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Type: op-ed snap

  • Impact of Reorganisation Act on Ladakh’s autonomy

    Context

    The article deal with the impact of the passage of the Jammu and Kashmir Reorganisation Act of 2019 on Ladakh’s autonomy or participatory democracy.

    What has changed?

    • Hill Councils: The Autonomous Hill Development Councils of Leh and Kargil read along with the framework of J&K’s special status and its bicameral legislative system gave Ladakh autonomy and participatory democracy.
    • The Hill Councils had the powers over land in Ladakh while the majority of the bigger concerns regarding land remained protected under Article 370 and J&K’s robust land protection laws.
    • Power to recruit the officers: Gazetted officers were recruited through the State Public Service Commission.
    • The District Service Selection Board made recruitments at the district level.
    • But today, there is no Public Service Commission in Ladakh and the Hill Councils’ power to make recruitments at the district level has also been affected by the Lieutenant Governor (LG)’s presence.
    • No law to protect the jobs: Technically, there also exists no law in Ladakh now that protects the land or even the jobs.
    • Loss of representation: the Reorganisation Act has taken away the six seats of the Members of Legislative Assembly and the Legislative Council and wakened the functioning of the Hill Councils.
    • The only elected representation from Ladakh outside of Ladakh is a lone MP.

    Conclusion

    Steps need to be taken to address the issues related to the lack of representation in Ladakh in the wake of the passage of the Reorganisation Act of 2019.

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  • India is keeping an eye on Central Asia

    Context

    The government is inviting the leaders of the five Central Asian countries — Tajikistan, Uzbekistan, Turkmenistan, Kazakhstan and Kyrgyzstan — as guests for Republic Day on January 26.

    Significance of Central Asian region for India

    • Return of Taliban in Afghanistan: The Taliban takeover in Afghanistan has made Central Asia a region where great contestations for influence are unfolding.
    • There is a growing awareness that for leveraging influence in Kabul and harvesting that influence in the form of material gains, a firm footing in Central Asia is a prerequisite.
    • Economic dimension: Given the vast untapped mineral wealth of the region encompassing the five Central Asian countries and Afghanistan — estimated to be worth a few trillion dollars — there is a significant economic dimension to the unfolding saga.
    • Geopolitical angle: Washington hopes to create in Central Asia a vector of its Indo-Pacific strategy to contain China and Russia. At the same time, governments in Moscow and Beijing are circling the wagons.

    Suggestions for India

    • India needs to work on an intricate network of relationships with the regional states while remaining mindful of the “big picture”.
    • Delhi’s non-aligned mindset needs to be turned into a strategic asset to navigate its long-term interests.
    • India’s membership of the BRICS and SCO will help.
    • Cooperation of  Russia and China: The deepening of the traditional Indo-Russian mutual understanding has injected dynamism into Delhi’s regional strategy on the whole.
    •  It is bound to have a calming effect on India’s tensions with China.
    • Delhi cannot have an effective Central Asia strategy without the cooperation of these two big powers.
    • Regional connectivity: India can use the card of regional connectivity to stimulate partnerships.
    • The time may have come to reopen the files on the TAPI and IPI gas pipeline projects. Both involve Pakistan.
    • Normalisation of India-Russia ties: Russia is well-placed to act as guarantor and help build both these pipelines, while China too will see advantages in the normalisation of India-Pakistan ties.

    New geoeconomic partnership

    • Recently concluded third meeting of the India-Central Asia Dialogue in Delhi served a purpose to sensitise the Central Asian interlocutors that it attaches primacy to geoeconomics.
    • But India will have a challenge on its hands to flesh out the “4Cs” concept that External Affairs Minister S Jaishankar presented at the event — commerce, capacity enhancement, connectivity, and contact being the four pillars of a new geoeconomic partnership.
    • The key areas are transit and transport, logistics network, regional and international transport corridors, free trade agreements, manufacturing industry and job creation.
    • They ought to be front-loaded into India’s Central Asian strategy.
    • Certainly, the EAEU integration processes must be speeded up.

    Consider the question “With changing geopolitical scenario, India’s stake in Central Asia has drastically increased. In the context of this, examine India’s outreach efforts toward the region and the challenges it faces in it.”

