- India’s farm input subsidies, including sops for fertilizers, electricity and irrigation, have increased by a sharp 50% to $48.13 billion in 2022-23 from $32.07 billion in the previous fiscal, as per notifications of the country at the WTO.
- The EU, the U.K. and the U.S. raised concerns and called for greater transparency at a recent peer group review meeting of the WTO.
- Recently, The Cairns Group also claimed that India’s public stockholding (PSH) program is heavily subsidized.
- New Delhi explained the input subsidies are mainly for power, irrigation and fertilizers, and the increase was due to inflation and rising costs of fertilizers.
- Input subsidies are part of the Amber box subsidies that distort international trade. WTO limits these subsidies by capping it at 5% for developed countries and 10% for developing countries.
- Agricultural input subsidies, targeted towards low-income and resource-poor farmers, are exempt from limits on domestic subsidies under the carve-out of special and differential treatment measures offered to developing nations under WTO rules.
- As India has declared that 99.43% of farm holdings in the country are of low-income or resource-poor farmers (per the Agricultural Census for 2015-16), its input subsidies are excluded from capping.
- There is more peer group scrutiny on input subsidies also because it is not capped and can be increased without limits.
Dig Deeper: Read about the Classification of subsidies under WTO like Green and Blue along with Amber Box. What is Cairns group?
