June 16, 2009

India is mulling to lift the curbs on rice and wheat exports but the decision will be based on how much grains it requires for domestic demand including that for welfare schemes, a senior government official said on Monday (June 15).

Overflowing grain bins in India, the world's second-biggest wheat and rice producer, gives the government flexibility to lift grain export curbs, clamped down in the past two years when global prices soared and supplies squeezed.

Bumper harvests and higher purchases by the government have pushed rice stocks to 20.4 million tonnes on June 1, up 69 percent from a year earlier and wheat stocks to 33.1 million tonnes, a rise of 37 percent from a year ago.

Trade Secretary Rahul Khullar said they would depend on how much grain would be required to run various welfare schemes and to meet an election promise to guarantee a fixed supply of cheaper grains to the poor.

Some analysts believe export curbs may persist as the government of Prime Minister Manmohan Singh is expected to increase grain supplies to the poor.

The Congress-led coalition, which was re-elected with the help of rural support, had promised during its campaign that it would raise the supply of cheap grains for the poor.

Last month, Farm Minister Sharad Pawar said India was in no hurry to lift curbs on wheat and rice exports.

India's overall exports have declined for seven straight months since October, and Khullar said it was too early to say if the situation would improve in the next 1-2 months.

In April, India's exports declined by a third and policy makers have said it would revive only after September.

The trade ministry has submitted to the finance ministry proposals for providing more incentives for exporters that could be considered in the budget to be presented on July 6, Khullar said without elaborating.