    Conclusion

    A host of new possibilities open up if India’s initiative on Central Asia runs on a parallel track with an improvement in relations with China.

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  • What rising inequality means

    Context

    In the aftermath of Covid-19 pandemic, evaluating the state of inequality serves as an eye-opener on the income/wealth divides prevailing across regions.

    Income and wealth inequality in the world

    • The top 10% of the global population share 52% of the total income, while the bottom half survives with a mere 8.5% of it.
    • This leaves the 40% in the middle with 40% of the income.
    • This distribution shows the tendency of a rising middle class with lower disparity in income, but it also shows that the status of the poor is worsening day by day.
    • Inequality of wealth: In terms of wealth, the top 10% of the global population own 76% of the total wealth, while the bottom 50% share a mere 2%.
    • Some additional features of this exposition of inequality also relate to imbalance of women’s share in income as well as the ecological inequities indicated by the differential carbon emission levels.

    Factors responsible for rising inequality

    [1]  Absence of effective measures of redistribution

    • Inequality varies across regions. It is moderate in Europe and sharp in Africa.
    •  The top 10% have an income share of 36% in Europe vis-Ă -vis the top 10% with a share of 58% of the total income in West Asia and North Africa.
    • Measures for redistribution: This disparity shows that worsening inequalities are avoidable with appropriate measures in place.

    [2] The absence of measures discouraging undue accumulation

    • Kuznet’s curve not follower everywhere: While there is an argument in literature that inequalities are a manifestation of the average level of income, as explained by the Kuznets’ theory, the prevailing pattern across countries does not follow the same.
    • Average income level is poor predictor of inequality: The average income levels seem to be poor predictors of the levels of inequality, with high-income countries such as the U.S. having higher levels of inequality as against countries such as Sweden, which have moderate levels of inequality.
    • Similar contradictions are also seen when we contrast middle-income nations such as Brazil, India and China as against Malaysia and Uruguay.
    • Hence, emerging inequalities are not necessarily an outcome of rising levels of income in the post-liberalisation era, but a depiction of poor redistributive policies towards discouragement of accumulation by governments with due sensitivity towards inequalities.

    How inequality hurts government finances

    • This prevailing pattern of wealth concentration and differential levels of income around the world has also resulted in rich nations having poor governments.
    • Such a situation has two underpinnings: one, governments have a limited capacity to act on inequality aversion measures and two, private interests overshadow the distributional fairness of wealth. 

    Way forward

    • Focus also needs to be placed on reducing disparities in capability domains like education and differential endowments (tangible and intangible) that have the potential to sustain inequalities.

    Consider the question “How rising income and wealth inequality could harm us in various ways? What are the factors responsible for the rising inequality? Suggest the way forward.”

    Conclusion

    The rising levels of income and wealth need to be addresses by policy measures and reducing disparity in capacity domains.

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  • Why the Russia-West equation matters to India

    Context

    Thirty years ago this week, the Soviet Union collapsed — after seven decades of an expansive global role. Few countries have been as significant as Russia for modern India’s evolution.

    Impact of Russian geopolitics on India’s worldviews

    • Russia’s relations with the West have always had consequences for India’s international relations.
    • India’s fear of a unipolar world dominated by the US: After the collapse of the USSR in December 1991, the loss of the long-standing Soviet ally left Delhi in fears of a unipolar world dominated by the US.
    • These anxieties were accentuated by post-Soviet Russia’s quick embrace of the US and the West.
    • However, by the turn of the millennium, relations between Russia and the West had begun to sour.
    • That drew India once again closer to Russia.
    • Russia’s growing closeness to China: Moscow also roped in Beijing to build a new coalition — the RIC — to promote a multipolar world that would limit the dangers of American hyperpower.
    • Improvement in India-US relations: India’s fears of the unipolar moment turned out to be overblown and Delhi’s ties with Washington began to see rapid improvement since 2000.
    • The upswing in India’s ties with America, however, coincided with a steady downturn in the relations between Russia and the US.

    Tension between Russia and the West

    • The continuous escalation of tensions between Russia and the West culminated in the last few weeks in Ukraine — at the heart of Europe.
    • Moscow’s military mobilisation on the frontier with Ukraine — that was part of the Soviet Union until 1991 — raised alarm bells of a new war between the forces of Russia and the US-led European military alliance, North Atlantic Treaty Organisation (NATO).
    • Last week, Russia presented several proposals for a new European security architecture.
    • Moscow is calling for an end to NATO’s further eastward expansion.
    • Moscow also wants NATO to rescind its earlier promise to make Ukraine and Georgia — two former Soviet Republics — members of the military alliance.

