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What game is India playing? The world’s most populous nation (now on the verge of overtaking China, at least demographically) plays a key, often underestimated, role in all of contemporary crises: from the war in Ukraine to food inflation.

Even the rise in bread prices in Italy can be linked, at least in part, to certain decisions in Delhi: self-sufficiency affecting the food exports of one of the world’s agrarian powers. That’s right, India, which by historical habit some of us think is in need of food, is actually an export giant. The lack of certain foods is also “troubling” for her. It’s one of those cases where government policies — right or wrong from a national perspective — create scarcity that’s more artificial than real.

At the Samarkand summit on September 15 and 16, Indian Prime Minister Vladimir Putin expressly criticized the situation: “This is no time for war,” according to official reports. Privately, Modi seemed even more urgent. Putin had to openly acknowledge Indian capriciousness. At the same time, India is competing with China in increasing its imports of gas, oil and coal from Russia. Economic support from Delhi is substantial and has never faltered. From a Western perspective, India has an ambivalent strategic position, but consistent in its logic as an autonomous superpower.

On China, Modi is happy to be part of the “quad of democracies of the Indo-Pacific” called Quad, along with the US, Japan and Australia. Curbing Chinese expansionism is the priority of Indian foreign policy. In the case of Russia, on the other hand, the distance from the West is almost total. India criticizes the invasion of Ukraine, but does not participate in our sanctions and develops excellent economic ties, which in fact provide valuable support for Putin’s war.

The reasons are varied. There is the historical legacy of the “socialist” period when Indira Gandhi’s India was very close to the Soviet Union. Among other things, Delhi has an old dependency on Russian arms supplies, which still make up a high percentage of the Indian Army’s arsenal. There is an undeniable geopolitical logic: Modi already has a major enemy in Asia, China, and prefers to get along with the continent’s other superpower. And in the name of the postcolonial culture that has made it a leader in the Nonaligned Movement, India may feel allied with the United States on certain issues, but it will never want to appear subservient to Washington.

And finally the whole economic dimension: Like China, India is also suffering from a slowdown in growth. Delhi fears inflation even more than Beijing. Putin is both the cause and the remedy for these ills. On the one hand, their aggression against Ukraine has exacerbated problems in the world economy and exacerbated inflation. On the other hand, negotiations with Moscow for gas, oil and coal supplies at reduced prices are essential to alleviate the problems of the Indian economy.

Indirectly, the war in Ukraine legitimized Indian self-sufficiency in a strategic sector, agricultural commodities. The spike in grain prices caused when Ukrainian grain shipments were blocked was not caused by a real shortage. Grains are plentiful, but not moving fast enough from production sites to consumption sites. Although India is a big producer thanks to strong agriculture, it fears being infected by price hikes even in sectors where it is self-sufficient and has an export surplus. The mechanism is similar to that in the United States for energy: It doesn’t matter if America is self-sufficient in gas and oil; Since its manufacturers are free to sell on the open market and export to Asia or Europe, the American user also sees higher tariffs.

Modi does not want 1.4 billion Indians to lose purchasing power because food prices follow global trends. India is the world’s largest exporter of rice, selling it to 150 countries and alone producing 40% of all world exports. It produces enough to feed not only its own population but also a large part of the African population. But he fears that in an open market, rice prices will chase world inflation and that the rise will also affect the price at which it is sold internally, from Delhi to Mumbai, Kolkata to Chennai. And so Modi decided to severely restrict rice exports. It completely banned the foreign sale of “broken rice”, the cheapest variety that is also used as animal feed and was widely sold in Africa.

On other rice varieties such as basmati and parboiled, the Delhi government has imposed a 20% export tax, another way to discourage overseas sales. The logic is compelling: Limiting exports creates an oversupply of rice in the domestic market and lowers consumer prices for an essential commodity. On the rest of the world the effect will be reversed. India had exported 21.5 million tons of rice in 2021, more than the four consecutive exporting nations combined: Thailand, Vietnam, Pakistan and the United States in order. These four, although exports are rising, will struggle to make up for the lack of Indian production.

Elsewhere, prices will rise as India seeks to keep its own in check. Affected consumers include China, which imported 1.1 million broken rice in 2021 to feed its livestock; and a long line of African countries from Senegal to Djibouti. And the Italian price increases? Our bread and pasta are not made with rice but with wheat flour. There too, in addition to the well-known consequences of the Ukraine, the less well-known consequences of Indian self-sufficiency are also being demolished. Indian agriculture too – thanks to its industrialization that began in the 1970s and was wrongly called the “green revolution” (but had nothing to do with “organic” but happened through the use of chemical fertilizers, then GMOs) – is also increasing Excesses in wheat and wheat flour. In normal times it exported them: at the rate of 10 million tons per year. But as Ukrainian shipments became haphazard and world prices soared, India responded to protect its consumers from price hikes. It banned the export of wheat in May and flour at the end of August. Emerging countries were the main buyers of wheat and flour. But when a powerful supplier like India fails, price increases spill over from one market to another, forcing everyone to look elsewhere. The world markets are communicating ships and inflation is rampant from one to the other. The self-sufficiency that protects the Indians does not help the Italians.

September 22, 2022 11:32 am – Change September 22, 2022 | 11:32

The mysterious role of India (also) in rising prices in Italy – S Chronicles

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