Manmeet Ajmani

Impact of rice export ban on Indian economy

In India, rice is an important crop that provides livelihood opportunity for millions of farmers and ensures food security for the 1.4 billion population. India also contributes 25 percent of global rice production and 40 percent of global rice exports, exporting 16 percent of its domestic rice production (FAO 2022). On the other hand, delayed onset of monsoon, extreme weather events, and weather variability significantly affect rice production and the domestic price of rice in the country (Palanisami et al. 201 7; Bowden, Foster, Parkes 2023). In response to this situation, policymakers frequently reassess export strategies to ensure adequate domestic supply and to control price fluctuations. Given India’s significant contribution to the global rice market, any change in rice trade policy to stabilize the domestic rice market in India will affect the global supply chain of rice and the livelihood of lndian farmers. In 2022/2023, in an effort to control rice prices, the government-imposed export restrictions on different varieties of rice such as broken, brown, non-basmati, basmati, and parboiled rice. Figure 1 reveals that total rice exports from India declined from 16.55 lakh metric tons (mt) to 7.58 lakh mt between July 2023 and November 2023, following the July 2023 ban on non-basmati white rice exports. In August 2023, exports of non-basmati white rice declined sharply from 3.81 lakh mt to 0.40 lakh mt, and exports remained negligible until the ban was lifted in February 2024. Parboiled rice also saw a decline, though it was less severe due to selective export allowances. Exports began recovering from early 2024, driven by basmati and parboiled rice. This recovery aligned with India’s October 2024 decision to remove the 20 percent export duty on parboiled rice. India’s global market share dropped from 35.48 percent in 2022 to 30.46 percent in 2023, creating opportunities for other major rice -exporting countries. Vietnam saw an increase in its exports from 10.52 percent of global share to 11.23 percent, while Pakistan’s share rose from 7.75 percent to 8.39 percent. Thailand maintained a steady presence at around 15 percent and the US share rose marginally from 5.62 percent to 5.87 percent. These shifts highlight how India’s policy decision disrupted global trade patterns, benefitting competing exporters and altering the international rice market dynamics. Even so, the economywide impact of these restrictions on the Indian economy remains underexplored. While the government aims to maintain domestic price stability, it is unclear how effectively the export ban shields consumers from inflation and how this compares to the income losses experienced by exporters and farmers. Questions also persist about the policy’s spill over effects on overall market dynamics. In this note, we examine the impact of the rice export ban on GDP (by sector), employment, and household income in India. We also provide insights aimed at helping policymakers balance affordability for consumers with stable incomes for producers.

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Agrifood value chains in India: A state-level analysis using a social accounting matrix

This study describes disparities in per capita income, in the structure of the economy, and in agrifood systems (AFS) across states in India. We use the gross value added (GVA) obtained from state-specific agrifood value chains (AVCs) to describe the size and structure of the AFS in each state of India. This study also presents the size of employment and variability in labor productivity within the AFS across states. A special focus is given to female and youth employment in the state specific AVCs. The 2017/18 state-level social accounting matrix (SAM) for India is the primary data source for estimating statewise GVA from the AFS. Periodic Labor Force Survey data are used to estimate the size of AFS employment. Our results reveal that the bottom half of the Indian population has an average per capita income of US$1,019, 2.5 times lower than that of the top half. India’s AFS is valued at $756 billion, or 31 percent of its GVA. Primary agriculture comprises 59 percent of the AFS, and off-farm activities the rest. The share of off-farm activities in the AFS rises moving from lower-income states to higher-income states, corroborating the theory of structural transformation. The national average share of female workers in total employment is 23 percent and the majority of women who do work are engaged in primary agriculture. The share of women employed in the primary agriculture sector does not change between low- and high-income states in India. In contrast, the share of youth in primary agriculture declines between lower- and higher-income states. Since state governments in India are empowered to design their own policy and development strategies, this study provides an important policy insight to both the federal (central) and state governments.