India’s rice export curbs could prove too myopic for its good
Global food markets have been thrown into some chaos yet again —not only because of Russia’s decision to pull out of the Black Sea grain deal, but also India’s announcement that it would ban the export of many varieties of rice. The partial exit of the rice market’s largest trading nation, with about a 40% share of exports, has led to fears that food inflation will race out of control, particularly in countries of the Global South that are already struggling with very high debt levels and inflated food and fuel bills.
Even if it is soon lifted, the export ban is a big mistake for India, both economically and geopolitically. It dramatically undermines Indian leaders’ recent claims that this country is the natural and responsible leader of the developing world.
[India’s share of worldwide rice shipments stands out; at a little over 40% in 2022-23, it exported a great deal more than Thailand, which had a share of just over 15% last year, and Vietnam, which accounted for a little more than 13%.] New Delhi’s justifications for its decision are familiar: rising food prices at home, with general elections looming next year. Low food inflation has traditionally been a crucial determinant of electoral success in India—and domestic prices for rice have risen over 10% in the past year.
The Indian government has placed some of the blame on ballooning exports of the commodity. What’s not clear to most Indian economists is why export bans are the best answer for domestic consumers when the government is also sitting on vast stocks of rice that it could easily distribute to poorer Indians or release into the open market to cool down prices.
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