In India, agriculture, especially in rural areas, is the primary and largest source of livelihood, as nearly 70% of the Indian population depends on agriculture. Currently, India plays a crucial role in global agricultural exports. However, India repeatedly faces scrutiny for its agricultural subsidies in the WTO. Consequently, India has informed the WTO that it will not discuss new agricultural programs until the subsidy issue is resolved.
In this article, we aim to understand the ongoing dynamics between Indian agriculture and the WTO.
So, let’s dive in.
What’s Happening?
After gaining independence, our country faced challenges providing enough food for its vast population. To meet the food requirements, we had to export grains from other countries, incurring substantial expenses or relying on assistance from other nations.
In 1960, the government finally decided to strive for self-sufficiency. For this purpose, the government introduced high-yielding seeds for agriculture, utilised essential fertilisers for cultivation, and initiated efforts to enhance various machinery for agricultural assistance.
Simultaneously, the government encouraged the cultivation of rice and wheat by providing farmers with a Minimum Support Price (MSP). This means that the government guarantees farmers that if they do not get a better price in the market, the government will purchase their produce at a favourable rate. However, there is currently tension between India and the WTO regarding these subsidies.
Beginning of the Green Revolution
This movement aimed to increase agricultural productivity and improve the country’s economy, starting in the 1960s. During this period, India transitioned its agriculture to technological and industrial systems. This involved adopting technologies such as high-productivity seeds, farming tools, irrigation facilities, pesticides, and fertilisers to improve the agricultural sector.
Reasons for Tension Between India and the WTO
India’s progress in this regard disappointed other countries, as they believed India was resorting to unfair trade practices. The Indian government was buying crops from farmers at low prices and then exporting them to global markets at reduced rates.
Developed countries complained that India had violated several rules, claiming that India had provided subsidies equivalent to 60-70% of the total value multiple times.
Now, you might be wondering, what are these rules?
The WTO allows governments to provide subsidies to farmers but imposes limits:
- 5% for developed countries
- 10% for developing countries
What’s Next?
India responded to the WTO, stating that it has been addressing these issues for decades. Tired of this ongoing struggle, India has decided to implement new agricultural programs and is seeking support from countries facing similar situations. India, along with these nations, aims to collectively bring about changes to these rules.
Now, let’s see what unfolds in the future. It seems that India has the support of some other countries to assert its demands. Additionally, we will have to observe whether WTO members agree to changes in these rules or not.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
*Disclaimer: https://tejimandi.com/disclaimer
