Scenario of Indian Agriculture In the context of WTO Regime - A critical Evaluation

7/24/2019 Scenario of Indian Agriculture In the context of WTO Regime - A critical Evaluation

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Presented by

SHRAYA SHRIVASTAVA

Ph. D. in Business Management

11PHBM209

Under Supervision of

Dr. Sarita Maxwell

Assistant Professor

Scenario of Indian Agriculture

In the context of WTO Regime - A critical Evaluation


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OBJECTIVES

The study has the following obectives in mind!To study the "re-emergence scenario of the WTO#To analyse the structure and functions of the World Trade

organi$ation#To analyse the com"onents of the Indian agriculture%allied

sector#To closely examine the im"act of the WTO-AoA on the

Indian agriculture


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To study the "re-emergence

scenario of the WTO#


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Evolution of the WTO

Predecessor of the WTO The GATT 47

The General Agreement on Tariffs and Trade (GATT)1947 -the first major effort to establish Internationalrules governing trade in goods.

It as a !rovisional legal instrument" it endured foralmost #$ %ears.

It fun&tioned ithout a formal organi'ationalframeor to oversee its im!lementation as the

!ro!osed International Trade rgani'ation (IT).


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The Uruguay Round !"#$%!""&'The results of the Uruguay Round UR' (ere signed in

)arra*e+h, )oro++o on !-thA.ril !""& /The WTO+a0e into e1isten+e on !st2anuary/ The Single Undertaking concept The 0ultilateral

trade agree0ents under the WTO syste0 are treated as a

single underta*ing (hi+h 0eans that every 0e0ber state ofthe WTO is a .arty to every one of these agree0ents and0ust i0.le0ent the0 a++ordingly/


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To analyse the structure and functions of the World

Trade organi$ation#


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What is the WTO3The World Trade Organisation WTO'

Established on !st2anuary !""-As a result of the Uruguay Round negotiations !"#$%!""&'

4o+ated in 5eneva, S(it6erland

)e0bers7 !$! +ountriesAt its si0.lest7

8A global organi6ation dealing (ith rules of tradebet(een nations9/

The head:uarters of the World TradeOrgani6ation in 5eneva, S(it6erland/

;ire+tors%general%Roberto Azevedo, ?Presentsour+e7 WTO'


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The WTO@s fun+tions Ad0inisters the WTO Agree0ents and fa+ilitates their

o.eration and i0.le0entation Provides a foru0 for trade negotiations a0ong 0e0ber

states on 0atters +overed by the Agree0ents and forfurther liberalisation of trade a0ongst 0e0bers

Res.onsible for the settle0ent of dieren+es and dis.utesbet(een 0e0bers Res.onsible for .eriodi+ revie(s of the trade .oli+ies of

0e0bers Also .rovides te+hni+al assistan+e and training for

develo.ing +ountries

Boo.erates (ith other international organisations onsubCe+ts of 0utual interest


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To analyse the com"onents of the

Indian agriculture%allied sector#


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Components of Indian Agriculture/Allied Sector

SUGA I!"UST# I! I!"IA

Sugar industry is an im"ortant agro-based industry that im"acts rural

livelihood of about &' million sugarcane farmers and around & la(h

wor(ers directly em"loyed in sugar mills# Em"loyment is also generated in various ancillary activities relating to

trans"ort) trade servicing of machinery and su""ly of agriculture in"uts# India is the second largest "roducer of sugar in the world after *ra$il and

is also the largest consumer#


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SUGA I!"UST# I! I!"IA

=

-==!===!-==-==

&===

Total Sugar Produ+tion Duantity in la*h Tons' Produ+tion ofSugar+ane

Total Sugar Produ+tion Duantity in la*h Tons' Produ+tion ofSugar

Source$ !ational %ederation of Cooperati&e Sugar %actories 'imited(

Cooperati&e Sugar( !o&em)er(*+,-( p.*



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%indings of sugar Industr0

Today Indian sugar industry+s annual out"ut is worth a""roximately ,''''

crores Sur"lus "roduction over domestic consum"tion in the last three sugar

seasons and low ex"orts due to subdued international sugar "rices have led to

building u" of sugar stoc(s with the mills and low reali$ation from sale of sugar#

This has adversely affected the financial health of the mills and resulted inaccumulation of cane "rice arrears#

E1E"IES O! T2E POB'E1S O% I!"IA! SUGA I!"USTIES

To restart closed mills

To encourage ex"orts


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Indian "air0 Sector3An emerging Industr0

