India’s move to ban export of non-basmati rice can “exacerbate volatility on food prices” globally, a top economist from the International Monetary Fund (IMF) has warned and urged the nation to reconsider its restrictions.
Last week, the Narendra Modi government banned the export of non-basmati white rice to regulate domestic prices of the key crop ahead of key national elections next year.
India is already seeing skyrocketing tomato prices that have led food chains to stop carrying it, robbers attacking supplies and consumers travelling to neighbouring Nepal to buy the vegetable.
Amid soaring concerns of food essentials, the government’s move aims to prevent further public uproar.
However, India is also the world’s largest supplier of rice. So its move to ban exports of all non-basmati rice, which accounts for a fourth of its total rice exports, threatens to lead to a global shortage amid an already strained global supply chain.
Echoing concerns by economists globally, top IMF official Pierre-Olivier Gourinchas said on Tuesday that India’s move can have the same impact on world supplies as the suspension of the Ukraine Black Sea grain export deal, helping drive up prices in other countries.
“In the current environment, these types of restrictions are likely to exacerbate volatility on food prices in the rest of the world, and they can also lead to retaliatory measures,” Mr Gourinchas told a press conference, according to Indian news agency PTI.
“We would encourage the removal of these type of export restrictions because they can be harmful globally.”
He said global grain prices, which are already at an 11-year high, could rise 10-15 per cent this year and India’s move could put a further strain on the rates.
India accounts for more than 40 per cent of the world’s rice exports and its decisions carry an impact for the world’s food security.
Rice prices jumped internationally to a five-year high in June after the Indian government announced an increase in minimum support prices for farmers.
Last year, India’s move to ban wheat exports led to a global outcry.
While rising food prices have a number of reasons behind it, one of the concerns globally is the recurring heat and erratic monsoon that has been impacting agricultural production worldwide, including in India, which has been grappling with repeated extreme weather events.
Fears of shortages also pose challenges of stockpiling.
Rice serves as a vital staple for around half of the global population, with Asia alone accounting for around 90 per cent of the world’s rice consumption. Importing countries such as Indonesia, China and the Philippines have been aggressively stockpiling rice this year.