    Major compromises between US and Russia

    • The resolution of US-Russian differences, however, involves some major compromises.
    • Russia aware of the over reliance on China: While Russia has demonstrated that its interests can’t be simply ignored by the West, it also recognises the costs of a prolonged confrontation with the US and Europe and the dangers of relying solely on China to secure its geopolitical interests.
    • Russia seeking accommodation with US and Europe: While Moscow is unlikely to abandon the partnership with China, there is no doubt that an accommodation with America and Europe is a high priority for Russia.
    • US to focus on China challenge: The US, which is now focused on the China challenge, appears interested in easing the conflict with Russia.
    • Despite its extraordinary military resources, Washington can’t afford to fight in both Asia (with China) and Europe (with Russia).

    Implications for India

    • Role of ideological sentiment: While coping with the complex dynamic of Russia’s relations with the West has been an enduring element of independent India’s foreign policy, Delhi’s thinking on Russia has too often been coloured by ideological sentiment.
    • In Delhi, the tendency is to over-determine Russia’s contradictions with the West.
    • It is not Russia’s national destiny to forever confront the West.
    • Russia’s current problems with the West are not about ideological principles.
    • It is about the terms of an honourable accommodation.
    • Prior to the 1917 revolution, Russia was a leading part of the European great power system.
    • Delhi can’t influence the new effort to build a mutually acceptable security order in Europe, but it can welcome and support it.
    • Role of Asian geopolitics: That the pressure for this attempted reset in Russia’s relations with the West is coming from Asian geopolitics is of some significance.
    • A reconciliation between Russia and the West will make it a lot easier for India to manage its own security challenges.

    Conclusion

    Delhi knows that stabilising the Asian balance of power will be difficult without a measure of US-Russian cooperation in Europe. If Moscow — at odds with the West in the last two decades — deepens its current close alignment with Beijing, it will be a lot harder to prevent Chinese dominance over Asia.

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  • Raising marriage age won’t lead to women’s empowerment

    Context

    The announcement of a cabinet decision to raise the age at marriage for women from 18 to 21 years marks the fruition of a plan that was first revealed almost two years ago when a Task Force was set up for the purpose.

    Why the age of marriage of women matters

    • Age of marriage has bearing on maternal mortality rates, fertility levels, nutrition of mother and child, sex ratios, and, on a different register, education and employment opportunities for women.
    • It is also argued that other factors — such as poverty and health services — were far more effective as levers for improving women’s and children’s health and nutritional status.

    Issues with the decision

    [1] Role of poverty neglected

    •  If women who marry at higher ages seem to have better health and nutrition indicators, this is not caused by their marrying later than others — it is because women from better-off groups tend to marry at higher ages.
    • Conversely, the health indicators of poorer women do not change just because they marry at a higher age.
    • An illustration of this truth is found in the National Family Health Survey (IV) data, which show that levels of anaemia — which is the highest cause of maternal mortality in India and one of our worst statistics — show no change even at ages of marriage up to 25 years, once we control for other factors.
    • World Bank study finds no impact on women: Population control was at the heart of the 1978 amendment to the Sarda Act of 1929.
    • Moreover, reducing fertility rates globally by banning marriage before the age of 18 years is very much on the agenda of international agencies to this very day.
    • A major multi-country study undertaken by the World Bank in 2017 estimated that “savings” of no less than $5 trillion would accrue if marriage before the age of 18 was eliminated.
    • But such savings would be mostly due to reductions in fertility and consequent reductions in public health investments due to fewer births.
    • The same study saw no significant gains from raised age of marriage for women’s decision making, for lowering the levels of violence they face, or helping them find employment.
    • Restriction on the right of an adult woman: Globally, the age of 18 is widely regarded as the age of adulthood.
    • It is also viewed as an upper limit in terms of the physical and reproductive maturity of women, as well as the age of majority by child rights conventions to which India is a signatory.
    • Thus, the proposed move will restrict the rights of already adult women, an issue for legal experts to debate.
    • Law is meant to set minimum age not the right age: Equally important is the crucial slippage in the arguments made on behalf of the government from the minimum age at marriage to the right age at marriage.
    • The minimum age is obviously a floor, not a standard or desirable norm.
    • Laws are meant to set minimum levels, a threshold for triggering legal or penal action, because of the harm that may be done.

