Duty on rice import

The unsavoury situation over the import of rice has got a new twist following an ongoing move to discourage the entry of the main staple from outside by levying customs duty on it. The ministry of food thus reportedly wants actions in this connection from the ministry of finance, ahead of the rice procurement drive scheduled to start from the first day of the next month. The procurement drives are launched after the harvests of Aman and Boro every year with a view to giving 'price support' to the farmers.

The move to impose duty on imported rice has come in the wake of its substantial import -- nearly 1.3 million tonnes -- until April 15 of this fiscal year (FY) compared to that of 0.37 million tonnes imported throughout the last fiscal. However, there has been no import of the item by the government this FY. The ministry of food considers that it is imperative to levy duty on import of rice to avoid any rice price-crunch in the domestic market. The trend about falling prices was witnessed following every rice harvest until a few seasons back. The ministry of finance, it is understood, would look at the proposal of the ministry of food favourably since it found the higher level of rice import from neighbouring India in recent months to be somewhat abnormal.

The main reason behind the private traders' importing Indian rice in large volumes is, reportedly, the 'clearance' sale of the commodity after every three-month period that was put into effect by the Indians. Local importers have already filled up their godowns with the low-priced Indian rice. Against this backdrop, the move has come to levy duty on import of rice, ahead of the official rice procurement drive, which is primarily meant to benefit the farmers through a minimum level of price support. However, there have been raging debates over the real outcome of the government's procurement drive and the corrupt practices ingrained in it. Allegations have it that the drive benefits the rice millers and middle men more than the growers.

In most cases the rice growers do not otherwise get what can be termed a fair return. But even after bumper harvests during last few seasons, the prices of different varieties of rice had not recoded any fall and maintained a steady level. That trend is unlikely to change course this time too. Moreover, international prices of rice and inputs such as oil and fertilizers have been on the lower side for many months. So, prior to taking any decision relating to the duty on import of rice, the government should examine the pros and cons of its actions. It could be that instead of benefiting the rice growers, any hasty action might destabilise domestic rice prices and help those importers who have already built up large stocks with the cheap Indian rice.