What explains India’s U-turn on wheat exports?

News: Union government has recently banned the exports of wheat.

However, there are certain conditions, under which exports will be allowed:

First, where an irrevocable letter of credit has already been issued.

Second, one window has been kept open for the neighboring countries in the notification. It says export will be allowed to other countries “based on the request of their governments”. It will be helpful in ensuring supplies to Sri Lanka, Bangladesh, and Nepal

What are the factors that led to the ban on exports of wheat in India?

Heatwaves at the end of March, have impacted the production of food grains, especially in northwest India.

The government has revised the wheat production estimates, lowering them by 6 million tonnes.

Wheat prices have increased nearly 20% and prices of essential food items such as Atta has risen nearly 15% last year.

The government has given its reasons for export ban, i.e. to check prices and curb hoarding.

What are the implications of the wheat exports ban?

First, India is the world’s second-largest wheat producer and countries were expecting India to fill the gap created due to the Ukraine-Russia war.

Agriculture ministers from the G7 condemned India’s decision to withhold wheat exports amid a global grain shortage.

Second, Indian wheat traders have lost the opportunity to gain from the global grain shortage. Building export markets and establishing supportive infrastructure, like warehousing, takes time. Such policy decisions will create more difficulties in it.

Third, it will be a loss for farmers as well because the market price of wheat had become higher than MSP. Many farmers were preferring to sell in the market. It led to the highest purchase of wheat by private traders in Punjab in the last 8 years.

Fourth, it will raise questions about the farm trade policy’s credibility. Signs of low output due to March heat were already visible, still, the delegation was sent abroad by the commerce ministry with the slogan Indian farmers “feeding the world”

Source:This post is created based on the article “What explains India’s U-turn on wheat exports?” published in Live Mint on 16th May 2022.

This post is created based on the article “Government ban on wheat exports hurts farmers and traders, dents India’s image as a reliable global supplier” published in Indian Express on 16th May 2022.

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