TACKLING AN INEDIBLE DEFICIT

Will legalising MSP reduce the import bill for edible oils and pulses?

- INDIVJAL DHASMANA

The protesting farmers' main demand to legalise the minimum support price (MSP) regime has divided opinion. One school of thought says it would lead to crop diversification and help India keep under check its burgeoning import bill on edible oils and pulses, while another says it would incentivise farmers to produce low quality crops.

Contrary to popular perception, India has a trade surplus in agriculture and allied activities, which stood at $18.65 billion during 2022-23 (FY23) against $15.92 billion in the previous year. However, the surplus was mainly on account of rice, wheat, sugar, spices, and buffalo meat.

It was dragged down by vegetable oils and pulses, which India imported to meet the domestic demand.

The country had a $20.84 billion trade deficit in vegetable oils during FY23, up from $18.99 billion in the previous year. The deficit was around three times as much during FY23, as against $7.2 billion 10 years ago. This deficit during the year alone constituted 7.8 per cent of the total trade deficit India had, at $266.78 billion.

Price versus yield

The enormity of edible oil imports could be gauged from the fact that India was the top country to import this foodstuff in the world in 2022, according to the United Nations trade statistics book.