EXCLUSIVE: Govt mulling over banning rice exports, final call not taken yet, says top FinMin source

Inflation is inching up across the world and has emerged as the biggest pain point for both, the global as well as the Indian economy. And amidst soaring inflation, rice is also witnessing a price hike. The price of rice has gone up by 10 per cent in the last five days, riding on the back of cut in import duty and tariffs from 62.5 per cent to 25 per cent on the essential commodity by Bangladesh. And once again the speculations of banning rice exports from India have gained force. Clarifying the situation, a top source from the finance ministry, on the condition of anonymity, has confirmed that the ministry is indeed mulling over banning rice exports.

“The ministry is giving thought to banning rice exports from India, however, final call [on the matter] have not been taken yet,” the source told Business Today.

According to experts and economists, any ban on the export of rice might put a lot of pressure on countries who are highly dependent on rice imports from India, such as Nepal, Philippines, Cameroon, China etc. India, going through the same situation, had banned the export of non-basmati rice to tame rising inflation way back in 2008. The ban was lifted only in 2010. Once again, costs in India are soaring, with the wholesale price inflation rate touching nearly 15.9 per cent in May, well above market forecasts.

Subsequent to the Russia-Ukraine war, global commodity prices witnessed a spike due to supply chain disruptions. With the rise in inflation globally, countries like India have reacted by banning the export of some essential commodities, such as wheat, recently. The reasoning behind such a move, as per the government, is that rising inflation would necessitate the need for food security, especially in the arena of essential items like wheat.

The government's decision to ban, however, is not without its critics. Some economists have raised questions on this whole move of banning exports.

Ashok Gulati, chair professor for agriculture at ICRIER, talking exclusively to Business Today on the government decision to ban wheat exports, said, “It's totally irrational, it’s a knee jerk reaction. You are trying to control wheat exports, but then atta exports will zoom up, so what you will do? You are trying to put pressure down on one side. Best trade policy is to keep borders open and lower the import duties across the board because all the prices have gone up, almost every commodity.”

India’s retail inflation eased to 7.04 per cent in May and inflation in the food basket was 7.97 per cent in the month of May. Whether the government will proceed to and ban rice imports, after banning wheat, indications are that a clarity on this will arrive soon.

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