Skip to main content

Corporatizing Indian agriculture 'to enhance' farmer efficiency, market competitiveness

By Shashank Shukla* 

Today, amidst the ongoing farmers' protest, one of the key demands raised is for India to withdraw from the World Trade Organization (WTO). Let us delve into the feasibility of such a move and explore its historical context within India's globalization trajectory.
India embarked on the path of globalization, opening its doors to the world. In 1947, a multilateral agreement known as the General Agreement on Trade and Tariffs (GATT) was signed by 153 countries to regulate international trade, primarily focusing on minimizing barriers such as quotas, tariffs, and subsidies. The GATT was succeeded by the establishment of the World Trade Organization (WTO), originating from the Uruguay Round of talks (1986-94), which commenced operations on January 1, 1995. Unlike GATT, the WTO encompasses not only goods but also services and intellectual property rights.
The crux of the farmers' demand lies in their apprehension towards WTO regulations. The Cairns Group, comprising countries like Australia, Brazil, and Canada, has raised objections against the subsidies provided to Indian farmers by the Government of India, citing violations of WTO agreements. The WTO delineates three forms of subsidies:
  • Green Box: This method allows states to provide unlimited benefits and subsidies for research and development to enhance the quality and quantity of production.
  • Amber Box: Governments utilize this method to ensure agricultural produce remains competitively priced in the market, thereby guaranteeing maximum returns for farmers. In India, subsidies are extended to reduce input costs, such as those on fertilizers, seeds, and other micronutrients. Additionally, the government procures crops at Minimum Support Prices (MSP).
  • Blue Box: This method permits governments to provide support linked to production, subject to production limits, with minimal trade distortion.
The issue primarily revolves around India's utilization of the Amber Box method. Developed countries are permitted a 5% subsidy allowance, while developing nations like India can avail themselves of up to 10% subsidies. However, India's subsidies, including MSP and agricultural input subsidies, surpass the prescribed limits. For instance, under the PRANAM Scheme, farmers can purchase Neem Coated Urea at a subsidized rate of Rs. 242 per 45KG, whereas the market price is around Rs. 2200. The government has allocated approximately 3.7 lakh crores to implement this scheme, benefiting numerous farmers.
The challenge arises when these subsidies result in Indian produce being priced lower than that of overseas farmers, raising objections from groups like the Cairns Group and WTO. Despite being a WTO member, India justifies its subsidies under the "Peace Treaty Clause," asserting that they are essential for ensuring food security and alleviating hunger crises. India has also secured agricultural reserves for up to two years through various warehousing facilities to mitigate food insecurity.
The challenge arises when these subsidies result in Indian produce being priced lower than that of overseas farmers
In addition to objections regarding subsidies, WTO members such as Australia and the EU have scrutinized India's export subsidies, particularly concerning sugar exports to countries like Iraq, Sri Lanka, and the UAE. Moreover, concerns have been raised about India's MSP for cotton. India has justified these measures as responses to factors like increased production costs.
Despite the contentious issues surrounding subsidies and WTO regulations, it is imperative for India to remain within the WTO framework for several reasons:
  • India's participation in the global market is essential for revenue generation and improving the quality of goods and services, benefiting both Indian entrepreneurs and consumers.
  • India relies on imports for various goods and services, necessitating WTO protection to safeguard against adverse impacts on import-dependent sectors.
  • India's emergence as a digital powerhouse and a global pharma giant is facilitated by access to cheaper electronic goods, APIs, and technology transfer, all of which are facilitated by WTO agreements.
  • Lowering tariffs and easing restrictions, facilitated by collaboration with the WTO, attracts significant foreign direct investment, creating jobs and boosting the economy.
  • Access to technology transfer through the WTO enhances Indian businesses' capacity for innovation and upgrading.
However, India must raise concerns about issues such as loss of tariff revenue, agricultural dumping, and the impact of WTO pressure on intellectual property laws. Addressing these concerns while leveraging the benefits of WTO membership is crucial for India's economic growth and sustainability in the global arena.
Conclusion: While India has benefited from the Peace Treaty Clause, it is imperative to consider the sustainability of this approach. 
The reliance on subsidies, particularly within the Amber Box framework, has led to a stalemate between the interests of Indian farmers and consumers. To navigate this challenge, policymakers must explore alternative strategies that prioritize long-term sustainability and mutual benefits. Embracing the Green Box approach, which emphasizes research and development (R&D), presents a promising avenue to bolster Indian agriculture without excessive reliance on subsidies. 
Additionally, corporatizing the agriculture sector can enhance efficiency and competitiveness in both domestic and international markets. Rather than resorting to short-term fixes like increasing MSPs and subsidies to score political points, a concerted effort towards finding permanent solutions is essential to ensure the prosperity of Indian agriculture and the welfare of its stakeholders. 
Furthermore, India needs to adopt an open and free-market model to ensure effective gains on agricultural produce, benefiting farmers automatically without the need for MSPs. This transition requires significant investment in infrastructure to support such an economic model.
*Political and economic commentator



