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News: Government has extended the stockholding curbs on oilseeds and edible oils. This may prove to be harmful for India’s vision of boosting the output of oilseeds to reduce dependence on imports for edible oils.
Why is this step harmful for the economy’s health?
Wrong signal to market: Economic Survey has also cautioned against such knee-jerk reactions that arise due to sudden policy changes. They may lead to price fluctuations of essential items and send wrong signals to domestic producers.
This along with step like abolishing import duties and drastically slash the agri-cess on edible oils will only lead to an increase in import of the commodity.
There has been a bumper rabi harvest of oilseeds. Any restraint on stock holding at this stage would tend to keep the buyers away from the market, thereby, depressing the prices during the post-harvest marketing season to the detriment of the growers.
Low price realisation would deter the farmers from raising oilseeds production in the next kharif as well, thus perpetuating the dependence on purchases from abroad.
Why India’ dependence on imports for oilseeds is not a good long term policy?
Oil is an essential kitchen component, and depending on imports to such a large extent may have negative consequences in the future. Any disruption in supplies can pose problems for India.
What is the way forward?
India has the potential to grow enough oilseeds and edible oils to meet its needs, it just needs a right strategy.
The Oilseed Technology Mission, set up in the mid-1980s had given some positive results for the sector, but it was abandoned in the 1990s. India can adopt a similar policy now to increase domestic production for the benefit of all stakeholders, that is producers, processors and consumers.
Source: This post is based on the article “Reducing edible oil imports” published in The Hindu on 8th Feb 2022.