India should allow exports of wheat with a duty of 10 to 15 percent and could consider a similar mechanism for rice if 2011/12 output is around 100 million tonnes, a key member of the government's economic planning panel told Reuters on Friday.
The world's second-biggest producer of wheat and rice, heading for record wheat production this year, would not need to put a volume cap on exports if the duty were appropriate, Abhijit Sen, member of the Planning Commission, said. "I would certainly advise (the government) to open (wheat) export to private trade usbject to an export tax," Sen said.
"It's not very clear how much it would be but I suspect 10-15 percent," he added, given current differentials between international and domestic prices. The Planning Commission is tasked with charting India's economic growth path and advises the government on policy.
Sen said the government could use a similar method for rice exports but any decision would probably wait until production for 2011/12 was clearer after the end of July and before output arrives on markets at the beginning of October. "If we come anywhere near 100 million tonnes (in 2011/12) production we should be exporting," Sen said.
India is on track for a record 84.3 million tonnes of wheat output in 2011 and rice production is seen at 102 million tonnes for 2010/11. The country has overflowing stocks of both commodities and yet continues to grapple with high inflation, as fuel imports are fired by international prices and distribution bottlenecks squeeze food prices.
Sen said the government would have to take a decision on raising fuel prices to cut the subsidy bill if global crude oil prices were still around $115-120 per barrel after the end of May, when a round of state elections comes to an end. "They can certainly wait until the end of May but they shouldn't wait very much longer," he said. Inflation, spurred by high oil prices, could be lower in March than in February, he said, but continues to be a problem. March inflation data is due to be published on April 14. February's cost of living was up 8.31 percent on a year ago.