Increasing rice prices in India

Source: The post increasing rice prices in India has been created, based on the article “What are the regulations with respect to rice prices?” published in “The Hindu” on 9th February 2024.

UPSC Syllabus Topic: GS paper3- Indian Economy-Major cropping patterns in various parts of the country, transport and marketing of agricultural produce and issues and related constraints; Issues related to direct indirect farm subsidies and minimum support prices; issues of buffer stocks and food security;

News: The article discusses the Indian government’s efforts to manage rice prices through measures like mandatory stock reporting, launching affordable ‘Bharat Rice’, and regulating exports. Despite these efforts, rice prices are rising due to increased production costs, export demands, and regional production variations.

What is the current status of rice in India?

Rice Production Variability: India’s rice production was 135 million tonnes in 2022-2023. In 2023-2024, Tamil Nadu and Karnataka saw production drops of 30% and 25% respectively due to inadequate rainfall, while northern states reported a 15% increase.

Rising Rice Prices: Over the last year, retail rice prices increased by 14.51%. Prices of some rice varieties have risen by more than ₹10 per kg.

Export Trends: Non-basmati rice exports have surged, from 5.1 million tonnes in 2019-2020 to 16.1 million tonnes in 2022-2023.

What are the reasons for increasing rice prices in India?

Increased MSP: The Minimum Support Price (MSP) for rice has increased in the last five years, adding to overall production costs.

Rising Transport and Storage Expenses: Costs for transportation and storage of rice are escalating, contributing to higher retail prices.

Decreased Production in Southern States: Tamil Nadu and Karnataka, major rice-producing states, have seen a drop in production by 30% and 25% respectively due to inadequate rainfall.

Shortfall in Retail Market Supply: The retail market is currently selling last season’s stock, and with lower production in some regions, this shortfall is pushing prices up.

Demand for Other Uses: There is a growing demand for rice in ethanol production and cattle feed, which impacts the availability and price in the consumer market.

What are the government initiatives to control rice prices in India?

Stock Declaration Requirement: The government mandates all rice traders, wholesalers, retailers, and millers to report their stocks online, including various categories like broken rice, non-basmati white rice, and basmati rice.

Launch of ‘Bharat Rice’: ‘Bharat Rice’ has been introduced for retail sale to general consumers at ₹29 per kg, aimed at providing affordable rice options.

Export Regulations: The government banned the export of broken rice and imposed a 20% duty on par-boiled rice exports. It also categorized non-basmati white rice exports as prohibited from July 2023.

Increased Paddy Procurement: To bolster domestic supply, the government procured 600 lakh tonnes of paddy in the current Kharif marketing season. This contributed to a central pool of 525 lakh tonnes of rice, aligning with the annual requirement of almost 400 lakh tonnes for welfare schemes.

What should be done?

1.Prioritize the sale of rice for domestic consumption over exports and other uses.

2.More specific data collection on the most consumed rice varieties is advised for better decision-making.

3.The newly mandated stock declarations from traders and millers should be analyzed to understand supply levels and market dynamics.

4.The government needs to continually evaluate the effects of its export restrictions and duties on rice to ensure a balance between domestic availability and international trade demands.

Question for practice:

Discuss the factors contributing to the increase in rice prices in India.