This article was first published on The India Cable – a premium newsletter from The Wire & Galileo Ideas – and has been republished here. To subscribe to The India Cable, click here.The decision of the Government of India to ban the export of non-basmati raw rice, generally understood as white rice, was not unexpected.Despite its own estimates of wheat production in 2022-23, the government would have expected double digit wheat inflation of 12.37% in June, immediately after the peak arrival season between April and June 2023. Despite a record production of rice, inflation in June was 11.78%. Close observers of the government’s food policy are therefore not quite surprised.The third advanced estimate of production issued on May 25, 2023 pegged rice production at a record high of 135.5 million tonnes. It seems that the farmers heeded the call of the food minister to increase the production of paddy. Against our expectations, rice procurement has already reached 56.8 million tonnes and there are still two months to go (till the end of September 2023). The record of 60.2 million tonnes of procurement in 2020-21 may well be broken.High production and procurement have been achieved despite deficient rains last year in Uttar Pradesh, Bihar and West Bengal – three large rice-producing states. As a result, the buffer stock of rice in the central pool was about 41 million tonnes while the norm is only 13.54 million tonnes.In view of the above, the government’s decision to ban the export of raw white rice looked unwarranted. However, the government would have realised that even though the buffer stock of rice was three times the norm on July 1, the stock level was the lowest in three years. Due to doubling of allocation under the Pradhan Mantri Garib Kalyan Yojana from April 2020 to December 2022 and substitution of wheat with rice (due to low wheat procurement last year), there was depletion of rice stock in the central pool.Also read: Rice Export Ban Leaves 200,000 Tonnes of the Grain Lying at Ports: ReportDespite the opinions of experts and economists, the Modi government has been highly conservative in its food policies. As early as December 2021, futures trading in non-basmati paddy, wheat, chana, soybean, mustard seed, crude palm oil and moong was suspended for a year. Despite a record high rice production, as explained above, the suspension was extended by another year, up to December 2023. This was claimed to be an important step for regaining stability in the market.Despite the fear of El Niño, the monsoon has been quite active so far. Eastern Uttar Pradesh, Bihar, Jharkhand and Gangetic West Bengal have experienced lower rainfall. Punjab, Haryana, and western Uttar Pradesh have received abundant rains and the deficiency in the southern regions has also been made up. If August rains are not too deficient, kharif production of paddy may be better than expected. Coupled with the ban on exports, this should keep domestic inflation in rice at a lower level.There is no ban on the export of basmati rice and the sown area of basmati in Punjab is reported to be higher. Last year, about 4.5 million tonnes of basmati rice was exported. This can go up to about 5 million tonnes this year. There is no ban on the export of parboiled rice (PBR). Last year, 7.8 million tonnes were exported. Andhra Pradesh and Telangana produce substantial quantities of PBR. The Food Corporation of India (FCI) has been finding it difficult to pick up the entire quantity as PBR is consumed only in Tamil Nadu and Karnataka. In fact, Telangana has been pursuing the uptake of PBR by the FCI which the Union government has been resisting.In our opinion, exports of 8-9 million tonnes of PBR would not be surprising. It means that despite the ban on export of raw rice, India’s total rice exports will not be impacted much this year and may still reach at least 13 million tonnes.However, some government decisions are not quite logical. An example is the ban on the export of de-oiled rice bran (DORB), an ingredient in poultry, cattle, and fish feed. Only about 10-12% of DORB produced in India is exported. Besides, inflation in meat and fish was moderate at 1.4% in June 2023. And other reasons account for inflation in milk and milk products.Also read: IMF Chief Economist Urges Reversal of India’s Restriction on Rice ExportsLast year, a similar decision was taken to ban the export of wheat flour, which is primarily consumed by the Non-Resident Indians. The void has been filled by Australian wheat, which is now milled in the UAE.This unprecedented situation has emerged days after Russia pulled out of the Black Sea grain deal. India’s move to ban the export of non-basmati rice may not risk global food inflation much. Once domestic supply eases, the government may lift the ban to enable Indian food companies, which have invested in export markets, to resume exports. Lifting of the export ban will also ensure that paddy prices do not fall below MSP.Hussain is former Union agriculture secretary. Bathla is professor at the Centre for the Study of Regional Development, Jawaharlal Nehru University.
