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Resource centre on India's rural distress
 
 

No need for imports

To import rice or not? That is the question to which the government does not seem to have a clear-cut answer. Senior ministers have been losing no opportunity to talk about importing rice, citing the monsoon-induced shortfall in production as the reason. Somewhat contrarily, they have also been asserting that the government has enough stock of rice and there is no need for any worry about a supply shortage, but that has not cut much ice as the ministers themselves keep pressing the import button. The empowered group of ministers (EGoM), which was supposed to take a final call on imports, has ended up compounding the confusion. While deciding, at its meeting last week, not to import rice for the present, it kept the option open for subsequent review.

This caveat, coupled with indications by officials that the country might explore the possibility of government-to-government rice import deals, has sent out signals to the markets — both domestic and international — that India will turn an importer of rice after a gap of nearly two decades. The tenders floated by three state-owned trading firms for importing rice have lent further credence to India’s need for rice imports. These tenders hit the international market at a time when the Philippines, usually one of the biggest exporters of rice, had turned an importer. As could be expected, this has pushed up prices in the global rice bazaar, which is a relatively thin market with an annual trade of under 30 million tonnes. It is no wonder then that the bids received by India are at prices ranging from $372 to $598 a tonne. The landed cost of these bids would have been far in excess of domestic prices, which are already ruling high because of the officially-encouraged scarcity psychosis.

The ground reality is that paddy harvesting is still in progress, and the final picture on rice availability is unclear. Though the agriculture ministry’s preliminary estimates have projected a shortfall of 15 million tonnes, past experience is that these estimates invariably get revised when the results of crop-cutting experiments become available. The initial projections are made on the basis of information supplied by states, which tend to overstate drought-inflicted crop losses in a bid to get higher assistance from the Centre. Besides, the total stock of rice in the official grain coffers on the eve of the commencement of the new procurement season on October 1 was 15.35 million tonnes, nearly three times the minimum buffer requirement of 5.2 million tonnes. On top of this, rice procurement this season has taken off well, with total purchases till now exceeding last year’s corresponding level by a million tonnes. In view of all this, the government’s decision-makers may have erred by creating a supply scare.