Hindu Editorial Analysis : 31-August-2023

In recent times, the Indian government has taken significant steps to control rice exports, aiming to stabilize domestic rice prices and safeguard food security. This decision has garnered attention both domestically and internationally, given India’s prominent position as the world’s largest rice exporter. In this essay, we will delve into the various aspects surrounding this move, including the context, rationale, and expected outcomes.

Context: India’s Rice Production & Exports

Decline in Rice Production: The Indian Department of Agriculture and Farmers Welfare’s third Advanced Estimate for the Rabi season 2022-2023 revealed a 13.8% decline in rice production, dropping from 184.71 lakh tonnes in the previous year to 158.95 lakh tonnes.

India’s Global Rice Exports: India has long been a key player in the global rice market, boasting a significant 45% share. The April-May 2023 figures show a noteworthy 21.1% increase in rice exports compared to the previous fiscal year, with Basmati rice leading the way with a 10.86% surge.

Position of Global Exporters

Thailand’s Production Woes: Thailand anticipates a nearly 25% decrease in rice production for 2023-2024. This hints at a potential shift in the global rice trade dynamics.

Myanmar’s Export Halt: Myanmar has ceased raw rice exports, adding to the changing landscape of rice exporters.

Challenges in Iraq and Iran: Other rice-producing nations, like Iraq and Iran, also face challenges, possibly creating a void in the global rice supply chain.

Indian Government’s Recent Moves on Rice Exports

Export Restrictions: The Indian government’s primary motive behind these measures is to control domestic rice prices and ensure food security. It has implemented several restrictions, such as prohibiting white rice exports, imposing a 20% export duty on par-boiled rice until October 15, and allowing Basmati rice exports only for contracts valued at $1,200 per tonne or higher.

Broken Rice Exception: While the export of broken rice has been prohibited since September 2022, exceptions are made for humanitarian purposes, allowing other countries to meet their food security needs upon government request.

Rise in Minimum Support Price (MSP): To bolster the income of rice farmers, the government has increased the Minimum Support Price (MSP) for rice. This ensures that paddy procured by rice millers is priced higher than the MSP, protecting farmers’ interests.

Rationale Behind Government’s Moves

Impact of Monsoon and El Niño: One of the driving factors behind these measures is the threat of decreased rice production due to deficient monsoon rainfall in key rice-producing states like Uttar Pradesh, Bihar, Jharkhand, and Gangetic West Bengal. The looming El Niño effects further exacerbate concerns regarding new season crop arrivals.

Depleting Rice Stocks: While rice stocks currently stand at a comfortable 40.99 million tonnes, the government is apprehensive about their depletion if there’s a sub-par kharif harvest. This concern is amplified by the political pressure to sustain the free-foodgrains scheme, known as the Pradhan Mantri Garib Kalyan Anna Yojana.

Outcomes of the Move

Price Stability: These export restrictions are poised to prevent sharp increases in rice prices in the domestic market, providing stability for both farmers and consumers.

Farmer Profitability: With the government setting higher benchmark prices, farmers stand to benefit as they can fetch better prices for their rice.

Long-term Security: Despite a slight increase in rice prices for domestic consumers currently, the move ensures long-term availability and guards against spiraling prices.

Why In News

The Indian government’s recent ban on white rice exports comes as part of their strategy to ensure food security and stabilize domestic prices. This move is expected to have a significant impact on global rice markets and trade dynamics.

MCQs about India’s Rice Export Policy

  1. What is the purpose of the 20% export duty imposed by the Indian government on par-boiled rice until October 15?
    A. To discourage rice exports entirely
    B. To promote Basmati rice exports
    C. To generate revenue for the government
    D. To control domestic rice prices
    Correct Answer: D. To control domestic rice prices.
    Explanation: The Indian government imposed a 20% export duty on par-boiled rice until October 15 as a measure to control domestic rice prices.
  2. What is the primary reason behind the Indian government’s decision to increase the Minimum Support Price (MSP) for rice?
    A. To decrease rice production
    B. To benefit rice millers
    C. To ensure rice availability for consumers
    D. To support the export of broken rice
    Correct Answer: C. To ensure rice availability for consumers.
    Explanation: The Indian government increased the Minimum Support Price (MSP) for rice to benefit farmers and ensure rice availability for consumers.
  3. What is the purpose of allowing the export of broken rice under certain conditions?
    A. To maximize profits from rice exports
    B. To support Basmati rice exports
    C. To meet other countries’ food security needs upon government request
    D. To boost rice production
    Correct Answer: C. To meet other countries’ food security needs upon government request.
    Explanation: The export of broken rice is allowed to meet other countries’ food security needs upon government request.

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