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India may lift ban on pulse exports to deal with glut and price crash at home

Opening up exports for the first time since 2006-07 will also allow the trading community and farmers to better manage abundant domestic stocks and realise better prices

July 31, 2017 / 12:08 PM IST
Representative Image.

Representative Image.

The government may soon lift the decade-old ban on pulse exports, allowing farmers and traders to sell lentils in overseas markets as part of a broader strategy to deal with the current glut and price crash at home.

“We may think of calibrated opening of exports for one or two pulses,” a senior government official told Moneycontrol. Pulse exports have been banned since 2006-07.

Pulses, a common source of protein for most Indians, have seen a significant fall in prices from two years ago, when unseasonal hailstorms damaged crops across major states. In 2015 arhar or tur dal prices had retailed at more than Rs 200 a kg.

Supplies had fallen further, battered by a drought in 2015, presenting the Narendra Modi government with a challenge to contain inflation in pulses, which was threatening to snowball into a political issue.

The government addressed this by announcing a string of administrative measures and stocks built up. It offered significantly higher minimum support prices (MSP) as an incentive to wean farmers towards pulses away from other crops.

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Also read: 3 Years of Modi: Govt scores high marks on pulse control, low grades on fuel

Separately, the government also bolstered stocks through greater imports. The results followed with arhar retailing at less than Rs 80 a kg currently.

India does not produce enough pulses and relies on imports to meet domestic demand. In a good farm year, the country manages only about 18 million tonnes while demand usually hovers between 22-24 million tonnes.

“One advantage of opening up export is that we can set certain trend in the prices in the domestic market. If our export prices are better, then the domestic prices will also rise," the official explained.

Opening up exports for the first time since 2006-07 will also allow the trading community and farmers to manage abundant domestic stocks and realise better prices

India’s inflation rates have slowed to record lows and food prices have been falling. Wholesale inflation slowed to 0.9 percent in June, the lowest in a year. It was 2.17 percent in May. Consumer price index (CPI)—commonly referred to as retail inflation—also moderated sharply to 1.54 percent in June, the lowest since the index was rebased to 2012 in a new data series.

Also read: Here’s why low inflation may not be a good sign

The falling inflation levels are emblematic of slumping vegetable prices as farmers grapple to deal with a bumper winter-sown crop that have flooded the mandis with few buyers. The price data mirrored rural distress sweeping across many states amid reports of suicides by farmers staring at unpaid debt and low income possibilities as unsold stocks of onions and potatoes continued to perish in many wholesale vegetable markets.

Tomato prices, however, have started rising sharply, selling at around Rs 100 a kg in major cities with supplies being disrupted due to heavy rains.
first published: Jul 31, 2017 12:03 pm

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