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India’s farm input subsidies, including sops for fertilizers, electricity and irrigation, have increased a sharp 50 per cent to $48.13 billion in 2022-23 from $32.07 billion in the previous fiscal, per notifications made by the country at the WTO. This prompted several countries such as the EU, the UK and the US, to raise concerns and call for greater transparency at a recent peer group review meeting of the WTO, according to officials.
“New Delhi explained that the input subsidies are mainly for power, irrigation and fertilizers, and that the increase was due to inflation and rising costs of fertilizers. It further said that the country had duly notified the information to the WTO,” a Geneva-based official told businessline.
Farm subsidies
Agricultural input subsidies, targetted towards low income and resource poor farmers, are exempt from limits on domestic subsidies under the carve-out of special & differential treatment measures offered to developing nations under WTO rules.
“The US pointed out that India’s input subsidies were more than twice the value of all trade-distorting support notified by the US in 2021-22. It raised concern on both the scale of India’s input subsidies and the rapid increase in expenditures,” the official said.
New Zealand, Canada and the US expressed dissatisfaction with the explanation provided by India and said that it was not sufficient. “The countries said that India should be more transparent about the increase in expenditure,” the official added. Brazil and Japan, too, raised concerns on the matter.
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As India has declared that 99.43 per cent of farm holdings in the country are of low-income or resource poor farmers (per the Agricultural Census for 2015-16), its input subsidies are excluded from capping. “There is more peer group scrutiny on input subsidies also because it is not capped and can be increased without limits,” the official said.
special subsidy
While several WTO members are trying to initiate negotiations on reforming all pillars of the Agreement on Agriculture, India has so far stoutly ruled out discussions around capping input subsidies on the ground that it was vital to ensure food and livelihood security of marginal farmers and for rural development.
Instead, India, together with several developing nations, has been pushing developed nations to cut down on their special subsidy entitlements (extra Additional Measurement of Support) that allows them to give extra subsidies over the limits set in the AoA.
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