The food crisis will worsen following India's ban on rice exports, says Swaminathan S Aiyar, noted economist and longtime World Bank consultant, who is currently a Research Fellow at the Cato Institute in Washington for India and Asia. He said the rice export ban shows India "is the biggest hoarder."
Aiyar, who was the lead panelist on a discussion of trade and security at a Heritage Foundation-FICCI sponsored conference on US-India Synergy: Facing the Economic Challenges of the 21st Century, said, "The government of India wants to crack down on hoarders, but the biggest hoarder actually is India by refusing the rice to be exported."
Arguing that the current food shortage was directly the result of export curbs, he noted that the International Food Policy Research Institute "has estimated that a relaxation of trade curbs can cut world (food) prices by 30 percent and in the case of rice, it would cut world prices by more than 50 percent."
"The problem is not a shortage of rice; it's that wherever the rice is being produced, to protect the domestic consumer, it is not being allowed to be exported and therefore you are artificially shrinking the grain in the world market and artificially pushing up prices."
Aiyar said that the IFPRI "has rightly called this 'starve your neighbor' policy,' and argued that India by imposing these export controls had effectively cut the production of rice.
"India used to produce almost one-fifth to one-sixth of the total rice trade - it exported 5.5 million tons of rice in 2007," he said, but said that this year it would only be exporting 1-2 million tons. "So three million tons are off the market from India alone and it's like one-tenth of the world trade (in rice) has disappeared just because of India's action."
Aiyar said by doing so, India had "managed to keep our rice prices only up 10 percent, (but) in neighboring Bangladesh, it is up 60 percent. So, this is what you call, 'Starve your neighbor