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Basmati pricey
Ruchika M. Khanna
Tribune News Service

Chandigarh, February 11
Causing a dent in the household budgets, price of basmati rice have doubled in the past eight months. Even the non-basmati rice prices have shot up by 22 per cent during the same period.

The price of basmati rice has increased from Rs 30 a kg to Rs 55-60 a kg, while the price of parmal has increased from Rs 12 a kg to Rs 13.50 a kg. Despite a record production of rice (91.5 million tonnes) in the country this year, the widening gap between demand and supply is stated to be the main reason for the hike. The fact that rice exporters did some brisk business last year is alleged to have caused a shortfall in demand in the local market.

Though the government has banned export of non-basmati rice in order to stem prices in domestic market, it seems to have little effect. Traders say the price continues to rise because majority of rice exporters keep on exporting non- basmati rice under the garb of transitional arrangement. With the price of superior variety rice having doubled in the international market- from $700 a ton to $1,400 a ton, paddy growers and exporters see a huge profit in export.

The government had banned non-basmati rice exports three months ago. Rice exporters, who had orders for exports and letters of credit, were, however, allowed to deliver their orders under transitional arrangements.

Thus, many exporters ‘availed this opportunity’ and started exporting rice under the garb of transitional arrangements. As a result, almost 2.5 million tonnes of rice have been exported from India this year. But price realisation is higher because of hike in international prices as global production has gone down drastically. Also, agriculture production has slackened in the country because of lack of investment in research and development in agriculture.

Vijay Setia, president, All India Rice Exporters Association, said the only way to ensure adequate supply of rice in domestic market and food security is to have a flexible minimum export price (MEP). He added that with the government now agreeing to use this tool, the prices would soon stabilise.