In a pure socialist mode, the Government initially tried to solve the problem
itself by trying to buy
sub-standard wheat from Australia. Faced with
increased criticism for sleeping on the switch, it subsequently, it
floated to tenders to import 3 mt of wheat. When it did not get enough bids for
the 1st tender in the second round, it tried to
lower quality, quarantine, and financial norms to allow other bids to
come through.
With this policy, Pawar did not say if there were quantitative limits for
duty-free imports by private players but only to say that this policy will be
in vogue till “till the start of the next rabi harvest” expected end-March
2007. Similarly, Pawar did not have a timeframe for the ban on pulses export
“We don't want any more exports till Diwali (mid-October).” However, he said
that “Further details will be notified by the concerned departments (Commerce
and Revenue) by tomorrow.” State-owned PEC Ltd and National Agricultural
Cooperative Marketing Federation of India Limited (NAFED) have been asked to
import more wheat and sugar to increase supplies.
The Government's announcement to allow the private sector to import wheat and
ban exports of pulses had the desired effect—at least for now. Prices of wheat
and pulses futures fell on the national exchanges. Surprisingly, there was no
change to sugar prices. Chana prices recovered on news that India had cleared
bids for companies to bid for a tender from Pakistan.
India exported .24 mt of pulses valued at Rs 553.81 crores (USD 120 million)
in 2004-05. On the other hand, imports at 2.2 mt valued at Rs 3,160.16 crores (USD
686 million) in 2001-02 and 1.29 mt valued at Rs 1,718.64 crores (USD 373
million) in 2004-05 were necessary to compensate for stagnant domestic
production at 12-14 mt since mid-eighties. The ban on exports comes at a time
when Indian pulses, especially Kabuli chana, have been gaining ground in
Pakistan and Sri Lanka.
The Government’s decision came in for sharp criticism from many quarters.
Sugar millers say that “In the current scenario, sugar imports is not possible
as the market is in disparity and even landing cost at the current
international rates would not be level than Rs 23 per kg.” Analysts say that
the import plan would just result in some panic selling resulting in lower
prices where supply stock will outpace demand and lower prices artificially.
The most annoying part of this decision is that the Government has no plan to
address long term issues relating to wheat, sugar, and pulses production in
India. The issue is seen in demand and supply terms without considering human,
environmental, and economic aspects. No questions are being asked nor are
answers volunteered for tardy management of supplies. There is no process in
place to monitor production, ensure output, and manage stocks—if there is such
a process, then it is broken and needs fixing.
