What are the direct and indirect subsidies provided to farm sector in India? Discuss the issues raised by the World Trade Organization (WTO) in relation to agricultural subsidies. (250 words)

Direct subsidies

• Income support such as PM-KISAN, interest subvention and compensation or disaster assistance.
• Price support through MSP procurement and input support for seeds, fertiliser, power, irrigation and crop insurance premiums.

Indirect and public-good support

• Subsidised electricity, canal water, credit, fertiliser, machinery and extension reduce cultivation costs.
• Public investment in research, roads, storage, markets, irrigation and food distribution creates farm-sector benefits not always transferred to an individual farmer.

WTO concerns

• Under the Agreement on Agriculture, trade-distorting domestic support is classified in amber/blue/green boxes; India’s administered price and procurement calculations face the 10% de minimis limit for product-specific support.
• The fixed external reference price based on 1986–88 values can exaggerate measured support when prices and inflation have changed.
• Public stockholding for food security may be challenged if stocks are procured at supported prices and exported, creating possible trade distortion.

Balanced response

India seeks a permanent solution and protection for developing-country food security. It should shift from untargeted inputs to income support, resilient infrastructure, R&D, water efficiency and transparent beneficiary databases while remaining WTO-consistent.

Keywords

MSP; amber box; de minimis; public stockholding; food security; AoA