G-20, the grouping of developed and emerging market economies, will focus on food security but issues concerning India like rising prices of vegetables may not come up for discussions at a meeting in Paris next week.
The meeting of finance ministers of these countries, to be held from February 17 to 19, will also take up the issue of volatility in commodity prices including oil, which affects countries like India the most as it imports huge chunk of crude to meet its requirements.
Though food security will be discussed, it will touch basically foodgrains, which currently, does not pose much of a problem for India. The prices of vegetables, which are of much concern till a few weeks ago, would most likely not be taken up, a key government official told Business Standard.
Food inflation has fallen to 13.07 per cent for the week ended January 29, after touching 18.40 per cent late last year on rising prices of onion, a staple in most kitchens.
Yesterday, India estimated its rabi crops to have bumper production with wheat and pulses expected to have record output.
According to the second advance estimates of the Ministry of Agriculture, India is likely to produce 232.07 million tonnes (mt) of foodgrains in the current year, posting an increase of 6.4 per cent over the drought-hit 2009-10. As such, foodgrain would not be a major problem for India to tackle than the rising prices of vegetables, the official said.
The meeting was also likely to discuss whether the export ban causes volatility in global prices, he added.
Finance Minister Pranab Mukherjee, Reserve Bank of India Governor D Subbarao and Economic Affairs Secretary R Gopalan will attend the meeting.
India’s stand will be that an export ban at a time of emergency is not against WTO (World Trade Organization) norms, which basically deal with imports. “It’s a matter of sovereign rights,” he added.
India had imposed a ban on onion exports, after its prices climbed to Rs 70-80 a kg in retail markets last month. However, after the prices crashed, the ban was eased. A ban on the rose variety of onions, grown in Karnataka, was removed yesterday.
The meeting in Paris is likely to discuss the issue of rising as well as volatile commodity prices, including oil. If prices were rising, in fact, investment in that sector would be more forthcoming in the long run, but volatility caused huge damage, the official said. The issue is quite important to India, since it imports around 80 per cent of its crude requirements. After the recent political crisis in Egypt, the crude has already flared to over $100 a barrel.
A more detailed discussion on food security will be made at a meeting of agriculture ministers of G-20 nations, in July. France, the current chair of G-20, has called for bringing stability to food commodity prices. It favoured a new mechanism in WTO for this purpose. G-20 agriculture ministers have been invited to Paris in June to draft solutions.
Meanwhile, the special representative of the UN Secretary General for Food Security and Nutrition, David Nabarro, said this year, the UN was studying food price volatility in assocation with G-20 countries. France has asked UN agencies to prepare a report on food price volatility due to derivatives trading.
However, US Treasury Secretary Timothy Geithner had said he was not clear what France was proposing to do with G-20 and implied that market forces should be left to determine prices unhindered. Geithner said US commodity trading was conducted in a transparent and accountable system that minimised price speculation.
The other issues to be discussed in the G-20 finance ministers’ meeting are likely to be global imbalances, taking stock of reforms in the International Monetary Fund. However, the issue of bank tax may not come up since it was agreed last time in Seoul that each country would devise its own strategy on the issue.
