Indian agriculture and WTO

THE BLAME FOR overflowing godowns and falling agricultural product prices is being placed at the door of import liberalisation in general and the World Trade Organisation in particular. The impending removal of the last of the quantitative restrictions (QRs) on all agricultural products has added to the fears for the future of Indian agriculture. While contractual obligations and import liberalisation forced on the Government have indeed considerably increased the exposure to the world market, there has been a tendency to shift the blame for domestic problems on to external factors. There are four different sets of WTO-related issues confronting Indian agriculture and public debate frequently confounds them by seeing them as one when in fact they are largely distinct.

The immediate challenge is what will follow the removal of QRs in April. There is no reason to believe that there will be a flood of imports, only that protection can no longer be provided by a ban on imports but by customs duties. With the plugging of loopholes that existed in the form of zero tariffs on cereals and dairy products, agriculture will for now continue to enjoy a measure of protection. Where the Government could fail - as it did in the case of edible oil imports - is by moving slowly on increasing tariffs whenever global or domestic prices fall. However, the fairly high levels of tariff protection that India can now invoke could be under threat when the next phase of multilateral negotiations on agriculture begins at the WTO. This is the second issue, on which the Government has approved a set of proposals which will constitute India's initial negotiating stance. These talks will be completed only years down the line. In its first proposals, the Government appears to have chosen to place greater importance on protecting agriculture than on liberalising farm exports. This is apparent from the demand for constituting a ``Food Security Box'' that will facilitate higher levels of protection and codify provisions that already exist in WTO agreements. An influential section in the policy-making establishment has been pushing for India to become an aggressive agricultural exporter. But the twin of joining the side of the agricultural exporters at the WTO is a lowering of import protection. While India continues to demand adequate market access for its exports, the Government has wisely decided against too aggressive a position on liberalisation of trade in agriculture. The third issue is the functioning of the 1994 WTO deal on agriculture, which far from boosting trade has been used by the rich countries to increase farm subsidies. Experts in the country have demanded a review of this agreement, but such a review underlies the preparatory work now going on at the WTO for future talks. Besides, India has officially already made proposals to address the ``implementation problems'' in the farm pact. Going further may force India to offer more concessions on imports. A fourth issue is intellectual property protection. Compelled as India was in 1994 to agree to provide sui generis protection to plant varieties it had the choice of drafting its own legislation. This could have contained innovative provisions to protect traditional rights. Yet, six years of procrastination and inter-Ministry squabbling have meant that no legislation has been enacted, opening the door to disputes at the WTO from other countries.

When imports have caused problems they have followed either leaden-footed decision-making or the Government placing the interests of the consumers above that of the farmers. Both were evident in the setting of tariffs for edible oils (mainly palmolein) which were raised only recently. The larger problems that Indian farmers face are the result of high costs, low productivity, falling public investment, poor market development and ultimately limited purchasing power among one billion people. All these are the making of domestic policies.

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Section  : Opinion
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