In India the product-specific supports is negative, while the non-product specific support like subsidies on agricultural inputs, such as, power, irrigation, fertilizers etc., is well below the permissible level of 10 per cent of the value of agricultural output. Therefore, India is under no obligation to reduce domestic support currently extended to the agricultural sector. Yet, subsidies are wisely considered burden in India and they are being rationalized. On the other hand, domestic subsidies in OECD countries during 2002 accounted for about US$ 226.5 billion, which has increased to US$279.5 billion in 2004. United States spent US$4 billion as subsidy to support its 25,000 cotton producers (US$160, 000 per producer) in 2003. It is also argued that in countries such as United States, subsidies are enjoyed by a selected few, mostly producing corn, wheat, cotton, soybean, and rice, while growers of 400 other crops hardly get any such subsidy. Because of income and price support programs, the farmers in OECD countries are reported to use high levels of pesticides, fertilizers and herbicides in order to increase productivity of the land and maximize profits. But, these acts also lead to pollution of rivers and lakes. Therefore, in overall assessment, it is argued that the social benefits of subsidies may be much less and deserve to be curtailed. Subsidy constitutes almost 54 percent of the agriculture value added in OECD as compared to seven per cent in India. Opposition to subsidy is also from within than outside.
The population dependency on farm is extremely thin in these countries. It is not like India, where more than 60 per cent of the population depends on farm. In OECD countries the farmers can easily switch to better options quickly as demonstrated in New Zealand, which was heavily subsidizing its sheep farmers until 1984. The sheep farm subsidy was completely removed within a span of one year after 1984 and today New Zealand is one of the least subsidized countries among OECD countries, with a subsidy incidence of just about 0.3 billion (3 per cent of total farm receipt as compared to 30 per cent in OECD)5 in 2004.
Post Contributed by:
Miss Kaushiki Brahma
Assistant Professor of Law
Indian Institute of Legal Studies
