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US, Canada and Pakistan have raised concerns about India’s new food security legislation at the World Trade Organisation (WTO). They have also asked India to explain the effect the legislation will have on global stocks and commodity prices.
New Delhi has sought more time to come up with its stock requirement as the legislation is yet to be fully implemented.
Senior Government officials, however, maintain that India will not succumb to pressure from developed countries. It will continue to press for changes in the WTO’s agriculture pact to raise the cap on subsidies.
Distortion limit
Commerce and Industry Minister Anand Sharma, in his meeting scheduled with newly appointed WTO Director-General Roberto Azevedo in New Delhi next week, is likely to underscore the importance of amending the Agreement on Agriculture (AoA) so that India can give more food subsidies to its poor without attracting penalties.
The AoA allows so called “market distorting subsidies” up to a limit of 10 per cent of total production. As food prices and the number of poor to be supported in developing countries have risen in the two decades since the AoA was framed, these subsidies have gone up substantially.
India is apprehensive that once the Food Security legislation, which entitles around 67 per cent of the population to 5 kg of subsidised foodgrain, is fully implemented, its food subsidies will breach the 10 per cent mark.
“India’s position on the subsidies allowed in the AoA and the limits that it could place on welfare programmes in developing countries would be a prominent part of the discussion between the Commerce Minister and the WTO Director-General,” a Commerce Department official told Business Line .
A group of developing countries at the WTO, including India and China, is lobbying hard to ensure that the Agreement on Agriculture is suitably amended at the WTO Ministerial meeting in Indonesia in December to remove limits on public stock holding and food aid.
Global effect
Concerns about India’s Food Security legislation were aired at a recent meeting of the WTO’s Committee on Agriculture, where several agricultural produce-exporting countries talked about stockholding of food by countries such as India and Thailand depressing global prices and affecting their exports.
India was specifically questioned about its wheat stocks, which have touched a record high as the Government did not allow exports for a long time despite state granaries overflowing.
“We understand the concerns that some countries have over banning commodity exports and are willing to look at it. But, we cannot allow anybody to scuttle our Food Security programmes,” said the official.
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