India’s policy makers have gone to extremes over the last few months to explain how it is ‘imported’ inflation that is driving up prices here.

No one (except opposition political parties) is contesting that. Sure, it is indeed soaring prices of global commodities that have pushed up prices of goods here in India. Coal prices are higher by 40% over last year, wheat is up 72%, soybean 78% and cotton 44% to name just a few commodities that affect our everyday lives.

Crude oil prices have doubled since last year but thanks to the government’s generous subsidy on oil, we haven’t yet felt the pain of rising fuel bills.

But maybe its time we asked the question if we ourselves aren’t in some way contributing to global price rise by ‘exporting’ inflation. Lets take the example of rice.

In October last year, India banned the export of non-basmati rice in order to rein in domestic prices of the commodity. What it unwittingly did was that it blocked the supply of over 3 million tonne of rice into the global marketplace, in turn driving up prices of the commodity which touched a record high of $25 per 100 pounds. Senior bureaucrats in New Delhi have hinted at the likelihood of the ban being ‘eased’ without defining what that might mean.

Asian farmers produce nearly 90% of the world’s annual production of rice with China and India accounting for more than half of the crop. World rice production in 2007 was at close to 645 million tonne and according to the Food and Agriculture Organisation of the United Nations, production this year will expand 2.3% to a record 666 million tonne. Clearly, there is no cause for worry about any possible shortage in rice supplies.

One might argue that only 6-7% of world rice production is traded internationally and there is no reason for a clampdown on exports to impact prices. Unfortunately, it has.

Take the example of Philippines. The country’s average daily consumption of rice stands at 33,000 tonne, a level that domestic production is not able to keep up with. The government expects that it will have to import close to 8 million tonne of rice this year to meet domestic demand. And it will import at prices ranging from $600-750 a tonne. That’s almost double the price at which it imported the commodity during the last quarter of 2007. Inflation, not surprisingly, is at a 20-month high of 6.4%, way above the government’s full year target of 3-5%.

I am not in any way saying that the Indian government’s decision to ban rice exports is wrong. The price and availability of food commodities, especially rice and wheat, is a socially and politically sensitive issue. Securing their supply, no matter what the cost, is of paramount importance to any government.

But the next time policy makers here blame ‘imported’ inflation for rising prices, I hope they will realize and acknowledge that they are, in some small measure at least, also contributing to global price rise by ‘exporting’ inflation.

And, oh! The Philippines is bracing for rice at $1,000 a tonne by the end of the year.