PMO Writes to Ministries to Quantify Agro Subsidies

India Prepares Food Subsidy Data for WTO

New Delhi plans to quantify all subsidies and farm support falling under the WTO’s Agreement on Agriculture by 15 January 2015, according to a letter dated 17 November 2014 from the prime minister’s office cited by the Indian Express.

(It may be recalled that the Bali deal at WTO when India raised the question of food subsidies had a negative impact. The final wordings allowed India to continue with subsidies till a settlement is reached. In return, India is enjoined to report regularly on the quantum of subsidy thus opening the agri sector to scrutiny and comment from the 150 plus WTO members! Thus India is saddled with reporting aid).

The letters follows an agreement last Thursday at the WTO, which clarified that a prior commitment not to challenge developing country public food stockholding schemes under the trade body’s farm subsidy rules would not expire in 2017 but will continue till a settlement is reached.

The deal also reaffirmed that countries benefitting from this “peace clause” would share data and information on their agricultural subsidies. Meanwhile, WTO members will ramp up efforts to negotiate a “permanent solution” to developing countries’ concerns in this area, with a new target date of end-2015 for such an outcome.

As part of a move spearheaded by India, developing countries in the G-33 coalition have complained that price inflation over the last two decades has eroded their ability under WTO rules to buy food at government-set prices as part of public stockholding schemes.

Quantification a first step

Quantifying farm support is “a first step in understanding the extent of support that this sector needs,” Principal Secretary Nripendra Misra in the Prime Minister’s office reportedly told other senior policymakers in the letter, according to the Indian Express.

The newspaper cites a letter from the Principal Secretary in the prime minister’s office, Nripendra Misra, addressed to the Secretaries of the departments of Commerce, Agriculture, Food and Public Distribution, Fertilizers, and Expenditure.

“It would be useful if this exercise is completed in two months’ time, i.e. by 15.1.2015,3 Misra reportedly writes.

The letter adds that the review should “study the existing support measures for agriculture, examine the possibilities that are there under the Agreement on Agriculture for promoting agriculture, classify all the ongoing support activities in the context of the various permissible and regulated activities under the WTO, and suggest possible changes and improvements that may be needed in future.”

(According to Indian Express, India has admitted to $56.13bn agro subsidy in 2010-11 in a Sept 10, 2014 filing at to WTO).

The September report indicated that trade-distorting support fell consistently below WTO ceilings for the seven-year period up to 2010-11. However, the government has warned that plans to expand subsidies to poor consumers under its new Food Security Act could mean that ceilings on farm support for rice might be breached if the food continues to be procured at administered prices.

The official figures presented in September revealed that just below US$14 billion of government spending was allocated for public stockholding for food security purposes – more than doubling support levels seven years previously.