘India First’ policy can be defended. At first glance this may seem like a selfish attitude but every government has to take care of its own people first. Only then can she think of the needs of outsiders. However, there is no need for a complete ban on exports. India can easily export up to 15 million tonnes. Even after that, the wheat required for the public distribution system will remain.

Way out
Government ministers have been talking of exporting one to one and a half crore tonnes. India must stick to it. This has allowed exporters to comply with earlier agreements. But that is not enough. To help farmers and traders who have not yet entered into an export agreement, the government will have to sit down with them and find a way to keep domestic prices under control, despite exporting at least 10 million tonnes. . Perhaps the monthly export quota of 4-5 lakh tonnes could be distributed to Star Trading Houses through lottery. Probably ‘syrupy’ wheat (very special variety) can be exported without any restriction. Under such circumstances, some restrictions on exports have become necessary, but a complete ban on exports is absurd.

Disclaimer: The views expressed above are those of the author.

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