India emerged as the largest "roducer of mil( in the world .il( emerged

as one of the biggest contributors to the value of agricultural out"ut in the

country# These encouraging trends in mil( "roduction were a""arent as early as

the /01's following the emergence and re"lication of the A.23 ty"e ofcoo"eratives in the country # Subse4uently growing at an ex"onential rate)

mil( "roduction was /'' million tonne mar( in 5''6-'1 and in financial

year it crossed /7' million in 5'/5-/7#



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%indings of "air0 The 8er ca"ita availability of mil( also im"roved) but it continues to be only 50'

grams "er day 9in financial year 5'//-/5:) as com"ared to the world average of5,& grams# ;et) the mil( yield in the country remains one of the lowest in the

world even today# The # The antici"ated mil( "roduction in the country for the year 5'/7-/= is

about /7, million tonnes# This re"resents a sustained growth in the availability of

mil( and mil( "roducts for growing "o"ulation#


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S4are of agriculture and allied sectors in t4e G"P

The agriculture and allied sectors contributed a""roximately /7#0> of India+s

?


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Ac4ie&ement under Price Support Sc4eme 5PSS6$


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P4armaceutical Industr0 in IndiaThe history of IndiaCs "harmaceutical industry and the role "layed by

multinational cor"orations 9.@s: and Indian com"anies are well (nown#


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They too( advantage of the "atent system to im"ort these rather than to

manufacturing the drugs in the country and charge exorbitant "rices "reventing

com"etition# The industry actually develo"ed since the /01's after India abolished

"roduct "atents in "harmaceuticals essentially through the efforts of indigenous

com"anies#

%indings


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To closely examine the im"act of the WTO-AoA on

the Indian agriculture


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Agreement on Agri&ulture (AoA)

To establish a fair and maret oriented agri&ultural

trading s%stem through substantial !rogressive

redu&tion in agri&ultural su!!ort and !rote&tionresulting in &orre&ting and !reventing restri&tions and

distortions in orld agri&ultural marets


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The Agreement on Agriculture 9AoA: is an international treaty of the World TradeOrgani$ation# It was negotiated during the 2ruguay Round of the ?eneral

Agreement on Tariffs and Trade) and entered into force with the establishment of

the WTO on Danuary /) /00

Agreement on Agric$lt$re

The Agreement on Agriculture has three "illarsdomestic su""ort) mar(et

access) and ex"ort subsidies#

"omestic support

The first "illar of the Agreement on Agriculture is Fdomestic su""ortF# The WTO

Agreement on Agriculture negotiated in the 2ruguay Round 9/0,6G/00=:

includes the classification of subsidies into FboxesF de"ending on their effects on

"roduction and trade! amber 9most directly lin(ed to "roduction levels:) blue

9"roduction limiting "rogrammes that still distort trade:) and green 9minimal

distortion:# While "ayments in the amber box had to be reduced) those in the

green box were exem"t from reduction commitments#


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In WTO terminology) subsidies in general are identified by

Hboxes which are given the colours of traffic lights! green9"ermitted:) *lue 9slow down i#e# be reduced:)

Amber -9 Borbidden: ?reen *ox - Research) Extension) 8


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Domestic suortDomestic suort

The negotiations on domesti& su!!ort should in&lude the folloingelements*

+ubstantial redu&tions in all forms of domesti& su!!ort should be

undertaen b% the develo!ed &ountries.

+ubsidies e,&luded from the dis&i!line introdu&ed b% the AoA" i.e.

those a!!earing in the lue o,/ and the Green o,/" need to be

re-assessed" !arti&ularl% from the !oint of vie of their influen&e on

!rodu&tion.


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!xort Su"sidies!xort Su"sidiesThe negotiations on e,!ort subsidies should in&lude the folloing

issues*

K 0ountries using e,!ort subsides should !hase out this form of

farmer su!!ort ithin to %ears of im!lementation of the

revised dis&i!lines to be folloed b% &ountries in the

agri&ultural se&tor.

K ,!ort subsidies dis&i!line should in&lude all forms of s!ending

that enhan&es the &a!a&ities of e,!orters to in&rease trade" e.g.

e,!ort &redit" guarantees and insuran&e !rogramme2s.


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INDIA SEEKS

8rotecting our food and livelihood security by having sufficient

flexibility for domestic "olicy measures#

8rotecting domestic "roducers from the surge in im"orts or

significant decline in im"ort "rices#

Substantial reduction in ex"ort subsidies and domestic su""ort to

agriculture in the develo"ed countries for greater mar(et access to

"roducts of develo"ing countries#

Binally) a more e4uitable L fair trading framewor( forAgricultural commodities

.ARMET A@@ESS ISS2ES @A OT *E SEE I ISO3ATIO TO

S2*SI


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1ar7et access

.ar(et access refers to the reduction of tariff 9or non-tariff: barriers to trade by WTOmembers# The /00& Agreement on Agriculture re4uired tariff reductions of!

