Analysts said that in a country where two-thirds of the population dependson agriculture for a livelihood, it is no surprise the government shouldtake steps to protect farmers' interests and underpin farm output.

"When QR's are being removed on primary agricultural commodities, it makessense to replace them with tariffs," Anil Sharma, principal economist at theNational Council of Applied Economic Research, said.

In recent months the Government had sharply raised the import duty on sugarto 60 per cent, imposed a 50 per cent duty on wheat imports and bannedcotton imports from Pakistan. The country has set an agricultural productiontarget of 212 million tonnes for 2000/01 (July-June) compared with output of201.6 million in 1999/2000.

Problem of plenty
The country is already self-sufficient in most grains. By July 1, theGovernment expects to have rice stocks of 13.1 million tonnes, way above itsrequirement norm of 10 million. Its wheat stock is expected to be 28.8million tonnes against a requirement of 14.3 million. Analysts said thatwhile the country is making an all-out effort to curb imports of agriculturecommodities because of its bulging stocks, it is unable to export thembecause its domestic prices are higher than global prices.They say theproblem is political. An official, who asked not to be named, notedsuccessive Governments have sharply increased minimum support prices forgrains to "meet political ends" - with an eye on the rural votebank.

India, which exported a record five million tonnes of rice in 1998/99, isstruggling to achieve 2 million this year. Until recently, the country'ssouthern states were importing wheat as it worked out to be cheaper thantransporting domestic grain from the bread basket states of the north."With support prices ruling so high, the Government is losing out on allfronts," said the official. "It has to pay higher prices to farmers. It hasto bear an additional subsidy burden. It also does not know where to sellthe wheat it buys from farmers as it is procuring them at prices higher thanthe open market prices," the official added.

Options open
Domestic traders are happy about the prospect of duty impositions. ButGovernment officials are not discounting the prospect of a relaxation of thenew duties if what one referred to as the country's "real agricultureminister" - the monsoon rains - bring a lower-than-average grains harvest."We are keeping our options open on the duty front," said JNL Srivastava,special secretary in the agriculture ministry. "If tomorrow there is ashortfall in output, we will reduce it." The country gets about 80 per centof its rainfall from the June to September southwest monsoon rains, whichdetermine the crop prospects and overall demand growth in the country.