The Centre is believed to have decided to abolish import duty on rice to augment supply in the domestic market, after drought in about half the country stoked fears of a fall in production of the food grain.
Sources said that in a meeting last month, the empowered Group of Ministers (eGoM) on food, headed by Finance Minister Pranab Mukherjee, recommended that import duty on rice be cut to zero from the current 70 per cent till September 2010.
The government had earlier (March 20, 2008 to March 31, 2009) scrapped the customs duty on rice as part of measures to control inflation. However, the customs duty was restored from April 1 this year.
The empowered panel also agreed to continue with the ban on export of non-basmati rice, imposed in April last year, sources added. Prior to the ban, India was a major exporter of non-basmati rice along with Thailand and Vietnam. However, the country is currently exporting only basmati rice.
The decisions by the government came after poor monsoon ravaged the most important summer-sown crop — paddy — with area under the crop slumping by nearly 6.4 million hectares, deepening fears that rice output may fall more than what the Centre had anticipated. Food and Agriculture Minister Sharad Pawar had said last month that rice production could decline by 10 million tonnes in view of drought. India produced 84.58 million tonnes in kharif 2008.
Paddy coverage has declined to 30.22 million hectares as on September 3, compared with 36.58 million hectares a year before. The empowered panel of ministers also decided to continue with the zero-duty import regime of wheat. This apart, it has also recommended against allowing more export of wheat products beyond 650,000 tonnes, as decided earlier.
To increase the supply of both wheat and rice, the government had last month approved open market sale, under which the Centre will provide these food grains from its reserves to States and bulk consumers like flour millers.
Ironically, India witnessed successive years of bumper production of rice and wheat before drought put a question mark on the prospects of food crops this year.
However, the record production in 2008-09 helped the government achieve all-time-high procurement of rice at about 33 million tonnes and wheat at over 25.3 million tonnes. Moreover, the government had over 50 million tonnes of food grains in its reserves till July-end, enough to meet the requirements of the public distribution system for 13 months.
