The Hindu Business Line : Pvt sector foodgrains export policy on anvil

FACED with the grim reality of a surplus stock of foodgrains this year, the Government is seriously considering to make export of foodgrains ``a completely market-driven activity'' by facilitating its export by private sector.

Highly-placed sources in the Government told Business Line here that a draft Cabinet note for such foodgrains export policy is being submitted to the Union Cabinet for its approval. Under this, it is proposed to make export of foodgrains a completely market-driven activity "right from procurement on private account to dispatch to the importing country by making available WTO-compatible costs to all exporters as is presently available for exports of foodgrains sourced from Food Corporation of India (FCI)." The inkling to this line of thinking engaging the policy-makers is also provided in the latest Mid-Year Review of the Economy, released on November 14 here, wherein it is explicitly spelt out that to establish itself as a reliable supplier in the global grain market, India must enunciate a stable export policy for foodgrains, the sources said.

It is in this context, the sources said, that such an export policy could be sustained only if the domestic price of foodgrains is properly aligned with global rates. This also needs to be complemented and supplemented by considering to "allowing private exporters to procure foodgrains directly from the farmers to encourage competition and efficiency gains in its export," the sources noted.

The High-Powered Committee on Economic Reforms, headed by Dr S. Narayan, Economic Advisor to the Prime Minister, has also in a recent review of the identified target areas of reform has singled out the completion of the foodgrains export policy before the end of the current calendar year.

Alongside, efforts are also on to set up a National Export Insurance Account (NEIA) with a corpus of Rs 2,000 crore, the sources said adding that a note for obtaining approval of the Cabinet Committee on Economic Affairs is being circulated to Ministry of Finance and the Plan Panel and apart from the setting up of a Committee of Direction under the Chairmanship of the Commerce Secretary, Mr Dipak Chatterjee.

The objective of NEIA include to ensure the availability of credit risk cover for projects and other high value exports and to provide insurance cover for undertaking project exports for which Export Credit Guarantee Corporation is not able to get reinsurance. NEIA would also meet part of the cost of credit insurance at premium rates which are higher than the rates which are paid for analogous exports by exporters in other countries where Governmental underwriting support exists.

The NEIA project, which may be completed by January 31, 2004, is also expected to provide cover for exports to countries which are not likely to be covered on purely commercial considerations or are beyond country exposure limits prescribed by ECGC or are countries currently facing economic or political difficulties, but where Indian presence is required to be maintained as a part of the long-term economic strategy, the sources added.

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