Wrong direction, Mr Pawar

Food and Agriculture Minister Sharad Pawar has ruled out the resumption of foodgrain exports this year.

At the same time, he has indicated that grain procurement operations would be extended to all those states where such arrangements do not exist, and that the public distribution system (PDS) would be expanded substantially.

Viewed against the backdrop of the ruling alliance asserting in its Common Minimum Programme that farmers would be protected against imports by keeping domestic prices high, the minister's statements are sufficient indication that foodgrain policy will revert to the pre-reform days. This is despite Mr Pawar promising to carry forward farm sector reforms.

Banning exports will merely mean shutting out the market for India's surplus grain, and will add to the discomfiture of exporters who have undelivered contracts in hand.

It will also leave high and dry those exporters who picked up stocks from the market for export, in the wake of the previous government's offer to reimburse expenses as permissible under the World Trade Organisation's (WTO) norms.

In recent years India has emerged as a major exporter of rice and wheat and has been formally recognised as such by the International Grain Council. All this will now be history.

This is not the only worrying aspect of the new policy. The proposal to extend grain procurement operations from 15 per cent of the country to all of it, will render private wholesale trade virtually irrelevant in this sector.

It could even take the clock back to the days when people had to queue up at ration shops for buying grain. One can only hope that the Congress-dominated and the Left-supported government does not follow the Jammu and Kashmir government (another Congress alliance) which has recently re-imposed limits on the number of guests that can be fed at weddings!

The new policy as enunciated will mean that the food mountain will start getting built up again, while the already bloated food subsidy bill will grow beyond the current Rs 30,000-crore mark.

India has built up unsustainable grain inventories in the past, and these were pruned by exporting over 33 million tonne, conducting open market sales of nearly 20 million tonne and by liberally using food for welfare and drought relief schemes.

Going by Mr Pawar's reckoning, the central grain pool inventory is, in any case, likely to touch 33 million tonne on July 1, against a buffer stock requirement of only 24 million tonnes. With the monsoon projected to be normal, another bumper kharif crop seems round the corner "" which means the government's stocks will climb further.

Under the circumstances, there is absolutely no need for Mr Pawar to ban exports or revert to tried-and-discarded models of food management, when the objective should be to reduce the subsidy bill and let markets function with greater efficiency, while providing farmers a price cushion.

Instead, Mr Pawar seems to be moving in exactly the opposite direction. Any modification in the grain procurement and distribution system that eliminates or reduces the role of private trade would be inappropriate, inadvisable and perhaps even financially unsustainable. And to shut out exports is of course to be completely anti-farmer.