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Indian Economic Policy

Notes • Structural adjustment assistance provided through
— Producer retirement programmes designed to facilitate the retirement
of persons engaged in marketable agricultural production
— Resource retirement programmes designed to remove land and other
resources, including livestock, from agricultural production
— Investment aids designed to assist the financial or physical
restructuring of a producer’s operations.
• Payments under environmental programmes
• Payments under regional assistance programme
Amber Box : This category of domestic support refers to the amber colour of traffic
lights, which means ‘slow down’. The agreement establishes a ceiling on the total
domestic support that a government may provide to domestic producers.
Blue Box : Certain categories of direct payment to farmers are also permitted where
farmers are required to limit production. This also includes government assistance
programmes to encourage agricultural and rural development in developing
countries, and other support on a small scale when compared with the total value
of the product or products supported (5 per cent or less in the case of developed
countries and 10 per cent or less for developing countries).
agreement requires WTO members to cut both the amount of money they spend on export subsidies
and the quantities of exports that receive subsidies. Taking averages for 1986-90 as the base level,
developed countries agreed to cut the value of export subsidies by 36 per cent over six years starting
in 1995 whereas developing countries by 24 per cent over 10 years. Developed countries also agreed
to reduce the quantities of subsidised exports by 21 per cent over six years whereas developing
countries by 4 per cent over 10 years. Least developed countries did not need to make any cuts.
During the six-year implementation period, developing countries were allowed under certain
conditions to use subsidies to reduce the costs of export marketing and transporting.
Developing countries’ perspective of the Agreement on Agriculture
Contribution of agriculture to economies of developing countries is highly important in terms of
sustaining livelihood of a significant proportion of the population, which includes a large number of
low-income and resource-poor producers and landless agriculture labourers. This section of the
population in developing countries, including India, lacks skills and is not covered under any safety
net, which is essential for ensuring a minimal cross-sector labour mobility. Thus, the situation in
developing countries is in sharp contrast to the reality of agriculture sector in developed countries.
India and other developing countries have, therefore, been insisting that special and differential
treatment for developing countries must be integral to all aspects, including the negotiated outcome
on agriculture under the Doha Round in the WTO.
Mitigating the risks associated with price declines, price volatility, predatory competition, and other
market imperfections that low-income, resource-poor, and subsistence farmers have to face, remains
paramount. Key reasons for market imperfections include huge amounts of production and trade-
distorting subsidies provided by some developed countries to their agricultural sector. Therefore,
along with other developing countries, particularly its alliance partners in the G-20 and G-33, India
has been emphasizing that the Doha agricultural outcome must include at its core
• Removal of distorting subsidies and protection by developed countries to the level playing field
• Appropriate provisions designed to safeguard food and livelihood security to meet the rural
development needs in developing countries
Apart from insisting on appropriate policy and flexibilities to enable developing country governments
to help low-income and vulnerable producers absorb or insure themselves against risks, India has
also taken the stand that governments must be able to foster stable and remunerative prices for
domestic producers to increase productivity and gradually move away from dependence on low-

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