Currently, edible oils can be freely imported under open general licence (OGL) on payment of import duty of 20 per cent. (Though actual duty rates vary, this is the average rate). The extent to which import duty can be raised is currently being debated at the highest levels of both the agriculture and finance ministries, for agriculture is a politically sensitive subject.

Higher import duties would make edible oils costlier for the common man but will win kudos from the strong farm lobby. On balance, the government seems inclined to favour higher oil prices since this will encourage farmers to grow more oilseeds and, thus, reduce the need for imports. Over time, this could push the country towards greaterself-sufficiency in both oilseeds and oil.

With the lean season for oils -- June to September -- about to begin, it remains to be seen whether the BJP will be willing to take such a decision in its maiden year in power. Rewarding the farm lobby can be expensive in terms of popular votes if the country heads for another election or political instability.

During 1996-97, the country imported an estimated 17.5 lakh tonnes of edible oils -- the highest in the last two decades. Imports were at their lowest at 0.52 lakh tonnes in 1992-93, just before they were freed from the list of products that were canalised through the State Trading Corporation. Towards the second half of 1997-98, edible oil prices flared up on fears of a lower oilseeds crop. Prices went up by about 40 per cent between November 1997 and March 1998. This suggests that both imports and consumption could be lower in 1997-98 compared to the previous year.

However, last Sunday in Jaipur, the Central Organisation for Oil Industy & Trade(COOIT), the apex body of the edible oils and oilseeds trade, surprised all concerned when it released comfortable oilseeds production figures for 1997-98. COOIT said oilseeds production during the 1997-98 oil year should be around 49 lakh tonnes, slightly lower than last year's 52 lakh tonnes.

Since then edible oil prices have began declining and are likely to remain soft in the domestic markets for the remaining part of the 1997-98 oil year.

On the other hand, international the edible oil prices -- especially palmolein prices -- have begun rising for the past few days. This follows Indonesia's decision to lift the three-month export ban, but after levying a hefty export tax.

This situation, therefore, raises a question: how much edible oil will be imported this year -- 1998-99? "It is a very difficult question to answer," said a top source at Hindustan Lever Ltd who closely monitors the oils and oilseeds scenario, both in the domestic and international markets. Last week, bigwigs of the oilseedssector who had congregated at Jaipur to assess edible oils and oilseeds availability appeared to be equally unsure with different sections suggesting highly varied figures.

According to oilseeds production projections for the 1997-98 oil year (ending October 1998) released by COOIT, the total availability of oilseeds in the country will be around 84.7 lakh tonnes, lower than the 97.2 lakh tonnes in the earlier year but certainly not as bad as anticipated earlier. This indicates that the overall supply of edible oils, as a result of reasonable oilseeds production, will not be too bad.