India’s rice output this kharif is likely to be down about seven million tonnes over last year, according to the first advance estimates for the season released recently. The expected output of 105 million tonnes, when seen along with the four million tonne wheat output shortfall earlier this year, has given rise to apprehensions on whether India has the stocks to meet welfare requirements and ward off food inflation. These fears are premature.

While foodgrain stocks with the Centre are indeed sharply below last year’s levels (wheat down by 52 per cent to 24.8 million tonnes, rice by 8.8 per cent to 24.4 million tonnes and unmilled paddy by 8.2 million tonnes to 16.1 million tonnes) as on September 1, efficient rice and paddy procurement can address the problem. A procurement target of 51.8 million tonnes, against an achievement of 51 million tonnes last kharif, is not hugely unrealistic, in view of the export control steps recently taken by the Centre. It The Centre perhaps does not want a repeat of the wheat procurement experience earlier this year when the drop in procurement was way beyond the output loss. This occurred because world prices ruled higher than the MSP owing to the Ukraine war, driving up domestic market prices and leading to diversion to private trade. The global rice scenario looks ominously similar. The USDA has projected a global drop in rice output in 2022-23 and exporters such as Thailand and Vietnam have indicated an increase in prices. China’s rice imports have surged. India has taken pre-emptive steps to curb exports, which may cap domestic prices as procurement gets underway from next month. An export duty of 20 per cent on raw rice and a ban on export of brokens are justified in a situation of price stress, even if not in normal circumstances. While export controls are best avoided, the present global situation is exceptional. While India accounts for 40 per cent of global rice trade, exporting about 20 million tonnes annually, it needs to balance domestic and global market requirements. However, having cracked down on exports, the Centre could also consider announcing a bonus on the MSP of ₹2040-2060 in view of the global scenario as well as domestic inflation. It is moot whether the Pradhan Mantri Garib Kalyan Yojana can be sustained at existing levels of foodgrain stocks. About 40 million tonnes of rice will have to be procured for PMGKY to be comfortably implemented till March 2023. The scheme requires about 23 million tonnes of foodgrains for the next six months, while the National Food Security Act schemes require a bit more. While it is a tough call to pull the plug on PMGKY at a time of rising food and energy inflation, an extension, if absolutely necessary, beyond December may not be a good idea.

These are straitened and sticky times, but there can be no denying the importance of diversifying from rice and wheat to nutricereals and pulses. To that extent, the PMGKY should not become a permanent feature. And nor should controls on exports.

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