Indian agriculture can thrive with a greater market orientation. And there’s no better time for it than when the worst of a supply crisis is over.
Mar 14, 2025 06:51 IST First published on: Mar 14, 2025 at 06:51 IST
The Narendra Modi government last week lifted a ban on exports of broken rice, in place since September 2022. It’s high time that it also scraps the 20 per cent duty on onion exports and stockholding limits on wheat. The reason is that the harvesting of both crops is underway. According to the agriculture ministry, farmers have sown 324.9 lakh hectares (lh) under wheat and 10.3 lh under onion in the current rabi season, as against 318.3 lh and 8.6 lh last year. Ground reports suggest bumper production. In onions, it is evidenced by wholesale prices in Maharashtra’s Lasalgaon market falling below Rs 1,500 per quintal, from Rs 2,300-plus at the month’s start. As for wheat, the ministry has itself estimated a record output of 115.4 million tonnes (mt). The veracity of that will be known in the coming days; a lot hinges on there being no sudden temperature spikes detrimental to yields during the terminal grain-filling stage.
Either way, the supply situation in food commodities — maybe with the exception of sugar and edible oils — is comfortable, compared to what it was even three months back. Wheat stocks in government godowns on March 1, at 13.4 mt, were higher than the 9.7 mt a year ago. Mustard is selling in Rajasthan mandis at well below the government’s minimum support price. The overall improved supply position is also borne out by annual consumer food price inflation dipping to 3.75 per cent in February, from 10.87 per cent in October. March so far hasn’t seen any heatwave conditions of the kind last year that were a trigger for the surge in prices. The mild La Niña conditions, as opposed to the devastating 2023-24 El Niño, have probably helped in ensuring a near-normal winter this time. And the resultant likely bumper rabi harvest would be welcome respite, including for the Reserve Bank of India that doesn’t now need to think twice about cutting interest rates.
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But that’s also a reason for the Modi government to be proactive about removing export and stocking restrictions. India should avoid repetitions of the cobweb cycle, of farmers overproducing crops in response to high prices and the subsequent price collapse leading to underproduction and price increase in the following year. The best way to address this is by keeping both the export and import window open, while also allowing the produce to move and be stocked freely within the country. Onion growers are justified in feeling angry over curbs on exports, which are imposed the moment domestic prices start rising. The same alacrity is missing when it comes to lifting them, leave alone when prices crash. Indian agriculture can thrive with a greater market orientation. And there’s no better time for it than when the worst of a supply crisis is over.
