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Beggar thine own people?

Shanta Devarajan's picture

First the good news. The Indian government has agreed to sell the originally-agreed 400,000 tons of non-basmati rice to the Government of Bangladesh at a price of $430 per ton. On March 30th, the Government of Bangladesh’s Purchase Committee approved the Indian offer of procuring the 400,000 tons of rice at $430 per ton by ship. The estimated time for the rice to reach Chittagong port is 75 days. Now the rest. India still has an export ban on non-basmati rice. So do Vietnam, Cambodia, and Egypt. Argentina has a ban on beef exports. The Economist has criticized these policies from the viewpoint that they are self-defeating: “they de-motivate farmers, push them into growing the wrong crops and jeopardize their future access to markets.” A recent BBC report had farmers in Rajasthan complaining about the export bans. And the benefits of export bans don’t necessarily go to poor people, because the domestic price is lower for everybody. So export bans not only hurt your neighbors (or more generally global trade), but also your own people. What can we do? Arvind Subramanian suggests that we need a multilateral agreement not to impose export bans, along the lines of the WTO.

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