Ban on rice and sugar export - India Uses Trade Policy to Curb Inflation

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Apurva Dhamankar

8/23/20232 min read

India, the world's largest exporter of rice and sugar, has imposed a ban on exports of both commodities in an effort to curb inflation. The move comes as food prices have been rising sharply in recent months, driven by factors such as the war in Ukraine and bad weather.

The ban on rice exports applies to non-basmati rice, which accounts for the majority of India's rice exports. The ban on sugar exports is also significant, as India is the world's second-largest sugar exporter.

The government has said that the export bans are temporary measures that will be lifted once domestic prices stabilize. However, some experts have warned that the bans could have a knock-on effect on global food prices, which are already at a record high.

The use of trade policy to curb inflation is not new to India. In May 2022, the government banned wheat exports in an effort to control rising domestic prices. The government has also imposed restrictions on imports of certain commodities, such as edible oils.

The use of trade policy to manage food prices is a delicate balancing act. On the one hand, export bans can help to keep domestic prices down. On the other hand, they can also lead to shortages and higher prices in other countries.

The government of India will need to carefully monitor the impact of the rice and sugar export bans before deciding whether to lift them. The decision will be made based on a number of factors, including the level of domestic food prices, the availability of food stocks, and the impact on global food markets.

In addition to the export bans, the government of India has also taken other measures to curb inflation, such as releasing food stocks from government reserves and increasing the import of edible oils. The government has also raised interest rates in an effort to cool the economy.

It remains to be seen whether these measures will be enough to bring inflation under control. However, the government's willingness to use trade policy to manage food prices is a sign of its commitment to addressing this important issue.

The ban on rice and sugar export is a significant move by the government of India. It will be interesting to see how these measures impact food prices and the global economy in the coming months.

Thank you.

Regards,

Omkar Sutar,

Kautilya, IBS Mumbai.

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