COMMENTARY. Move to impose QRs on pulses may prove to be shortsighted and counter-productive

In the wake of record domestic harvest and concerns over the slump in prices of traditional pulses such as tur/arhar (pigeon pea), urad (black matpe) and moon (green gram), the government in August imposed quantitative restrictions (QRs) on the import of these pulses.

For tur/arhar import of up to 2-lakh tonnes was allowed during financial 2017-18, and for the other two pulses combined, it was 3-lakh tonnes. This has created utter consternation among major suppliers, including Myanmar and East African countries such as Ethiopia, Tanzania, Mozambique and others.

Importantly, like in India, in these countries, pulses are grown by smallholder farmers. They are the ones who produce pulses with India as the target market. Now that a major market has been shut out, these small growers have nowhere to go because these pulses are not the favourite legumes in other parts of the world.

A question that arises is whether the imposition of QRs on the import of these pulses is WTO-compliant, or whether it breaches any agreed rule or undertaking.

Since 1995 when the World Trade Organisation (WTO) came into existence, members were obliged to eliminate QRs on imports and exports. As a responsible member of WTO, India has been able to progressively remove QRs on most of the goods, according to the government.

However, consistent with Article XX (General Exceptions) of General Agreement on Tariffs and Trade 1994 (WTO’s predecessor in a manner of speaking), a member can maintain restrictions on imports/exports on the grounds of protection of public morals; human, animal or plant life or health; patents, trademarks and copyrights, and prevention of deceptive practices; conservation of exhaustible natural resources; and protection of trade of fissionable material or material from which they are derived; and preventing traffic in arms.

Accordingly, India maintains restrictions on around 500 tariff lines under QRs in the form of prohibition, restriction or exclusive trading by State Trading Enterprises. Obviously, these tariff lines are sensitive in nature and deserve close monitoring.

In law it is axiomatic that there has to be a rational nexus between the legislation and object sought to be achieved.

The policymakers have to explain how the imposition of import restriction (QR) on tur/arhar, urad and moong would serve one or more of the stated objectives such as protection of public morals, human, animal or plant life and or health so on.

The decision of the government will have to stand legal scrutiny.

More importantly, from a practical perspective, the decision to impose QRs may prove to be shortsighted and counter-productive. India’s sudden policy change has directly injured the livelihood of small growers in Africa and Myanmar.

They are angry and are free to retaliate. What if they switch to some other crop that offers more ready markets? And what will happen if India faces drought next year and we go back to the world market to scout for supplies? We did that in 2015 and 2016, not too long ago to forget.

Instead of adopting negative tactics such as imposing QRs selectively, the government must advance affirmative action. Defending the minimum support price is one important dimension of the affirmative action, and it can be achieved through strong procurement.

For a government that handles 50-60 million tonnes of foodgrains (rice and wheat) procurement of say 3-million tonnes of pulses should pose no special problem.

It is important to review the hasty decision to impose QRs on select pulses. The restriction should be lifted. At the same time, regulate imports closely so that the government knows precisely the quantity contracted for, prices, arrival period and so on.

This data will help proactive policymaking.

(The author is a global agribusiness and commodities market specialist. Views are personal)

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