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Will a pro-farmer trade policy help BJP electorally? -Sayantan Bera

-Livemint.com

BJP-led central government has raised import duties on a range of edible oils, ahead of the crucial Gujarat assembly elections

New Delhi:
Ahead of the crucial Gujarat assembly elections, the centre last week raised import duties on a range of edible oils, in a bid to support growers who are bearing losses due to plunging domestic prices.

On 17 November, India, the largest importer of edible oils globally, raised import duties on crude palm oil from 15% to 30% and that of refined soybean oil from 25% to 40%. While the duty on crude soybean oil was raised from 17.5% to 30%, import duty on refined soybean oil was raised from 20% to 35%.

The hike in import duties on edible oil is the highest in a decade—in a bid to encourage farmers at home—and comes ahead of the Gujarat assembly elections in December. For the ruling Bharatiya Janata Party (BJP), retaining Gujarat, which it has ruled for over two decades, is crucial as results in the state can set the mood for the general elections in 2019.

Gujarat is a major producer of groundnut contributing about 40% to India’s total production of the oilseed.

In September, the Gujarat government had announced it will procure groundnuts at Rs4,500 per quintal as local prices plunged to Rs3,000 per quintal. In October, the state government also announced a bonus of Rs500 per quintal on public procurement of cotton, over and above the centre’s announcement of minimum support price (MSP) of Rs4,020 per quintal.

The hike in import tax is also likely to benefit growers of soybean and the largest producing state of Madhya Pradesh, where assembly elections are likely by the end of next year.

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