    Way forward: Address issues that drive empowerment

    • Going by the NFHS 4 data (2015-16), more than half — 56 per cent — of women in the age group 20-24 years marry before the age of 21 years.
    • The problem is that the real reasons that drive empowerment are not being addressed, at least not adequately.
    • Educational attainments have improved enormously in recent years.
    • But the shocking fact (evident in all major data sets) is that decline in early marriages has been accompanied by a fall in women’s employment rates, that persisted even during the 1990s boom.
    • Paradoxical outcomes: The proportion of women not in paid work increases at higher ages of marriage!
    • Complex paradoxes like these are the hallmark of our society.
    • They cannot be addressed by a legal fix, particularly one that will be very hard to implement.

    Consider the question “How the age of marriage of women is connected with the issue of women empowerment? What are the concerns with increasing it to 21 years? Suggest the way forward.“

    Conclusion

    Instead of criminalising our youth, the government must take concrete steps to really empower women. If they are truly in charge of their own lives — through affordable education, meaningful and decent employment opportunities — they will be able to make better decisions about whether, when and whom to marry.

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  • MSP for all crops is fiscally unfeasible

    Context

    Many political parties are demanding to make the minimum support prices (MSP) a legal instrument.

    Background of MSP

    • MSP regime had its genesis in 1965 when India was hugely short of basic staples and living in a “ship-to-mouth” situation.
    • Indicative price: It was an indicative price (not a legal price) and procurement of rice and wheat was done to support farmers when they were adopting new seeds (HYV technology) and domestic procurement was to feed the PDS.
    • The government declares MSP for 23 crops: Seven cereals (paddy, wheat, maize, bajra, sorghum, ragi and barley), five pulses (tur, moong, chana, urad and masur), seven oilseeds (soybean, groundnut, rapeseed-mustard, sesamum, safflower, sunflower and nigerseed) and four commercial crops (sugarcane, cotton, jute and copra).

    Need to rethink procurement policy

    • But now with granaries overflowing with rice and wheat, there is a need to rethink and redesign the procurement policy.
    • In the crop year 2020-21, about 60 million metric tonnes (MMTs) of rice and 43 MMTs of wheat were procured by the Food Corporation of India (FCI) and NAFED procured about 0.66 MMTs of pulses.

    The increasing cost of PDS

    • The main procurement by the government happens largely for rice and wheat to feed the public distribution system (PDS).
    • The PDS issue prices of rice and wheat are subsidised by more than 90 per cent of their economic cost to the government.
    • In 2020-21, the food subsidy bill was almost 30 per cent of the net tax revenue of the central government, reflecting clearly a huge consumer-bias in the system.
    • Way forward: Unless this PDS is reformed either by restricting this to say the bottom 30 per cent of the population, or raising the issue prices to say half the economic cost of rice and wheat, giving a better deal to farmers is likely to blow up the fiscal position of the central government.

    The cost of legal MSP

    • Assuming that only 10 per cent of the production of remaining crops (excluding sugarcane) is procured, it will cost the government about Rs 5.4 lakh crore annually to procure these other MSP crops.
    • This cost is estimated on the basis of economic costs of operation that are usually about 30 per cent higher than the MSP (in case of rice and wheat it is 40 per cent).
    • But it appears that despite this, market prices may stay below MSP, especially during the harvest time.
    • It also raises the question why only these MSP crops, why not other agri-produce, say milk, the value of which is more than the value of rice, wheat and sugarcane combined.

    Way forward

    • PDP: One may use price deficiency payments (PDP), implying that the government pays to farmers the gap between the market price and MSP, whenever market prices are below MSP.
    • Income support instead of price support: It may be better to use an income policy on a per hectare basis to directly transfer money into farmers’ accounts without distorting markets through higher MSPs or PDPs.

    Consider the question “What are the challenges in providing the legal backing to the Minimum Support Price to the agriculture produce? Suggest the way forward.”

