India may lift ban on pulse exports to deal with glut and price crash at home

The government may soon lift the decade-old ban on pulse exports, allowing farmers and traders to sell lentils in overseas markets as part of a broader strategy to deal with the current glut and price crash at home.

Pulses, a common source of protein for most Indians, have seen a significant fall in prices from two years ago, when unseasonal hailstorms damaged crops across major states. In 2015 arhar or tur dal prices had retailed at more than Rs 200 a kg.

Supplies had fallen further, battered by a drought in 2015, presenting the Narendra Modi government with a challenge to contain inflation in pulses, which was threatening to snowball into a political issue.

The government addressed this by announcing a string of administrative measures and stocks built up. It offered significantly higher minimum support prices (MSP) as an incentive to wean farmers towards pulses away from other crops.

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Separately, the government also bolstered stocks through greater imports. The results followed with arhar retailing at less than Rs 80 a kg currently.

India does not produce enough pulses and relies on imports to meet domestic demand. In a good farm year, the country manages only about 18 million tonnes while demand usually hovers between 22-24 million tonnes.

“One advantage of opening up export is that we can set certain trend in the prices in the domestic market. If our export prices are better, then the domestic prices will also rise," the official explained.

Opening up exports for the first time since 2006-07 will also allow the trading community and farmers to manage abundant domestic stocks and realise better prices

India’s inflation rates have slowed to record lows and food prices have been falling. Wholesale inflation slowed to 0.9 percent in June, the lowest in a year. It was 2.17 percent in May. Consumer price index (CPI)—commonly referred to as retail inflation—also moderated sharply to 1.54 percent in June, the lowest since the index was rebased to 2012 in a new data series.

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