The scorching heat has damaged wheat yields in the South Asian nation, prompting the government to consider export restrictions, Bloomberg News reported. when food ministry He said there does not appear to be a case yet for controlling wheat exports, a question that will gain momentum and bring political ramifications for Modi and his ruling Bharatiya Janata Party.
Modi has tried to burnish his reputation as a credible global leader, but he continues to face despair on home soil about record-high inflation, an issue that toppled the previous government and left him in power. Paved the way for upliftment.
“At a time when the world is facing a shortage of wheat, the farmers of India have come forward to feed the world,” PM Modi said at a gathering of overseas Indians in Germany this week. “Whenever humanity is in crisis, India comes up with a solution.”
After the disruption of war in the Black Sea region, which accounts for nearly a quarter of all wheat trade, India has sought to fill the void.
Egypt, the world’s top buyer, recently approved India as a source of wheat imports. Last month, Food and Commerce Minister Piyush Goyal had said that India expects to become a sustainable exporter of wheat, shipping 15 million tonnes this year, as against around 7.2 million in 2021-22. Goyal said officials are pushing the WTO to relax the rules so that India can export from the state’s reserves.
But the country’s domestic challenges have begun to receive more attention in recent weeks. Hundreds of acres of wheat crops were damaged during India’s hottest March, according to a Bloomberg survey, potentially reducing yields by as much as 50% in some parts of the country.
Frank Gabaguidi, senior analyst at political risk consultancy Eurasia Group, said damage to crops will limit India’s ability to meet widespread supply shortfalls, even if exports go ahead or not. According to the US Department of Agriculture, wheat consumption in the world’s second most populous country is estimated at 107.9 million tonnes.
“With the current impact of the heatwave, India’s claim of ‘feeding the world’ by exporting wheat surplus – if permitted by the WTO – is now hollow,” he said.
With supply chain disruptions due to war, increased freight rates and extreme weather events, domestic inflation is also rising, especially for cereals and edible oils. In a sign of concern, India raised its key interest rate in a surprise move on Wednesday, sending bonds and stocks falling. Retail inflation rose to a 17-month high of 6.95% in March.
In an online briefing, Reserve Bank of India Governor Shaktikanta Das said inflationary pressures are becoming more intense, especially on food. The average retail price of wheat on May 5 stood at Rs 29 per kg, which is about 7% higher than a year ago. And according to government data, the turnover of flour made from cereals was close to Rs 33, which is 8% higher than last year.
Shilp Shikha Singh, assistant professor at the Giri Institute, said, “This is a major policy dilemma that his government is facing: to capitalize on the opportunity to project Modi as a potential domestic food shortage, which will dent his popularity and electoral prospects. can affect.” of development studies in the city of Lucknow.
Still, Singh said the Bharatiya Janata Party would prioritize protecting the prime minister’s reputation as a statesman on the world stage, even as his government faces local elections later this year. and weighs the trade-off of exporting more wheat.
Since taking office in 2014, Modi has played a big role in shaping global affairs, whether by liberalizing India’s tax code or spurring foreign investment by supplying millions of coronavirus vaccines. That decision exposed the consequences of overstepping: When the delta version ravaged India in 2021, the government rushed to boost domestic vaccine supplies after sending so many overseas.
The Indian government on Thursday said it does not see any reason for now to curb wheat exports. But the calculations may change: according to the latest estimates, wheat production is on track to fall to 105 million tonnes in 2021-22. This is lower than the previous forecast of 111 million tonnes (an all-time high) and last year’s harvest of 109.6 million tonnes.
Singh said the decision on whether to dial up wheat exports up or down is ultimately with the Prime Minister’s Office.
“Modi’s image is important and the party invests heavily in it,” he said.