Bali Package and Indian Subsidy
Bali Ministerial conference has witnessed the 1st ever agreement signed under WTO because it needs a unanimous consensus of all the 168 members.This agreement is basically based on trade facilitation and regulation of custom rules for the mutual growth of its members.
So what's the Indian Issue there ?
The matter revolves around the food security policy of India under which it has started providing food grains to around 2/3 of population ( 75 % rural and 50% urban ) at a highly subsidized rate .For example rice for Rs 3 per kg, wheat for Rs 2 per kg and coarse grains like millet,bajra etc for Rs 1 per kg. Because for this India will incur a subsidy of around 125 lakh crore in mere 1 year and which is going to increase exponentially in coming years.Now India is on the verge of breaching the 10% limit ( for Developed countries this is around 5 %) with respect to subsidies on agricultural production as specified after Uruguay round of WTO conference.(It is to be kept in mind that the calculation of price is on the basis of base year 1986.)
After India's hard bargaining in Bali a temporary four year suspension had been excepted by WTO members with respect to government purchases under statuary programmed like that of food security and assured that a concrete plan is going to be prepared in order not to hamper the Indians need and cause. But the BJP government under Mr Modi is skpetical of WTO's motives as it hasn't even started preparing any plan and our government had said that they have to continue the food Security policy as they have an obligation to fulfill the article 21 of the constitution .
But the most important point to note here is that there are two types of subsidies, one is producer subsidy and other is consumer subsidy and WTO has a say only in the producer subsidy because if the producer subsidy is more then the producers will produce more and ultimately foreign producers will not be able to market their products.But an easy alternative for that can be direct money transfer to the consumers, in that way it will be a consumer subsidy and WTO can't have a say in it
So what's the Indian Issue there ?
The matter revolves around the food security policy of India under which it has started providing food grains to around 2/3 of population ( 75 % rural and 50% urban ) at a highly subsidized rate .For example rice for Rs 3 per kg, wheat for Rs 2 per kg and coarse grains like millet,bajra etc for Rs 1 per kg. Because for this India will incur a subsidy of around 125 lakh crore in mere 1 year and which is going to increase exponentially in coming years.Now India is on the verge of breaching the 10% limit ( for Developed countries this is around 5 %) with respect to subsidies on agricultural production as specified after Uruguay round of WTO conference.(It is to be kept in mind that the calculation of price is on the basis of base year 1986.)
After India's hard bargaining in Bali a temporary four year suspension had been excepted by WTO members with respect to government purchases under statuary programmed like that of food security and assured that a concrete plan is going to be prepared in order not to hamper the Indians need and cause. But the BJP government under Mr Modi is skpetical of WTO's motives as it hasn't even started preparing any plan and our government had said that they have to continue the food Security policy as they have an obligation to fulfill the article 21 of the constitution .
But the most important point to note here is that there are two types of subsidies, one is producer subsidy and other is consumer subsidy and WTO has a say only in the producer subsidy because if the producer subsidy is more then the producers will produce more and ultimately foreign producers will not be able to market their products.But an easy alternative for that can be direct money transfer to the consumers, in that way it will be a consumer subsidy and WTO can't have a say in it
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