India Notifies WTO of 415bn Agri Subsidy in 2003-04

Input subsidy at $9bn, Food Stocking $5.5 bn

After going several years without releasing updates, the Indian government recently notified the WTO of increases in its farm subsidies. Agricultural support grew from US$9 billion to nearly US$15 billion between marketing year 1998-99 and 2003-04, according to the report from 9 June.

The subsidies reported to the WTO are made up of ‘green box’ payments (which are supposed to cause only minimal trade distortion), along with another category of support that only developing countries are allowed to use for subsidising agricultural investments and inputs for poor producers.

Under these latter subsidies, by far the largest amount reported was attributed to agricultural input subsidies to “low income or resource poor producers” - including support for fertilisers, irrigation, electricity and seeds. These payments rose from around US$6.7 billion in the 1998-99 marketing year to over US$9 billion in 2003-04, according to the government’s report.

The lion’s share of India’s green box payments were allocated to food grain for buffer stock operations, and categorised under WTO rules as “public stockholding for food security purposes.” Support in this category rose from a little over US$2 billion in 1998-99 to around US$5.5 billion in 2003-04, the new figures show.

While larger than the amounts of green box support provided by several other developing countries, India’s payments in this category are considerably lower than the level of support provided by China, which in 2004 provided around US$37 billion in green box subsidies to its agricultural sector. It also is lower than the level of green box payments provided by the EU (US$78 billion in 2007) and by the US (US$82 billion in 2008) - although both the US and EU also provided trade-distorting support.

No trade-distorting support was provided in India’s case, the report indicates.

Post-2004 data had still to be reported to the global trade body. Several WTO members have repeatedly been late in submitting their obligatory regular reports on farm spending to the WTO, sometimes hampering efforts to discuss subsidy commitments under the troubled Doha Round of trade negotiations.