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In a welcome move, the government has liberalised import of certain pulses to counter rising prices amid tightening availability and threat of food inflation. The three pulse varieties — tur/arhar (pigeon pea), urad (black matpe) and moong (green gram) — under quantitative restriction since August 2017 are now under ‘Free’ import category until October 31 this year.
Importantly, these are the three major pulse crops cultivated in the Kharif season, planting for which will start in June. While the liberal import policy will have a salutary effect on open market prices, there are also some associated risks that the policymakers must consider and address.
Today, the government has no clue as to the quantum of pulses likely to be contracted for, their price, origin and period of arrival in India. It is critical for New Delhi to know in advance the traders’ import plan as well as adequacy and timeliness of import. To enable this, the government must mandate registration for all import contracts with a designated agency with no trading interest.
Not only contract registration, physical arrivals need monitoring too. The importers should be directed to provide information relating to fulfilment of the contractual obligation matching with import contract already registered.
Risk of price collapse
If bulk of the import or physical arrival gets bunched towards September/October, it would raise the risk of a price collapse in the domestic market right at the time of the next Kharif harvest. This is best avoided. Prior registration of import contract would provide all the requisite information to the government to facilitate urgent intervention, if any needed.
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Indian importers are sure to go out of the way to maximise imports in the coming months from various origins. Prices of pulses have already flared up in the exporting countries while overseas suppliers are keen to get rid of all their stocks to desperate Indian importers.
This situation is fraught with undesirable possibilities. Arrival of sub-standard material is a real risk. Border control agencies at various ports must be extra-vigilant to ensure old, poor or substandard material does not enter our food supply chain. We must guard against this real danger.
Some enterprising Indian importers have already booked over 5,00,000 tonnes of lentil (masur) in anticipation of a reduction in duty (see BL, April 27: Indians do advance booking of lentils ). Lentil prices at origin have already risen sharply. By freeing the import of tur/arhar or pigeon pea, the premium on lentil is likely to reduce. Lentil usually substitutes pigeon pea.
‘Track hoarding’
The Centre has advised State governments to track hoarding of pulses, despite dilution of ECA. There is danger of a lack of uniformity in implementation. Different State governments will be prone to adopt different yardsticks to verify stockholding with dal mills, traders, importers and other value chain participants. This can lead to undesirable practices. So, clear guidelines for uniform implementation and suitable directive to all States are necessary.
The author is a policy commentator and agribusiness specialist. Views are personal
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