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G-7 COUNTRIES

18th May, 2022

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Context

  • In the wake of the Russian-Ukraine war, the demand for Indian wheat increased overseas. Whereas, wheat production in India is expected to be lower this Rabi season.
  • India, due to lower production and higher demand from private buyers, the world’s second-largest producer of wheat banned wheat exports.
  • The issue of India’s wheat export ban is likely to dominate the upcoming G-7 summit and global food security meeting at United Nations (UN).

 

Why did India ban wheat exports?

  • The reasons given were runaway inflation and food security of 1.4 billion people.
    • Some parts of India, have seen prices of wheat and flour jump 20 to 40 per cent in recent weeks.
  • Because of the sharp rise in global prices, some farmers were selling to traders and not to the government.
    • This got the government worried about its buffer stock of almost 20 million tonnes -- depleted by the pandemic -- needed for handouts to millions of poor families and to avert any possible famine.
  • Low production due to heatwaves. India recorded its warmest March on record -- blamed on climate change -- and in recent weeks has seen a scorching heatwave with temperatures upwards of 45 degrees Celsius (113 Fahrenheit).
    • This hit farmers in wheat-producing northern India, prompting the government to predict output would fall at least five per cent this year from 109 million tonnes in 2021.

 

India as a wheat exporter

  • India is a marginal player globally and produces mostly for domestic consumption, and almost half its exports last year went to Bangladesh.
  • India’s exports have been limited over quality concerns and World Trade Organisation (WTO) rules about grain purchased by the state.

 

About G7

  • It is an intergovernmental organization consisting of Britain, the US, Canada, France, Germany, Italy and Japan.
  • The heads of government of the member states, as well as the representatives of the European Union, meet at the annual G7 Summit.
  • G7 represents 58% of the global net wealth ($317 trillion), more than 46% of the global gross domestic product (GDP) based on nominal values, and more than 32% of the global GDP based on purchasing power parity.
  • The seven countries involved are also the largest IMF-advanced economies in the world.

 

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