76> average reduction by develo"ed countries) with a minimum "er tariff line

reduction of /&> over six years#

5=> average reduction by develo"ing countries with a minimum "er tariff line

reduction of /'> over ten years#

3east develo"ed countries 93 9by value: or by

5/> 9by volume: over six years# Bor develo"ing countries) the re4uired cuts were

/=> 9by volume: and 5=> 9by value: over ten years

E8port su)sidies


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!xort Su"sidies!xort Su"sidiesThe negotiations on e,!ort subsidies should in&lude the folloing

issues*

K 0ountries using e,!ort subsides should !hase out this form of

farmer su!!ort ithin to %ears of im!lementation of the

revised dis&i!lines to be folloed b% &ountries in the

agri&ultural se&tor.

K ,!ort subsidies dis&i!line should in&lude all forms of s!ending

that enhan&es the &a!a&ities of e,!orters to in&rease trade" e.g.

e,!ort &redit" guarantees and insuran&e !rogramme2s.


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Agriculture is the bac(bone of the Indian economy# Agriculture sector "rovides em"loyment to around 6& >of the total wor(

force in the country# The significance of agriculture in the national economy can be best

ex"lained by considering the role of agriculture under different heads#


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Indian Agriculture and pattern of Emplo0ment in t4e Countr0$

Place of agriculture in t4e national econom0

Absol$teTotal Agric$lt$ral

7abo$rers

Total Rural Urban

"ersons !&,&>,=,$ ,!=,!!-8emales $,!-,#",< -,"=,$&,

Source! @ensus of India) 5'// 9Binal


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Importance of Agriculture for Industrial "e&elopment$


Indian agriculture has been the source of su""ly of raw materials to our leading

industries# e#g# @otton and ute textile industries) sugar) vanas"ati and

"lantations) all these de"end on agriculture directly# There are many other industries which de"end on agriculture in an indirect

manner# .any of our small scale and cottage industries li(e handloom weaving)

oil crushing) rice hus(ing etc#


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ole of Agriculture in t4e %ield of International Trade$


main items of ex"orts of India can be categori$ed in two forms one is

Agriculture "roducts li(e-Tea) Sugar) Oilseeds) Tobacco) S"ices) etc# Second one is manufactured goods such as Dute cloth and sugar#

They combined contributes 1'> of Indian ex"orts


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depend upon agriculture for t4eir ra9 materials3 toget4er t4e0account for :+ per cent of income generated in t4e manufacturing

sector in India.

Broadl0 spea7ing( t4e proportion of agricultural goods 94ic4

9ere e8ported came to :+ per cent of our e8ports( and

manufactures 9it4 agriculture content 5suc4 goods as

manufactured ;ute clot4 and sugar6 contri)ute anot4er *+ per

cent or so< and total comes to =+ per cent of India>s e8ports. T4e

Tent4 plan estimates t4at agriculture contri)utes ,-.= per cent of

total e8port earnings. T4is 4as great significance for economic

de&elopment. %or increased e8ports 4elp t4e countr0 to pa0 for

t4e increased imports of mac4iner0 and ra9 materials.


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ole of Agricultural Sector in Economic Planning$


In India+s trans"ort system li(e railway L roadways Agriculture "lay

im"ortant role in the national economy#


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K In the "ast two decades) India has emerged as one of the fastest growing maor

economy among the develo"ing economies of the world#K International trade has resulted into increased national income and em"loyment

and also the living standard of "eo"le of India) where the role of ex"orts

generating investible sur"lus and financing im"orts by earning foreign exchange#K India+s ex"ort sector has observed much change in the "ast two decades and the

creation of WTO has significantly im"acted its ex"orts#

K WTO regime and also ex"lores "olicy direction to enhance India+s ex"orts#K So far discussion on the various as"ects of AoA and its im"lications on the Indian agricultural sector# It can be said that the trade system ex"ort growth was not

only affected by WTO rule based system but also considerably influence by domestic economic "olicy reforms and International economic environment#

K The outcome of AoA has not been beneficial to the develo"ing countries as was ex"ected or "redicted in early /00's# This is not only due to increase in agriculture

subsidy but rise in use of non-tariff measures# umerous distortions and mar(et access barriers) "resent in the develo"ed countries have adversely affected the

agricultural ex"orts of the develo"ing countries#K After /006) the world "rices of agricultural commodities started falling and it made a dent in the com"etitiveness of India+s ex"orts and a slowdown of growth in

agricultural ex"orts was ex"erienced#

CO!C'USIO!


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REBO))E;ATIOS

Developing countries cannot afford to be silentspectators.

THE DEVELOIN! "O#NT$IES %#ST

"OLLE"TIVEL& TAKE A STAND ON THE'OLLO(IN!)*

"Zero-tolerance" on agricultural subsidies

estoration of ?uantitati&e estriction$


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Scenario of Indian Agriculture In the context of WTO Regime - A critical Evaluation

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