IMA vs Ramdev: Why what's good or bad for goose should be good or bad for gander

By Dr Amitav Banerjee, MD* Baba Ramdev and his associate Balkrishna faced the wrath of the Supreme Court for their propaganda about their Ayurvedic products and belittling mainstream medicine. Baba Ramdev had to apologize in court. His apology was not accepted and he may face the contempt of court with harsher punishment. The Supreme Court acted on a public interest litigation (PIL) moved by the Indian Medical Association (IMA).

Women innovators on simple, revolutionary alternate solutions for water problems

By Proshakha Maitra, Mansee Bal Bhargava* The detrimental effects of uncontrolled population rise and accelerated change in the global climate have posed tremendous pressure on the water and sanitation. This calls all stakeholders, from both developed and developing nations, to improve their resilience and to instigate sustainability. It is more crucial than ever to optimise the use of the resources we have on hand since the world population is projected to reach 9.7 billion by 2050.

Magnetic, stunning, Protima Bedi 'exposed' malice of sexual repression in society

By Harsh Thakor*  Protima Bedi was born to a baniya businessman and a Bengali mother as Protima Gupta in Delhi in 1949. Her father was a small-time trader, who was thrown out of his family for marrying a dark Bengali women. The theme of her early life was to rebel against traditional bondage. It was extraordinary how Protima underwent a metamorphosis from a conventional convent-educated girl into a freak. On October 12th was her 75th birthday; earlier this year, on August 18th it was her 25th death anniversary.

Alleged killing of another Bangladesh youth inside Indian territory: NHRC inquiry sought

By Kirity Roy* There was yet another incident of the killing of a Bangladeshi youth by the Border Security Force personnel attached with ‘Barthar’ BOP of ‘G’ Company of 75 BSF Battalion. In last five years several incidents of killings happened under this police station’s jurisdiction and the cases will get the award as “Not Guilty” as usual.

Modi model, Hindutva icon 'justified' alliance with Muslim League before Independence

By Shamsul Islam*  Our PM describes himself as ‘Hindu’ nationalist and member of RSS. He proudly shares the fact that he was groomed to be a political leader by one of the two fathers of the Hindutva politics, MS Golwalkar (the other being VD Savarkar) and given the task of establishing Hindutva polity in India after eradicating secularism.

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

Crusader for people’s causes, this Hollywood actor entered 'unexplored zones' in US

By Harsh Thakor*  Marlon Brando on April 3rd completes his birth centenary. He perished in 2004, on July 1, aged 80 years. Arguably in Hollywood Brando penetrated sensitivity and versatility at an unparalleled scale and discovered new horizons or explored path breaking zones in acting.

Nuclear power expansion: Is AEC's new, 'unrealistic' target fully backed by PMO?

By Shankar Sharma*  Another unrealistic and tall claim by Atomic Energy Commission (AEC) has been announced: India is eyeing 100 GW nuclear power by 2047, the AEC chairman  AK Mohanty   has said. A few years ago, the dream target for the Indian nuclear establishment was 275,000 MWe of nuclear power by 2050 (as per DAE document of 2008 "A Strategy for the Growth of Electricity in India”). Now this target of 100 GW nuclear power by 2047. And as at the end of February 2024, the actual nuclear power capacity was only 7,480 MWe, which formed only 1.7% of the total power capacity in the country. 

How huge crowd at Mukhtar Ansari funeral is comparable to BJP's 'people's court' talk

By Vidya Bhushan Rawat*  The massive crowd at the funeral of Mukhtar Ansari in Mohammadabad reflects the power and influence that his family wields in the area. One can't deny that he had enormous power in Ghazipur and Mau districts. But the crowd that came and chanted slogans in his favour does not exonerate him of his conviction by the court.  It is important that we understand this. 

'Critical for cultural and ecological security': Ladakh women seek statehood, self-rule

By Our Representative Six Ladakhi women from different organisations in the region, who concluded their 10 day fast, have told an online press conference that it is necessary to provide statehood to Ladakh, even as declaring the region under the 6th schedule, for “deepening democracy, preserving ecology, and for survival.” Feminists across India joined the media meet in solidarity with the Ladakh movement “for 6th schedule, statehood and justice.”