Local polls behind India’s wheat, sugar export curbs
Electoral calculations appear to be one of the key factors behind India's decision to curb sugar and wheat export, according to industry analysts.
Two states -- Prime Minister Narendra Modi's home state Gujarat and Himachal Pradesh -- will witness fresh assembly elections this year-end and the government is in no mood to take any chances with a possible surge in the prices of sugar and wheat in the domestic market in the run-up to the polls.
By restricting the export, the government of Modi, whose Bharatiya Janata Party is in power in Gujarat and Himachal Pradesh, hopes to build up sufficient domestic stock to keep the prices in check in order to keep the voters happy, particularly during the coming festive season in October when India's two biggest festivals -- Durga Puja/Dusshera and Diwali -- are scheduled.
According to officials, allowing unregulated export, particularly by private traders taking advantage of rising international prices of wheat and sugar, could have added to a fall in their availability at home and increased prices. The government is keen to avoid this by keeping a tight leash on wheat and sugar export.
India may have faced criticism for its curb on wheat export but the Modi government obviously does not want to upset the voters at home, industry insiders and officials said.
Sources in the BJP said a victory in Gujarat and Himachal Pradesh is expected to send the desired optics for the BJP in the run-up to the assembly elections in the key states of Rajasthan (now ruled by the Congress), Madhya Pradesh (BJP-ruled) and Chhattisgarh (Congress-governed), besides the northeastern state of Tripura, now in the BJP's control.
To top it all, there are fresh general elections in early 2024 when the Modi government's handling of the economy is likely to come under close scrutiny.
India is already grappling with rising food inflation and there are speculations that the Reserve Bank of India might go for a lending rate hike. In view of this, the government would not like to face any fresh risk of price rise, the BJP source said.
The government is continuously monitoring the situation in the sugar sector, including production, consumption, export as well as price trends in the wholesale and retail markets all over the country.
Prices of sugar in the domestic market in the last 12 months are under control, said officials.
The wholesale prices of sugar in India are range-bound between 3,150 rupees and 3,500 rupees per quintal, while retail prices are also within control in the range of 36 rupees to 44 rupees per kilogramme in different parts of the country.
India has been the highest producer and the second-largest exporter of sugar in the world in the current year. Its decision to restrict sugar export came in the light of record exports of the product, according to official estimates.
In the sugar season of 2020-21, against a target of six million tonnes, about seven million tonnes were exported. In the current sugar season of 2021-22, contracts for export of about nine million tonnes have been signed and about 8.2 million tonnes were dispatched from sugar mills for exports and nearly 7.8 million tonnes have been exported. The export of sugar in the current season is the highest.
The decision to cap sugar export will ensure that the closing stock of sugar at the end of the season (September 30) remains 6 million to 6.5 million tonnes, which is 2-3 months' stocks. India's monthly requirement in the domestic market is around 2.4 million tonnes, officials said.
Crushing in the new sugar season starts in the last week of October in Karnataka state, in the last week of October to November in Maharashtra, a major sugar-producing state, and in November in Uttar Pradesh, another key manufacturing state. So generally, up to November, the supply of sugar takes place from the previous year's stock, they pointed out.
Against the backdrop of the unprecedented growth in exports of sugar and the need to maintain sufficient stock and safeguard the interests of the common people by keeping prices in check, the government of India has decided to regulate sugar exports from June 1, the officials said.