Wheat from the chaff
The Govt?s justification to import 3 mn tonnes of wheat, rings somewhat hollow, since there is no real shortage of wheat in the country.india Updated: Apr 25, 2006 01:55 IST
When the world’s second-largest wheat grower announces plans to import wheat -- that too, at levels significant enough to move global prices and set mouths watering in agriculture ministries in two hemispheres -- one can reasonably assume that one of two possible scenarios forced the decision. The first, that there has been, or will be, a disastrous crop failure. The second, that the country faces, or anticipates, some sort of national emergency, which requires stockpiling of foodgrains as a security measure. Neither of the two is applicable in India’s case. True, the government has revised its initial estimate of wheat output from 73-75 million tonnes to around 72 million tonnes, due to what it termed “unusually hot” weather conditions in February this year. However, the Economic Survey presented towards the end of February made no mention of any possible shrinkage in agricultural output. In fact, the forecast was quite the opposite: that prospects for the agriculture sector were looking up despite deficient rainfall. Though agriculture’s share of India’s GDP has fallen over the years as the share of manufacturing and services grew, its total output has maintained a rising curve.
The government’s justification for its decision to import 3 million tonnes of wheat, on top of the half million tonnes already ordered by the sole importing agency, the State Trading Corporation, is an anticipated drop in production, combined with depleted wheat stocks in government stockpiles. This rings somewhat hollow, since there is no real shortage of wheat in the country -- it’s just that the government is unable to lay its hands on a sufficient quantity. Rather than imports, the government could have considered allotting the money it is going to spend on imports towards a higher support price for farmers, who prefer to sell to traders because they get a better price. Besides, its ponderous procurement process, through a monopoly agency, will also allow time for global prices to rise further.
The last time India imported wheat was seven years ago. It was a purely political decision by the IK Gujral government on the eve of elections, which was nevertheless implemented by the newly-elected BJP government, for obvious reasons. There is little evidence to support the view that it’s any different time around.