The Rippling Effect of India on Wheat Ban
The current Ukraine- Russia turmoil has led many countries to introspecting their financial strategies to cope up with economic crisis. The rising up inflation in the country have prompted the country to ban the wheat exports with the Wholesale Price Index (WPI) has risen from 2.26 percent in the initial year of 2022 to 14.55 percent today. The retail price index also reached a record-high level of 7.79% in April, owing to increased food and fuel prices. This unexpected declaration came after the cease in wheat exports in order to manage the overall food security of the country and to support other vulnerable countries. Currently India is exporting to Bangladesh, Nepal, Sri Lanka, etc. India, the globe's second-largest wheat producer, has sufficient wheat on stock to meet needs from both traditional purchasers and local markets. India was prepared to fill some of the global supply shortfall caused by Russia's conflict with Ukraine.
Impact of Wheat ban on Indian Market has been rippling effect as in how the image of the country has been seen in recent times its one of the largest manufacturers of wheat industry. especially when Russia Ukraine has levied 30% tax on wheat export.
Also, during the covid-19 their distribution of grains which in subsequent year seen a shortfall in wheat output in 2022 and 2023 meant slower-than-expected replenishment of inventories at state warehouses. Although, Export bans can be valuable for stabilizing prices in the country during times of crisis, exemplified by the food price crisis of 2007–2008. Consumers in urban areas are relieved and protected from immediate inflation as a result of the ban's short-term in nature influence to a 10–15% decline in domestic wheat prices in India.
However, restrictions on exports cause a range of monetary damages. India's Current Account Deficit (CAD) will fall and its foreign exchange reserves will rise as a result of higher exports. Domestic producers do not receive correct indications of demand and do not profit from increasing global market pricing. In the short term, these actions reduce farmers' incomes and export revenues, akin to a set forth tax on farmers. Due to an increase in open market competition over the cost at which government acquires its primary wheat from domestic farmers, state purchase of wheat dropped by 53% to 18.8 million tonnes last year.
The centre idea remains behind such drastic decision to ascends that with country recovering through economic crunch, amending policies that aid country replenish state reserve and bring domestic prices. India's action serves a purpose on the basis of ensuring food security and stabilizing domestic prices, it has to convey it in the same way to the rest of the world; otherwise, India's prestige in world politics and reputation will be impacted. India ought to make careful that the food availability to vulnerable and neighbouring countries is not undermined, as this may cause diplomatic complications.