A little ban on exports…

Article;
High rates to make things better -Raghuram Rajan

Comment;

Rajan is right when he says high minimum support prices (MSP) are hindering disinflation. But why the government increase minimum support prices? Is it legitimate in the Indian context? The answer for the former is to woo agricultural income but, again, the question is why? Is there any need to support farm prices or is a total vote-bank politics or sheer populism. For the latter, higher MSP is against the economy. The government is trying support farmers because agriculture is not very profitable, it is not receiving enough investment. But, now, we have become a net exporter of food-grains… But is it really fair to export when the domestic demand goes unmet and prices of food grains are a problem for lower interest rates for the industry, for agriculture, too. You see there are many questions the government needs to answer… The government has artificially made the prices overshoot the common man’s budget because of bad policy. The government banned exports of onions when there was scarcity and prices crossed all barriers, but it did not ban export of cereals when their prices are hovering above 10% because prices at home would crash and the stock of food-grains in the government coffers would suffer a loss and farmers would lose… a little ban on exports… It is a case of populism just before elections… agriculture in INDIA is a great constituency… Higher MSP when actually we can reduce prices, bring down inflation and interest rate is not doubt against the economy…