Global food markets have been thrown into 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 percent share of exports, has led to fears that food inflation could race out of control, particularly in countries in the Global South that are already struggling with high debt levels and inflated food and fuel bills.
Even if it is soon lifted, the export ban is a big mistake for India, economically and geopolitically. It dramatically undermines Indian leaders’ recent claims that their country is the natural and responsible leader of the developing world.
New Delhi’s justifications for its decision are familiar: rising food prices at home, with a general election looming next year. Low food inflation has traditionally been a crucial determinant of electoral success in India — and domestic prices for rice have risen more than 10 percent in the past year. The government blames ballooning exports.
What is 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.
For control-mad bureaucrats in New Delhi, export bans have become the first, not last, response to rising domestic prices.
For example, just a few months after the Russian invasion of Ukraine roiled wheat markets last year, India shut down wheat exports — once again, callously increasing food insecurity in the emerging world just when it was at its most vulnerable.
Indian bureaucrats like to claim — including at the WTO — that their restrictive trade policies are meant to protect the country’s millions of subsistence farmers.
Yet in practice, farmers are the last thing on policymakers’ minds. If agricultural income was the government’s top priority, it would not shut down exports just as prices are rising and farmers have an opportunity to make a rare profit.
If India is to take on a leading role in the world, it must understand that its decisions have global ramifications. Even in richer countries such as the US, consumers — many from the Indian diaspora — have stampeded supermarkets in attempts to hoard Indian varieties of rice.
Indian policymakers have their defense ready against such complaints.
They say that the ban does not extend to the most popular Indian variant, basmati. (This will be little consolation to Indians abroad, particularly those from South India, who prefer shorter-grain varieties.)
They could also, in perfect truth, point out that in spite of the ban on exports announced last year, India actually shipped out almost twice as much wheat during summer last year than it had the previous year. This was not because of leakages in the system. Partly, it was because contracts signed before the ban were still fulfilled.
Yet it was also because other governments could lobby Indian officials to make exceptions for specific wheat shipments. A similar system is to be put into place for rice.
That is India trying to have its cake and eat it, too. It wants to hold onto its grain, while also casting itself as a bountiful provider to the rest of the developing world.
This trick is unlikely to work more than once. It is one thing to buy Indian grain on the open market; it is quite another to have to go, hat in hand, to Indian diplomats and ask for rice or wheat because of concerns about food riots.
India’s short-sighted decision is more likely to build up resentment over time. Anger might actually grow rather quickly if global rice prices hit a 10-year high and the developing world blames shortages largely on the Indian ban.
The central prong of India’s case for leadership of the Global South was always that, unlike the West or China, it saw other developing countries as equals. Indian policymakers should rethink arbitrary export bans that leave those nations feeling like supplicants instead.
Global leadership requires taking on responsibility for the world, too.
Mihir Sharma is a Bloomberg Opinion columnist and a senior fellow at the Observer Research Foundation in New Delhi.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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