Export Competitiveness of Indian Rice:A Policy Analysis Matrix Approach

Rice is a major food crop in the world. It is being consumed by more than half of the world population. Available data indicate that world output has witnessed some decline for the recent past. Production of milled rice in the world totaled 409.2 million tonnes in 1999 but declined to 384.4 million tonnes in 2002. In India, rice production and its export witnessed fluctuations as it declined during 2009-10, but however went high in 2011-12. However Indian Agricultural trade will in future operate in an external trade framework mainly due to the global openness in trade in agriculture. To avail the new trade opportunities, right decisions need to be made regarding which crop to grow more and which one to grow less or, which one to purchase more and which to purchse less. The most important to such decisions lies in finding out the export competitiveness of a crop in relation to the prevailing world market prices, therefore; this paper tries to assesed the export competitiveness of Indian rice. Results of the policy analysis matrix for the years under consideration (Table 1 to 4) depicts that social revenues were much higher than the private revenues. Implying that Rice grown in country is net taxed, the average nominal protection coefficient (NPC) was 0.48 thus indicating that Rice producers in country were disprotected and also the average effective protection coefficient (EPC) was found to be 0.44 indicating a high export competitiveness of the India Rice. However, the average domestic resource cost (DRC) was found to be less than one (0.37) this means that domestic resources were efficiently utilized in case of rice crop in the country and also indicated that they have comparative advantage in the production of rice crop. All the indicators (NPC, EPC and DRC) were less than unity thus a reflection that the domestic price of Rice in the country is lower than the world market price and hence competitive worldwide. It is therefore recommended that, in order to improve the competitiveness of Indian Rice in particular and Agriculture in general, attention needs to be given to domestic market thereby rationalizing subsidies on certain inputs and improvement of domestic market performance.