The European Union seems to be more worried than India about how Prime Minister Narendra Modi plans to double farm income without resorting to trade-distorting subsidies. In a questionnaire submitted to the World Trade Organization’s agriculture committee by member governments, the EU is wondering how India’s farm incomes could be boosted in the backdrop of low prices.

The US has specifically raised questions on India’s export subsidy for non-basmati rice, and its continued state purchases of grains at rising government-mandated prices despite record output. The suggestion seems to be that

India wants to fund a bumper crop for its surplus stock to be dumped in overseas markets. However, such accusations by rich countries are not new, and are often used as a ruse to skirt uncomfortable questions on their own massive support to the farm sector.

In India’s own questionnaire submitted to the committee, which holds its quarterly meeting on 25-26 June, the country has slammed the US 2018 Farm Bill, arguing that the legislation not only aids farmers, but also their first

cousins, nieces and nephews, with children and spouses qualifying for $125,000 payouts. India’s farm subsidies are tiny when compared to the budgetary support that the West provides its farmers. Besides, the minimum support price mechanism is key to incentivising production as India is obliged under a law to provide ultra-cheap foodgrains to two-thirds of its poorest people. Also, there has been no evidence so far to suggest that India floods

global markets with its produce, distorting trade dynamics. India, as a developing economy, is well within its rights to protect its most vulnerable.


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