Export wheat rather than let it rot: Basu

Chief Economic Advisor Kaushik Basu has said the government should consider allowing export of essential foodgrains like wheat rather than let these rot due to lack of storage capacities and distribution channels.

He also said overhauling the public distribution system should be a top priority for the government.

“We have got to trade among crops, let market forces rule. We should sell some of our excess stock by having swap deals with other countries, as we are currently not able to create the storage capacity or able to distribute it to the poor,” said Kaushik Basu at the 12th Dharm Narain Memorial Lecture yesterday.

He espoused the idea that India can go into swap deals with countries and sell grains in exchange for return sale after 2-3 years. “The idea is that because you cannot store it here, you store it somewhere else,” added Basu.

Moreover, he said the distribution channel for foodgrain needed to evolve and grain should be sold in smaller batches, rather than in bulk to only millers and traders. Giving statistics like how government procurement has increased from 18 per cent and 19 per cent for wheat and rice, respectively, in 1999 to 32 per cent and 33 per cent in 2009, Basu said such a trend indicated “creeping nationalisation of the grain trade”.

Criticising such a trend, he added the government should allow market forces to play a greater role in the agriculture sector.

Acknowledging inflation as a problem, he said even though the government was not aware of the various and complex reasons leading to inflation, it had a “reasonably good” idea of how to control the problem.

“We do not have definite ideas (of what is causing inflation). There are so many factors playing a role but India is doing a pretty good job in controlling inflation,” Basu added.

Basu also said India needed to overhaul its policy on labour and reform was needed in the Industrial Disputes Act. However, he said the long-term growth outlook for India looks robust and brighter than that of China. “It is quite likely that we will overtake China as far as growth is concerned in the next four years,” added Basu.