80% of Agri. Subsidies go to Corporates.

WTO Guidelines Cap Agricultural Subsidies at 10% ..

World Food Day 16 October

Observed by All UN Member States

Date.. 16 October

Next time..     16 October 2014

Frequency..   annual

World Trade Organizations' (WTO) guidelines cap agricultural subsidies at 10 per cent of the production for most developing countries. And considering that India's food bill is expected to cover almost 2 / 3rd of the population the subsidy figure may breach the cap.

This could distort the agricultural markets worldwide. US and EU fear that these subsidized food grains will be shipped outside as against domestic consumption. And this may not be in the interest of their farmers.

As such, they are opposing the India's food subsidy programme. However, India is looking to sign a treaty that may give it a breather from the WTO law. But, what is surprising is the opposition from the West which itself gives farm subsidies that in value terms are at least 5 (Five) times India's subsidy program.

Their mode of subsidy is different than India and hence within WTO guidelines. However, their opposition to India's Food Security Bill is something which may not have gone well with the central government.

One may say that India should stand up against the dubious practices of the West; which understandably aim at protecting their trade interest. There is an argument that India's model of direct cash subsidy distorts markets. This is because government procures food at market price and sells it below that. In that case, farmer associations across the country have questioned the way the subsidies get doled out in West.

Over there 80 % of agricultural subsidies go to corporates. And the rationale of subsidies is to benefit the poor farmer and not corporates. Thus, there is a demand to withdraw such kind of subsidies.

At least, India's subsidy mechanism benefits the poor while that in the West goes to corporates.

While the government may have turned deaf ears to such argument now we believe it will do whatever it can to get rid of this external pressure by any means. Not only because the Food Security Bill is government's primary agenda. It's also because the bill can change India's political landscape.

As we have said earlier, the Food Security Bill could seal the possibility of the government getting India's fiscal position back in shape. While the intent of the bill is sound, the manner and extent of implementation leaves enough scope for corruption.

So, whether it is opposition from the US or the WTO, anything that forces the government to rethink its fiscal profligacy plans is a positive according to us.

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