India has submitted its eleventh notification (G/AG/N/IND/11), as Domestic Support DS:1 to the World Trade Organisation (WTO) for the period of 2011-12 to 2013-14 on July 12, 2017. As per the WTO Agreement on Agriculture, Article 18.3 states that all member countries shall submit their notifications to the Committee on Agriculture for the review process of the implementation of the WTO rules. Last domestic support notification provided by India on 9 September 2014, for the period of 2004-05 to 2010-11.
In this eleventh notification, India shows its Domestic Support to Agriculture in the form of ” In general agriculture support” and support to “product specific.” As per the WTO rules India can give subsidies amount to 10 per cent of total farm production value in general often called input subsidies and 10 per cent of the total value of the particular products. If India crosses this limit, then it is required to reduce the support. But the policy documents reflect that India has no production specific total Aggregate Measurements of Support (AMS) reduction commitments in its schedule, states WTO rules on AMS classified under four different categories. However, India supports its agricultural producers through operations of the Ministry of Agriculture, Cooperation and Farmers Welfare and other Government agencies, which decide minimum support price (MSP) for different agricultural products.
Domestic Support is a highly debated issue since the Uruguay Round. In 2016, 79 per cent questions asked about domestic support by the various member countries during the meetings of Committee on Agriculture. The issue of domestic support might resurface again at the WTO’s eleventh ministerial conference, to be held in Buenos Aires (Argentina) in December 2017. Some developed countries have already put pressure on India to reduce the domestic support to agriculture, especially for Wheat and Rice. But at ministerial conference, it’s an opportunity to presents its side vigorously and defy any agreement to reduce its domestic support. However, India should also inform the developed countries that India has ample policy space for domestic support to the agriculture sectors being an agricultural state. Especially on wheat for food security purposes, India can increase the quantity of wheat procurement as subject to given Minimum Support Price (MSP) in 2013-14. The Agreement on Agriculture’s Annexure 3, explained the methodology for the same purpose. The current total AMS for product specific is equal to the multiplication of available production with the gap between AAP (Applied Administrative Price)/MSP and Fixed External Price.
Some developed countries have already put pressure on India to reduce the domestic support to agriculture, especially for Wheat and Rice. But at ministerial conference, it’s an opportunity to presents its side vigorously and defy any agreement to reduce its domestic support.
Analysing the WTO notifications between 2011 to 2014 and India’s domestic support notifications data on wheat subsidies, it is observed that India’s Current Total AMS for wheat is negative for the period of 2012-13 and 2013-14. Although, in 2011-12 support is positive but was under the limit set by WTO. India provides support to 0.46 per cent of wheat production against the production of 28.34 million ton in 2011-12. However, India could buy all the production (95 million ton) in 2011-12 without exceeding the limit of 10 per cent set by the WTO.
We can understand this whole debates in an as simple way that Domestic support refers to the total annual amount which is given by any country to its agriculture sector as under the WTO rules. The WTO has set the limit of 10 per cent for developing countries like India, 5 per cent for developed countries and 8.5 per cent for the China. Suppose wheat production market value is Rs 100 (it’s possible example value use 100 as simplicity purpose) in 2017, then India can give subsidies to wheat Rs 10 without crossing the limit. However, India has not exercised this fix slab provided by WTO to help its farmers. It put a question over the intention of the state where the majority of the population dependent on farming and facing challenges.
India has not exercised this fix slab provided by WTO to help its farmers. It put a question over the intention of the state where the majority of the population dependent on farming and facing challenges.
Author: Satpal, a Junior Research Fellow in Economics is pursuing his Ph.D. from Banaras Hindu University (Varanasi, India) and affiliated with Giri Institute of Development Studies (GIDS), Lucknow.
