Centre says measures in place to check price rise
Context
Union Food Secretary Sanjeev Chopra stated here on Thursday that the Center has implemented sufficient steps, such as extending the ban on sugar, wheat, and rice exports, to guarantee that the costs of these necessities did not rise higher and stayed steady throughout the festival season.
Why are there restrictions on agricultural products in India?
- Sustaining Sufficient Domestic Supply: To guarantee that there is a sufficient supply in the home market, the Indian government has placed limitations on the export of specific agricultural products, such as sugar, wheat, and rice. This is done, particularly during the festival season, to protect food security and avoid shortages.
- Price Control: Price control is achieved by export prohibitions. The government wants to keep prices from rising and guarantee that households can continue to purchase staple foods by restricting exports.
- Protecting Farmers: The interests of domestic farmers are likewise safeguarded by these limits. The government helps guarantee that farmers have access to a local market and get fair prices for their agricultural produce by limiting exports.
- Foreign Exchange Management: These actions could also be taken by the government to control its foreign exchange reserves. India can control its foreign exchange resources by restricting the amount of foreign money that leaves the country through export prohibitions.
What are the measures taken to maintain the stability of essential food items?
- Extension of Export Limits: The export of vital agricultural goods like sugar, wheat, and rice is now subject to additional limitations from the government. The purpose of these limitations is to guarantee that there is a sufficient supply of certain goods on the home market.
- Parboiled Rice: From March 31, 2024, till March 31, 2024, a 20% export tariff will be applied to parboiled rice. The goal of this action is to keep the domestic market’s supply of parboiled rice sufficiently supplied.
- Export Tax on Non-Basmati White Rice: Non-basmati white rice was subject to a 20% export tax.
- Offloading of Wheat: Using an online auction, the government has chosen to dispose of fifty lakh tonnes of wheat through the domestic Open Market Sale Scheme. Due to this action, there was more wheat available in the local market, which assisted moderate retail and wholesale prices.
What are the negative impacts of these measures taken?
- Diminished Production Incentive: Price limits and export limitations may lessen the motivation for farmers to increase the production of key food goods. Farmers may lower their output if they are unable to get fair market pricing, which could eventually result in shortages.
- Market Dynamics Distorted: These actions may cause supply and demand imbalances by warping market dynamics. Price volatility may be further exacerbated by black markets, hoarding, and other illegal behaviours that may arise from this.
- Loss of Export Revenue: A nation’s capacity to earn foreign currency through exports is restricted by export laws. The trade balance and foreign exchange reserves of the nation may be impacted by this.
- Inefficiency and corruption: In certain instances, these actions may result in corruption and inefficiencies in the supply chain. Price limits, for instance, could make it easier for unscrupulous practices like rent-seeking to occur in the distribution of necessities.
- Trade Tensions: Export limitations may cause trade conflicts, trade disputes, sanctions, or punitive actions with foreign nations.
In conclusion, the article concentrates on particular limitations on rice, wheat, and sugar in India, emphasizing that these actions are meant to handle concerns about local supply, price stability, farmer support, and foreign exchange management. All of these factors are crucial to take into account while analyzing India’s economic and agricultural policies.
