Government may resort to direct rice imports

With a 20-per cent shortfall in summer rice production this year, it is reported that India may import about 2 million tonnes of rice, including government-to-government deals with Thailand and Vietnam.

The government may also give incentives for such imports to be spread over one year, the Press Trust of India reported this morning, citing unnamed official sources. A ministerial panel headed by finance minister Pranab Mukherjee would make a decision on various proposals for rice imports on 12 November, it said.

The worst monsoon in 37 years has shrunk the summer-sown rice output, raising prospects of higher food prices and further dependence on imports for the main food crop.

To help cover the production shortfall, the union government last month allowed tax-free imports. Also, three state-owned firms have been asked to import 30,000 tonnes of rice by mid-December.

On Tuesday, the government formally admitted a summer rice production shortfall of over 20 million tonnes compared to an output of around 85 million tonnes last year. Rice output this summer is estimated at only 64.45 million tonnes, while overall foodgrain output in the season is down from 117 million tonnes last year to 96.63 million tonnes.

Sugarcane output is also pegged to be substantially lower at 249.48 million tonnes in 2009-10, compared to 273 million tonnes last kharif. The biggest drop in output is indicated in key grower state UP this year. The low crop estimates are expected to firm up prices for farm commodities further, fuelling food inflation.