The correct approach to tackling inflation, whether in wheat, cotton or yarn, is by allowing duty-free imports without putting fetters on exports.Justify. (200 words)
Refer – The Indian Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· Domestic prices increasing to international parity levels should, by itself, slow down exports in the natural course.
· Rise in cotton prices cannot be blamed just on exports. It expected to halve in the current marketing season (October-September)
· Sowing of cotton has already started in Punjab, Haryana and Rajasthan. Plantings in Gujarat, Maharashtra, Telangana and other states will also take off with the arrival of the southwest monsoon rains.
· Also High prices would definitely incentivise farmers to expand acreage this time; banning exports will send the opposite signals to the ultimate detriment of the textile industry.
· So, the real problem in cotton that needs addressing is yields.
· Also output of one industry is often the input of another. For example cotton is spun by mills into yarn, which is further woven or knitted into fabric used for making garments.
· India exported $2.8 billion worth of raw cotton, $5.5 billion of cotton yarn, $8.2 billion of cotton fabrics and made-ups, and $9 billion of cotton ready-made garments.
· Spinning mills seeking a ban on cotton shipments will not agree to the same in respect of yarn.
· Exports are happening at every stage of the value chain. There cannot be pick and choose on which one to disallow or promote.
· So the government has to scrap the import duty at every stage of the value chain to meet the demand rather than banning exports.
· Therefore correct approach to tackling inflation, whether in wheat, cotton or yarn, is by allowing duty-free imports without putting fetters on exports.
