ICRIER: India's trade policies reflect a deep-rooted consumer bias in trade policies . The government could have offered a Rs 200-250quintal bonus in addition to the MSP to aid in its wheat procurement .
The new wheat production estimates are much lower than the estimated 111 mmt (million metric tonnes), according to Prime Minister Joe Biden, who delivered his inaugural address at the 2+2 ministerial on April 11th, and wheat procurement is projected to begin exporting from tomorrow to feed the world.Another possibility could be that the wheat harvest for April 22 is 9.59 percent (y-o-y) up from total cereal inflation of 5.96 percent.Whatever the explanation, Government babus or the minister concerned gives, it does no harm to both the Prime Minister's and India's reputation as a reliable exporter of anything in global markets.It states that we do not have a sustainable export program as it can turn its back at the drop of a hat.More interestingly, it also reflects a deep-rooted consumer bias in India's trade policies.It is this consumer prejudice that is implicitly anti-farm.What if 800 million plus people have been provided practically free food (rice and wheat) under NFSA and PMGKAY until September?Is the government trying to shield the urban middle class at the expense of farmers?It is this urban-consumer bias that has made our peasantry poor.ICRIER found that the enactment of stocking limits on traders and export controls serves as an implicit tax on farmers.All OECD countries, as well as other major economies such as China, Brazil, Indonesia, etc., provide net positive support to their farmers, but India still implicitly taxes its peasantry by way of market and export control. The situation may have been improved by export restrictions.Newsletter What could have been done even when wheat production and procurement are down.First, the government could have offered a Rs 200-250quintal bonus in addition to the MSP to aid in its wheat procurement.Farmers who have stocks may even wish to give it to the government even if the bonus is announced tomorrow.Farmers will be rewarded with this and encouraged to increase their area under wheat in the coming season. It could have given people cash to buy any food, from eggs to milk to pulses, because inflation is much lower and they are more nutritious.In the case of the PMGKAY, a change in rice for wheat is a step in the right direction.Thirdly, if the situation on the wheat front is so bad, the government might have calibrated exports by placing a minimum export price (MEP).It chose the worst policy option, a partial prohibition on exports, however.It only highlights the impossibility of agri-trade initiatives and hopes of doubling agri-exports. The Indian wheat export ban will not be enough to dampen inflation at home.(Gulati is an Infosys Chair Professor for Agriculture, and Gupta is a researcher at ICRIER.)The writer is chair professor for agriculture at ICRIER.Views are real....Sanchit Gupta, an ICRIER researcher, is a researcher.