Page 194 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Indian Economic Policy

Notes facts stand today, developed countries tried to circumvent this agreement by providing Green
Box and Blue Box subsidies to support agriculture.
• Earlier, Indian agricultural prices were lower than international prices mostly. But as a result of
the heavy subsidization of agricultural exports by developed countries, the situation undertook
a dramatic about-turn.
• Doha Ministerial (2001) forced the developed countries to consider issues of implementation
before undertaking consideration of new issues.
• The upshot of the entire analysis is that whereas the developed countries want to penetrate the
markets of developing countries in agriculture, they continue to use tariffs, quotas and subsidies
to help their farmers.
• Although earlier rules of GATT did apply to agriculture trade, they contained loopholes. Some
developed countries protected their costly and inefficient production of temperate zone
agricultural products (e.g., wheat and other grains, meat, and dairy products) by imposing
quantitative restrictions and variable levies on imports in addition to the high import tariffs.
• 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.
• 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.
• 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-productivity agriculture.
• Developing country members will also have the right to recourse to a special safeguard
mechanism based on import quantity and price triggers, with precise arrangements to be further
defined.

15.3 Key–Words

1. Tariff : A tax or duty to be paid on a particular class of imports or exports.
2. Export subsidies : Export subsidy is a government policy to encourage export of goods and
discourage sales of goods on the domestic market through low-cost.
15.4 Review Questions

1. Discuss the role of WTO.
2. What is the WTO agreement on agriculture? Discuss.
Answers: Self–Assessment

1. (i)(c) (ii)(b) (iii)(d) (iv)(b) (v)(a)
15.5 Further Readings

1. The Indian Economy; S.K. Ray; Prentic, Hall of India Private Limited
New Delhi - 110001.
2. Indian Economy; Gaurav Datt and Aswani Mahajan; S. Chand and Company
LTD. Ram Nagar, New Delhi-110055.

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