India’s rice export curbs could prove too myopic for its good

Source– The post is based on the article “India’s rice export curbs could prove too myopic for its good” published in the “mint” on 28th July 2023.

Syllabus: GS3- Indian economy

Relevance: Issues related to external trade

News- Russia’s decision to pull out of the Black Sea grain deal, but also India’s announcement that it would ban the export of many varieties of rice.

Why is the export ban not a good policy decision?

It significantly undermines the claims that India is the natural and responsible leader of the developing world. Notably, India’s share of worldwide rice shipments stands over 40% in 2022-23.

It could lead to growing resentment over time. If global rice prices surge to a 10-year high and the developing world attributes shortages mainly to the Indian export ban, anger may escalate quickly.

The central argument for India’s leadership to the Global South has always been its perception that it considers other developing countries as equals. This distinguishes it from the West or China.

However, Indian policymakers should refrain from arbitrary decisions like export bans that make other nations feel dependent and subservient. True global leadership is taking responsibility for the world as a whole.

What are India’s justifications for its decision?

There is rising food prices at home. Domestic prices for rice have risen over 10% in the past year.

Export bans may seem like the best solution for domestic consumers. The government holds significant stocks of rice that could be distributed to poorer Indians or released into the open market to stabilise prices.

For the bureaucracy, export bans appear to be the immediate response to soaring domestic prices. Last year, following the upheaval in wheat markets due to the Russian invasion of Ukraine, India also imposed a shutdown on wheat exports.

These restrictive trade policies are aimed at protecting millions of subsistence farmers. But farmers’ welfare seems to be the least priority for policy makers.