World Grain - May 2008 - 18

COUNTRYFOCUS

Focus on India
High prices and extreme poverty
have made the supply of grains a
hot political issue
by Chris Lyddon

India has a huge population, but it is also one of the world's
biggest grain producers, achieving a high level of self-sufficiency.
Even so, the combination of high prices and extreme poverty in
sections of its population has made the supply of grains, and rice
in particular, a hot political issue.
Concern over rice prices was behind the decision of India's
Cabinet Committee on Prices, taken on March 31, 2008, to double the minimum export price for basmati rice to $1,200 a tonne,
which was cited by the International Grains Council (IGC) as one
reason for the sharp rise in Asian rice prices. The same meeting
agreed to a ban on exports of non-basmati rice.
However, the Reuters news agency reported on April 11 that
rice exporters expect the government to allow exports of a superior grade of non-basmati rice. "We are expecting a decision on
this in the next 10 to 15 days," Vijay Sethia, President of the All
India Rice Exporters' Association, told the agency. He expected
the government to broaden the definition of basmati rice to include the high-yielding aromatic Pusa 1121 variety, which would
allow exports.
With inflation running at a three-year high, India's rising prices are fast becoming a political flash-point ahead of next year's
elections.
AFGHANISTAN
According to Frank Horan of U.K. inCHINA
PAKISTAN
BHUTAN
gredient importers Unicorn Ingredients,
NEPAL
the election is behind much of what has
been done. "There are all sorts of poliINDIA
MYANMAR
ticking going on in India," he told World
BANGLADESH
Grain. "They're heading toward election time."
Despite government controls, India is
SRI LANK
A
LANKA
one of the world's biggest rice exporters. According to the IGC, it will export
33.66 million tonn
tonnes in 2008, compared with 4.1 million in
2007. "In India, exports are forecast to fall for the second
20
consecutive year amid tight availabilities of non-basmati
co
varieties, especially following the government's further
va
increase in the minimum export price," the IGC said.
inc
India is also
a
one of the world's biggest wheat producers. The
IGC has predicted a 2008 crop of 74.5 million tonnes, slightly
lower than 75.8 million in 2007. "Harvesting has begun in southern areas," the IGC said in its report on March 28. "The crop in
18

Key Facts
Capital: New Delhi
Population: 1,147,995,898 (July 2008 est.)
Religions: Hindu 80.5%, Muslim 13.4%, Christian 2.3%,
Sikh 1.9%, other 1.8%, unspecified 0.1% (2001 census).
Location: Southern Asia, bordering the Arabian Sea and
the Bay of Bengal, between Burma and Pakistan.
Government: Federal republic; chief of state: President
Pratibha Patil (since July 25, 2007); head of government:
Prime Minister Manmohan Singh (since May 22, 2004).
Economy: India's diverse economy encompasses
traditional village farming, modern agriculture, handicrafts,
a wide range of modern industries and a multitude of
services. Services are the major source of economic
growth, accounting for more than half of India's output
with less than one-third of its labor force. About 60%
of the workforce is in agriculture, leading the United
Progressive Alliance (UPA) government to articulate
an economic reform program that includes developing
basic infrastructure to improve the lives of the rural poor
and boost economic performance. The government has
reduced controls on foreign trade and investment. Higher
limits on foreign direct investment were permitted in a
few key sectors, such as telecommunications. However,
tariff spikes in sensitive categories, including agriculture,
and incremental progress on economic reforms still
hinder foreign access to India's vast and growing market.
Privatization of government-owned industries remains
stalled and continues to generate political debate; populist
pressure from within the UPA government and from its
Left Front allies continues to restrain needed initiatives.
The economy has posted an average growth rate of more
than 7% in the decade since 1997, reducing poverty by
about 10 percentage points. India achieved 8.5% GDP
growth in 2006, and again in 2007, significantly expanding
production of manufactures. India is capitalizing on its
large numbers of well-educated people skilled in the
English language to become a major exporter of software
services and software workers. Economic expansion has
helped New Delhi continue to make progress in reducing
its federal fiscal deficit. However, strong growth combined
with easy consumer credit and a real estate boom fueled
inflation concerns in 2006 and 2007, leading to a series
of central bank interest rate hikes that have slowed
credit growth and eased inflation concerns. The huge and
growing population is the fundamental social, economic
and environmental problem.
GDP per capita: $2,700 (2007 est.); Inflation: 5.9%
(2007 est.); unemployment 7.2% (2007 est.).
Currency: Indian rupee; 1 U.S. dollar = 39.8338 Indian
rupees (April 21, 2008).
Exports: $140.8 billion f.o.b. (2007 est.): petroleum
products, textile goods, gems and jewelry, engineering
goods, chemicals, leather manufactures.
Imports: $224.1 billion f.o.b. (2007 est.): crude oil,
machinery, gems, fertilizer, chemicals.
Major crops/agricultural products: Rice, wheat,
oilseeds, cotton, jute, tea, sugarcane, potatoes; cattle,
water buffalo, sheep, goats, poultry, fish.
Agriculture: 16.6% of GDP and 60% of the labor force.
Internet: Code. .in; 2.306 million (2007) hosts and 60
million (2004) users.
Source: CIA World Factbook

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