PM Modi was confronted with difficult choices: keep Indian voters happy or feed the world.
Indian Prime Minister Narendra Modi will be forced to choose between sending wheat to countries that are suffering from dwindling supplies as a result of the Ukraine conflict and stockpiling food at home to fend off high inflation as a result of the growing food security threat.
Heatwaves have reduced wheat yields across the South Asian nation, prompting the government to consider restricting wheat exports, according to Bloomberg News. While the food ministry has stated that it does not believe there is a case for restricting wheat exports at this time, the issue is likely to gain momentum and have political ramifications for Prime Minister Narendra Modi and his ruling Bharatiya Janata Party.
Modi has worked hard to improve his international standing as a dependable global leader, but he is frustrated at home by record-high inflation, which was one of the issues that brought down the previous government and paved the way for his ascension to the top position.
In an address to the Indian diaspora in Germany this week, Prime Minister Narendra Modi said, ‘At a time when the world is facing a wheat shortage, Indian farmers have stepped forward to feed the world.’ As one observer put it, ‘Whenever humanity is confronted with a crisis, India is the first to propose a solution.’
In response to the war’s disruption of logistics in the Black Sea region, which accounts for approximately a quarter of all wheat trade, India has attempted to fill the void.
In recent months, Egypt, the world’s largest buyer of wheat, approved India as a source for wheat imports. Earlier this month, Piyush Goyal, India’s minister of food and commerce, stated that the country aspires to become a permanent exporter of wheat, shipping as much as 15 million tonnes this year, up from an estimated 7.2 million tonnes in 2021-22. Goyal said that officials are attempting to persuade the World Trade Organization to relax rules so that India can export from its state reserves.
However, in recent weeks, the country’s domestic challenges have come into sharper focus than they previously had. Following India’s hottest March on record, hundreds of acres of wheat crops were damaged, potentially causing yields to plummet by as much as 50 percent in some areas of the country, according to a Bloomberg survey.
Damage to crops, according to Franck Gbaguidi, senior analyst at political risk consultancy Eurasia Group, will limit India’s ability to meet broader supply shortages, regardless of whether exports proceed or not. According to the United States Department of Agriculture, wheat consumption in the world’s second-most populous country is estimated to be 107.9 million tonnes per year.
According to him, ‘given the current impact of heatwaves, India’s claim to be able to ‘feed the world’ by exporting wheat surpluses — if permission is granted by the World Trade Organization — now appears to be a hollow one.’
As a result of the war’s disruption of supply chains, skyrocketing freight rates, and extreme weather events, domestic inflation is surging, particularly for cereals and edible oils, according to the World Bank. India’s key interest rate was unexpectedly raised on Wednesday, sending bonds and stocks tumbling as a result of the country’s economic woes. Retail inflation reached a 17-month high of 6.95 percent in March, according to the govt data.
Shaktikanta Das, governor of the Reserve Bank of India, stated in an online briefing that inflationary pressures are becoming more acute, particularly in the food sector. On May 5, wheat retail prices averaged about 29 rupees per kilogram, an increase of approximately 7 percent over the same day a year earlier. According to government data, the price of flour made from the grain traded at close to 33 rupees, an increase of 8 percent over the previous year.
‘This is one major policy dilemma that his government is facing: how to capitalize on the opportunity to project Modi as a world leader while also dealing with the possibility of a domestic food shortage that could harm his popularity and electoral prospects,’ said Shilp Shikha Singh, an assistant professor at the Giri Institute of Development Studies in the northern Indian city of Lucknow.
Nonetheless, Singh stated that the Bharatiya Janata Party will likely prioritize protecting the prime minister’s reputation as a statesman on the international stage, even as his government prepares for local elections scheduled for late this year and weighs the benefits and drawbacks of increasing wheat exports.
Since taking office in 2014, Modi has positioned India to play a larger role in shaping global affairs, whether by encouraging foreign investment through the liberalization of India’s tax codes or by supplying millions of coronavirus vaccines to countries around the world. When the Delta variant devastated India in 2021, the government was forced to increase domestic vaccine supplies as a result of having sent so many vaccines abroad. That decision brought the consequences of overstepping into the open:
The Indian government stated on Thursday that it does not believe there is a compelling reason to restrict wheat exports at this time. However, there is a possibility that the equation will change: According to the most recent projections, wheat production will decline to 105 million tonnes in 2021-22 from 115 million tonnes currently. This is a decrease from a previous forecast of 111 million tonnes (an all-time high) and from the harvest of 109.6 million tonnes in the preceding year.
Singh stated that the final decision on whether to increase or decrease wheat exports rests with the Prime Minister’s office. According to her, ‘Modi’s image is significant, and the party makes significant investments in it.’