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Rain Shortages In India Is A Matter Of Worry

In some areas, such as West Bengal and Uttar Pradesh, which produce about a quarter of India's total rice, it has declined by 13 per cent this season

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India, the world's biggest rice exporter, has experienced a shortage of rain in parts of the country, which has led to a reduction in planting area for three years.

As world food prices rise and inflation ramps up, India's rice production is threatened.

In some areas, such as West Bengal and Uttar Pradesh, which produce about a quarter of India's total rice, the production over there has declined by 13 per cent this season.

Traders are concerned that the drop in rice production could actually complicate India's inflation and restrict exports.

In order to safeguard food security and control local prices, the Indian government has already curtailed wheat and sugar exports.

Mukesh Jain, Director at Sponge Enterprise, told ANI that in major growing states such as West Bengal, Orissa, and Chhattisgarh, prices of some varieties have increased more than 10 per cent in the last two weeks because of less rainfall and the surge in demand from Bangladesh. 

He added that till September the export price on a free on board basis will increase to USD 400 a tonne from USD 365.

It is essential for the political and economic stability of Asia that rice should be cultivated and consumed.

The plentiful production and stockpiles of rice have subdued prices compared to wheat and corn following Russia's invasion of Ukraine.

It is likely that there will be some time to make up for some of the shortfall due to India's rice crop and the monsoons' progress. Scientists are optimistic regarding the fact that there will be time to plant and catch up on the loss. It is predicted that rain will be normal from August to September, which may enhance the crop production.

Himanshu, a professor at Jawaharlal Nehru said that it is uncommon for sowing to take place after mid July so a recovery is not that much possible and moreover a drop in output would also affect the inflation.

India's inflation battle could be complicated by rice. There was a sharp rise in interest rates this year due to consumer prices remaining above the Reserve Bank of India tolerance limit of six per cent.

The central bank may raise borrowing costs again this week as the rupee weakens and commodity prices fall.

Sonal Varma, an economist at Nomura Holdings Inc., mentioned that persistent differences in rainfall may hinder crop production, negatively impacting economic growth and inflation.

India exports rice to more than 100 countries that  includes Bangladesh, China, Nepal and Middle Eastern nations which are the largest customers. Food security is generally improving around the world.

During the past two weeks, the US has delivered a bumper wheat crop while Ukraine has exported for the first time after the invasion.

In an effort to cut costs, sugar and rice surpluses are being used to increase ethanol production in India.

Tags assigned to this article:
Rice Production inflation exports