Under intense pressure from various quarters, and for want of a valid reason to hold back, the Government is slowly easing the restrictive policy for fine cereals export. First, it was the decision to permit export of 10 lakh tonnes of non-basmati rice; and, late last week, the Agriculture Minister announced the decision to allow wheat exports. Assuming that an official notification will be issued soon, the ban on wheat exports is being lifted after four years and at a time when government granaries are bursting at the seams with over 37 million tonnes of the cereal.
Annual wheat production has exceeded 80 million tonnes for three years now and market prices have been more or less stable. Whether export will be subject to any minimum price stipulation or quantitative ceiling is still unclear, but ideally it should be left free of avoidable conditions. It is axiomatic that in matters of international trade policy, timing is crucial. And, as usual, the government has got it wrong. Grain shipments are usually avoided during the monsoon season for operational reasons. So, the pace of shipments over the next two-three months is sure to be rather slow. Price-wise too, Indian wheat may be out of parity, as world wheat prices are at least 10 per cent lower than the domestic price. Therefore, any hope of reducing the inventory overhang through liberal exports may prove illusory. Worse, the fate of buffer stocks with the Food Corporation of India is unclear. The agency continues to carry too much inventory at too high a cost. The only consolation is that non-basmati rice shipments are likely to do well because of export parity; further, easing of the quantitative ceiling may be considered. Fortunately, the initial reports of kharif season paddy planting are encouraging. Should rice output rebound to its normal level by September, there is a case for freeing export.
For at least a year now, there has been no real justification for the continued embargo on wheat and non-basmati rice export. It was simply that the Government remained defensive, having failed to rein in food inflation. The restrictive export policy attracted adverse comments from other countries, especially because of the wide publicity the humungous buffer stocks with the Indian Government received. Opportunities to export wheat and rice with clear price parity were missed because of policy inertia. Often, growers were denied the opportunity to benefit from global price spurts. It is time the Government formulated a transparent, consistent and unambiguous long-term policy for grains export and made it a part of the Twelfth Plan strategy.