Thu Sep 26 14:51:07 UTC 2024: ## India’s Economic Survey Calls for Flexibility in Export Bans, Focusing on Substitution Effects
**New Delhi:** India’s Economic Survey has advocated for greater flexibility in the use of export bans on agricultural products, emphasizing that such measures should be reserved for exceptional circumstances. The Chief Economic Advisor (CEA) has urged the government to allow market mechanisms, such as substitution effects, to play out before resorting to restrictions on exports.
The CEA highlighted that consumers are more adaptable to price changes, being able to switch to substitute products or reduce consumption, than farmers who face significant losses due to sudden export bans or large imports. This comes in the wake of recent export bans on rice, wheat, onions, and sugar, which were imposed to stabilize domestic prices.
These bans have been criticized for causing financial hardship to farmers, with experts estimating that the onion ban alone resulted in ₹10,000 crore losses for farmers and traders.
The Economic Survey cites the example of consumers potentially switching from sugar to jaggery due to rising sugar prices. However, the lack of a structured market for jaggery hinders this transition. The CEA suggests that government intervention, such as subsidies for jaggery producers and measures to improve market access, could facilitate this shift.
The survey also touches upon the challenges of phasing out tobacco cultivation, highlighting the need for viable alternative crops before implementing bans. The recent experience in Sri Lanka, where an abrupt ban on agrochemicals led to a food crisis, serves as a cautionary tale against poorly planned agricultural policy shifts.
The Economic Survey emphasizes the importance of facilitating smooth substitution by promoting consumer awareness and strengthening market linkages. This involves ensuring that substitute products are efficient and accessible, thereby enabling a seamless transition for consumers and farmers alike.
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