India seems to have a problem managing both commodity shortages and surpluses. Government policy lurches from curbing exports when there is domestic shortage to subsidising them when there is a glut! The government’s purely reactive strategy in dealing with food price inflation shows once again the absence of either a medium-term strategy or adequate crisis management systems. In the process, both the consumer and the producer end up suffering, with traders making a quick buck whenever they can. Many of the bans and curbs imposed in recent past on agricultural commodities as a panic reaction to the spike in prices seem to have lost their relevance with the arrival of fresh crops. Questions are now being raised, and quite justifiably so, about the need for retaining curbs on the export of wheat, rice, sugar, onion, potato and several other items when the domestic granaries are brimming over, the rabi harvest is round the corner and seasonal vegetables and fruit have begun flooding local markets. Besides, the international prices of most commodities are ruling higher than domestic prices. Exports, in such a situation, can ensure better returns to producers without hurting consumer interests. The government is, however, going about it only reluctantly and in a piecemeal manner. This is apparent from the way exports have been opened up for commodities like rice and onions. Export curbs were first lifted for basmati rice, but by simultaneously fixing a rather high minimum export price, and subsequently for some types of non-basmati but specialty rice consumed by the Indian diaspora in West Asia and some other regions. But the ban on other non-basmati rice continues despite the availability of sizeable surplus. Even in the case of onions, a politically sensitive crop, export bans were lifted after prices crashed below production cost levels and farmers began protesting.
In the case of sugar, too, the government seems to be in two minds — between desiring to build domestic stocks and allowing exports. Uncertainty is hurting the sugar industry and cane growers. The global sugar scenario is currently favourable for exports but it may not remain so for long as the next cane crop in Brazil, the largest sugar producer and exporter, is anticipated to be good. While Mr Sharad Pawar, who was the minister in charge of sugar till recently, has his own reasons for demanding a revocation of the export ban, an early decision either way would be better than procrastination. What needs to be realised is that the present moment is a good time for India to be exporting some of these commodities, both because international prices are ruling high and India has a trade deficit to manage and reduce sooner rather than later. It would be unfortunate if, as so often in the past, India misses this opportunity and enters the global bazaar at a time when prices have softened. Government policy should aim to benefit both producers and consumers, and not just traders and speculators.