Aspects of India’s Food Economy and Their Implications for Rice Trade Between India and Bangladesh

Working Paper
FMRSP Working Paper 10

The prospect of importing rice from India to cope with domestic shortfalls offers Bangladesh a powerful means of achieving food security in times of crises. In recent years, this prospect has become more concrete. Both India and Bangladesh took important steps to liberalize their foodgrain trade in 1994. Since then, both Indian exports of rice to the world market and Bangladeshi imports of rice from India have increased to historically unprecedented levels. Whenever there was a serious shortfall in Bangladesh during this period, foodgrain flowed in from India, mainly at the initiative of the private sector, and moderated the price hike in the domestic market. This phenomenon raises a completely new dimension to the issue of food security in Bangladesh. It opens up the possibility that private trade with India may provide a relatively inexpensive way of strengthening Bangladeshi food security in comparison with traditional methods of holding expensive buffer stocks or using inefficient bureaucratic machinery to try and import food in times of crises.
However, this prospect also begs the question of whether trade with India can be relied upon to fulfill this role on a sustained basis. This paper addresses the potential for continued exports of Indian rice to Bangladesh in view of seven key aspects of India’s agricultural economy, food policy and domestic political situation.

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Date and language
Dec 1998
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