IMF too worried over rice export ban

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India’s ban on non-basmati rice exports is creating ripples in the international market. Fearing a price hike in global markets, the International Monetary Fund has said it would “encourage” India to remove restrictions on export of a certain category of rice, which, it said, would have an impact on global inflation. The government had banned the export of non-basmati white rice to boost domestic supply and keep retail prices under check during. This type of rice constitutes about 25 per cent of total rice exported from the country.

There would be no change in export policy of par-boiled non-basmati rice and basmati rice, which forms the bulk of exports, the food ministry had said in a statement.

In the current environment, these types of restrictions are likely to exacerbate volatility on food prices in the rest of the world. They can also lead to retaliatory measures, Pierre-Olivier Gourinchas, Chief Economist, International Monetary Fund (IMF), said. To ensure adequate availability of non-basmati white rice in the domestic market, the government has amended the export policy from ‘Free with export duty of 20%’ to ‘Prohibited’ with immediate effect.

Commenting on the ban, Daniel Leigh, Division Chief, IMF Research Department, said that the context is clearly, an environment of declining inflation around the world. “We see it in the interest of the overall global community to keep that food and energy inflation trend down. Now the challenge is that if we see restrictions in other countries as well as India, we’ve been very clear that in our view we understand the domestic consideration, but if you see that global impact, then that would go against the reduction in inflation. So our perspective is that such restrictions should be phased out as soon as feasible,” Leigh said.