Discuss the different types of subsidies and supports provided by the Government of India to agricultural sector. Examine the related issues pertaining to Agreement on Agriculture of World Trade Organisation (WTO).
Agriculture supports 45% of the workforce; government subsidies remain essential for input affordability, income security and food security.
Types of Subsidies and Supports:
A. Input Subsidies:
- Fertiliser subsidy — urea sold below cost; Nutrient-Based Subsidy (NBS) on P&K fertilisers (~₹1.75 lakh crore in 2024-25).
- Power and irrigation — free/subsidised electricity for pumps; canal-water charges below O&M.
- Seeds — subsidised certified/hybrid seeds via NSC, SFCI.
- Credit — interest subvention (2% + 3% prompt repayment) making crop loans effectively at 4%.
- Insurance — PMFBY premium subsidy.
- Machinery — under SMAM.
B. Output/Price Support:
- Minimum Support Price (MSP) for 23 crops; FCI procurement mainly of rice and wheat.
- PM-AASHA covering PSS, PDPS, PPSS for pulses/oilseeds.
- Market intervention for horticulture.
C. Income Support:
- PM-KISAN — ₹6,000/year DBT to landholding farmers.
- State schemes (Rythu Bandhu, KALIA).
D. Infrastructure Support:
- Agri-Infrastructure Fund, warehousing, cold chains, e-NAM.
WTO Agreement on Agriculture — Issues:
The AoA (1995) has three pillars: Market Access, Domestic Support, Export Subsidies.
- Domestic Support boxes: Green Box (non-distorting, unlimited), Blue Box, Amber Box (trade-distorting, capped at 10% of value of production for developing countries — de minimis).
- Aggregate Measurement of Support (AMS) issue: MSP for rice repeatedly exceeds 10% cap; India invokes the Bali Peace Clause (2013) for public stockholding.
- Public Stockholding for Food Security: developed countries object; India seeks a permanent solution, unresolved since Nairobi/Buenos Aires.
- Historical inequity: developed countries retain massive Green Box support (US Farm Bill, EU CAP) while capping developing-country flexibility.
- Cotton subsidies by US distort global prices.
- Special Safeguard Mechanism (SSM) for import surges — pending.
India's stance: food security is non-negotiable; reforms must correct historical asymmetries.
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