‘Harmful globally’: IMF encourages India to remove export ban on non-basmati rice

The International Monetary Fund (IMF) has encouraged India to remove export restrictions on non-basmati rice. The Indian government on July 20 banned the export of non-basmati white rice to boost domestic supply and keep retail prices under check during the upcoming festive season, which constitutes about 25% of the total rice export of the country.

In an official statement, the food ministry said there would be no change in the export policy of par-boiled non-basmati rice and basmati rice, which forms the bulk of exports, according to a report published by the news agency PTI.

Addressing a press conference, Pierre-Olivier Gourinchas, Chief Economist of IMF said that these types of restrictions are likely to exacerbate volatility in food prices in the rest of the world.

″So, they are certainly something that we would encourage the removal of these types of export restrictions because they can be harmful globally," he told media persons.

The total exports of non-basmati white rice from India was USD 4.2 million in 2022-23 as against USD 2.62 million in the preceding year. Major destinations of India's non-basmati white rice exports include the US, Thailand, Italy, Spain, and Sri Lanka.

The government has amended the export policy from 'Free with export duty of 20%' to 'Prohibited' with immediate effect.

The Washington-based financial body on Tuesday projected India's growth rate to be 6.1 percent for fiscal year 2024, which is slightly up from 5.9 percent estimated projection for the same period in April.

"India remains an economy that is growing quite strongly. I mean, it's coming down from really a very strong year in 2022, at 7.2 percent. That was also revised upwards, by the way -- but still slow down, but still fairly strong growth and fairly strong momentum," Gourinchas said.

Speaking to PTI, Daniel Leigh, Division Chief of the IMF Research Department said that the context is clearly, an environment of declining inflation around the world.

″That's important because then it allows monetary policy to ease up and not to start increasing interest rates, which means currencies move around. We see it in the interest of the overall global community to keep that food and energy inflation trend down," Leigh said.

"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," he added.