The potential that it could work against it in this year’s and next year’s national elections for several state assemblies has the government particularly concerned. Because of this, the government’s price-control policies have a specific urgency to them. The majority of them have taken the form of market interventions to control prices and guarantee a sufficient supply of the commodities in the food basket. The farmers who produce the majority of those commodities may suffer as a result of most of these steps.
Source: CNBC
Among the measures are a 40% tax on onion exports that will remain in effect through December, restrictions on the export of non-basmati rice that were put in place in July, and stock limits for pulses and wheat that were put in place in June. Additionally, the government has disclosed an increase in onion buffer stocks. Farmers and business owners who were pleased with the increase in prices this season have challenged the measures because they fear a price collapse.
To ensure adequate domestic availability of these varieties and to keep their prices in check, the 20% export tax on parboiled rice, which made up 30% of shipments in 2021u20132022 and the suspension of shipments of nonu2013basmati white rice, which made up 30% of exports in that same year, are both in place.
Source: Business Standard
These are intended to maintain price lines, but they will also have the unintended consequence of reducing and stifling farmer earnings. Profits in farming are generally minimal. Farmers do not receive enough assistance from the government when their crops fail. They typically don’t receive high prices for their produce. Middlemen control the lion’s share of the revenues.
The government is worried about how rising prices will affect literate, opinion-forming consumers who may turn against the government. However, when prices are unnaturally lowered, farmers suffer. The limits also have an impact on rural demand, which is important to many industries and economic sectors. The interests of farmers and consumers, which are currently skewed in favor of the latter, need to be better balanced. Breaking export agreements can also harm a nation’s reputation as a dependable exporter.
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