Updated February 27th, 2024 at 15:37 IST

Why farmers are asking India to exit from WTO?

India is advocating for a permanent solution regarding public stockholding at the World Trade Organization (WTO).

Reported by: Business Desk
WTO | Image:WTO
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India at WTO:  The meeting of the World Trade Organisation (WTO) is underway at Abu Dbhai to discuss some key issues ranging from agricultural subsidy to fisheries subsidy, from investment facilitation to e-commerce. India has taken a tough stand and expressed serious concerns at a WTO meeting in Abu Dhabi regarding the rising use of trade protectionist measures by some countries under the pretext of environmental protection. Various farmer bodies are asking India to exit from the WTO considering the pressure of the WTO to phase out all agricultural subsidies. Samyukta Kisan Morcha (SKM), a farmers group that spearheaded the 2020-21 farmers’ agitation, observed February 26 as ‘Quit WTO Day’. “Government of India must firmly defend the rights of the country to protect its farmers and ensure national food security," SKM said in a statement.

Bargaining hard for a permanent solution

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India is advocating for a permanent solution regarding public stockholding at the World Trade Organization (WTO), primarily due to the challenges faced by emerging economies in providing farm subsidies for agricultural growth and ensuring food security. The objective is to avoid potential disputes at the WTO over the breach of subsidy limits, particularly concerning India's minimum support price program for grains, such as rice.

The push for a permanent solution becomes crucial as disputes may arise if subsidy limits are exceeded, prompting India to rely on the 'peace clause' under WTO norms, specifically the 2013 Bali peace clause, to shield its food procurement program from actions by other member nations.

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India seeks a permanent solution with terms more favourable than those outlined in the Bali peace clause. The focus is on safeguarding the interests of poor and vulnerable farmers and addressing the food security needs of a significant portion of the population. While some developed countries argue that subsidized public procurement and storage distort global agriculture trade, India contends that such measures are essential to protect its farmers' welfare and ensure food security.

The commitment of the government to providing 5 kg of free food grains per month to approximately 80 crore poor people under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) underscores the urgency of securing a permanent solution. This solution would enable India to continue its food procurement and distribution programs without facing challenges or disputes at the WTO.

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Clamour to exit  WTO

According to WTO, the overall subsidies granted by the government of developing nations should be below 10 per cent of the total value of the production. “In India, there are two types of subsidies, input subsidy, and food subsidy. Input subsidy is the subsidy provided by the government on fertilizer etc. And second, is the total food subsidy given under the National Food Security Act to poor people,” Biswajit Dhar quipped. 

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Samyukta Kisan Morcha (SKM), a farmers group that spearheaded the 2020-21 farmers’ agitation, observed February 26 as ‘Quit WTO Day’. “Government of India must firmly defend the rights of the country to protect its farmers and ensure national food security," SKM said in a statement.  Almost some farmer bodies are of the view that the government should exit WTO on the MSP issue, as developed economies are mounting considerable pressure on India to succumb to the pressure of phasing out agricultural subsidies. 

As far as the case of India is concerned, even the food subsidy given by the government of India is being counted as a subsidy by advanced economies along with input subsidy. As per their assessment, India’s overall agricultural subsidies stand at 70 per cent of the value of production, against the ceiling of 10 per cent. 

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“The calculation is wrong as the food subsidy given by the government to the poor is also taken in as an agricultural subsidy to which the government of India has raised its objection.  Our own calculation shows that India’s overall subsidy is just 15 per cent of the total production,” Biswajit Dhar mentioned. 

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Published February 27th, 2024 at 15:27 IST