Predictability and coherence in government policies are curtail to address farmer distress.
What are the recent trends?
There has been a significant upsurge in pulse imports, in the range of 30% to 46%, in four out of the first six months of this financial year.
But currently, along the currently adequate stockpile of pulses, the domestic production is also at a record high and a bumper rabi crop is expected.
Among pulses chana and masoor are key contributors for India’s pulses imports that totalled to over $1.6 billion in the previous two fiscals.
Hence, the government slapped a customs duty of 30% on the import of ‘chana and masoor dal’ to prevent cheap imports from hitting farmer earnings.
Notably, as international prices are staying low for long, traders are currently thought to prefer imports over local procurement due to the cost advantage.
This is move is seemingly late, as imports pressures has already eased considerably since September.
What is the problem with such actions?
Other than the late response, reflexively raising or breaking such tariff walls, as the production cycle warrants, doesn’t add up to a serious long-term policy.
Rather a policy for boosting farm incomes and ensuring food security should be focused and well thought.
Notably, in the case of a key protein source like pulses, such actions may be counterproductive in the long run as it may hurt the exporter sentiments.
Significantly, last year, while pulse prices were soaring in the Indian market, pacts were signed with multiple countries to increase pulses imports.
If such strategic agreements are undermined impulsively, then it would become tougher to deal with times of shortages.
What is the way forward?
Like investors, farmers too need predictability and coherence in government policies to be able to plan production cycles ahead and enhance earnings.
Also, it needs to be recognized that increasing import duty won’t automatically lead to increase in farm incomes.
The challenge before the government is to enhance farm incomes without stirring up food inflation.
Also, building and protecting carefully cultivated food security partnerships around the world is another key aspect.
