It is yet another step to try and combat soaring inflation. A day after the Reserve Bank of India tightened money supply by raising, for the second time in three months, the ratio of cash reserves that banks must park with it, the Commerce Ministry banned the export of wheat and milk, and allowed the import of maize.
Inflation in the latest weekly data touched 6.58 per cent. But analysts were not sure if the latest measure will significantly alter supplies or prices.
“The step needs to be supplemented with more fiscal measures, including cuts in import duties on finished products as well as on items like diesel,” said Rajeev Kumar, chief executive, Indian Council for Research in International Economic Relations. “I do not believe the ban on export of wheat is going to help much.”
“The step is unlikely to impact the underlying price pressure,” said a leading commodities’ analyst, who did not wish to be identified. “India currently exports less than 1 lakh tonnes of wheat out of a production of 72 million tonnes annually. We import much more.”
Over 45 lakh tonnes of imported wheat is already in the Indian markets.
Apart from squeezing money supply and raising interest rates, the government last month also announced a series of import-duty cuts aimed at lowering manufacturing costs that push up inflation.