    Conclusion

    There is no easy substitute to “getting the markets right”. Government need to apply an innovative approach to solve the conundrum of the MSP.

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  • Disability in india

    Context

    The Draft Accessibility Standards/Guidelines recently released by the Ministry of Home Affairs (MHA) for built infrastructure under its purview (police stations, prisons and disaster mitigation centres) and services associated with them assume significance.

    What are the provisions under the Standards?

    • Models for police stations: The Standards set out models for building new police stations as well as improving upon existing police stations and prisons that are modern, gender sensitive and accessible.
    • The Standards speak to the need to make the websites and institutional social networks of police stations accessible, ensuring that persons with disabilities accused of committing any crimes are treated appropriately, having disabled-friendly entrances to police stations and disabled-friendly toilets.
    • Inclusive police force: the Standards state that the police staff on civil duty could be persons with disabilities.
    • Equal protection during natural disasters: Acknowledging that persons with disabilities must receive equal protection as others in such situations, the Standards provide direction on disability inclusion in disaster mitigation, preparedness, response and recovery efforts.
    • They also stress on disability inclusive training for persons involved in disaster relief activities, data aggregation, use of information and communication technology (ICT) and enforcing accessible infrastructure models for schools, hospitals and shelters following the principle of universal design.
    • Accessibility norm: The Standards introduce accessibility norms for services associated with police stations and prisons.
    • These norms promote the use of ICTs to facilitate communication, development of police websites, app-based services for filing complaints, making enquiries, etc., as well as encouraging the use of sign language, communication systems such as Braille, images for persons with psycho-social disabilities, and other augmentative and alternative modes of communication.

    Shortcomings of the Standards/norms

    • Accessibility of signage not ensured: The Standards call for the deployment of directional signage regarding accessibility features in the MHA’s physical infrastructure as well as to indicate the location of accessible toilets.
    • However, they do not require that such signage itself be accessible to the visually challenged, such as through auditory means.
    • Certain accommodations merely recommendatory: The Standards characterise several reasonable accommodations that are necessary for the disabled as being merely recommendatory.
    • These include having trained police personnel in every police station to assist persons with disabilities and placing beepers at all entrances to enable the visually challenged/blind to locate themselves.
    • Lack of detail on human assistance: In the case of Patan Jamal Vali, the Court suggested connecting special educators and interpreters with police stations to operationalise the reasonable accommodations embodied in the Criminal Law (Amendment) Act, 2013.
    • While the standards do require developing a mechanism to provide human assistance to the disabled such as sign language interpreters, they are short on specifics on this count.
    • Lack of representation: Interestingly, the Standards state that the police staff on civil duty could be persons with disabilities.
    • This is inconsistent with the Office Memorandum issued by the Department of Empowerment for Persons with Disabilities on August 18, 2021, according to which the Centre has exempted posts in the Indian Police Service; the Delhi, Andaman and Nicobar Islands, Lakshdweep, Daman and Diu and Dadra and Nagar Haveli Police Service; as well as the Indian Railway Protection Force Service from the mandated 4% reservation for persons with disabilities in government jobs.

    Conclusion

    In sum, the Standards, when enacted into law, will mark a huge step forward in making our law enforcement apparatus more disabled-friendly. Bolstering the Standards further, by incorporating the suggestions flowing from well- thought-out public comments, will take us closer to the aim of ensuring that India’s disabled citizens truly have the police they deserve.

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  • Tackling agricultural reforms after farm laws repeal

    Context

    In the run-up to the repeal of the three farm laws, the potential cost of MSP to the taxpayers became a matter of debate.

    Issue of MSP

    • Large variation: Experts and agricultural economists quoted numbers about the cost of MPS.
    • There is a large variation in the quoted numbers.
    • The enormity of the variance in estimates is astounding.
    • No consensus on the number of beneficiaries of MSP: There is also a dissonance between the NSSO data and the administrative data on the number of farmers who enjoy MSP.
    • No consensus on a formula to calculate MSP: Further, there is no consensus on the formulae for the calculation of MSP.

    Suggestions on land reforms

    [1] Reduce high domestic prices

    • That India is an agri-surplus country.
    • That domestic prices of agri-commodities are often higher than in the international market and therefore, there is a need to bring them down.
    • How to achieve cost reduction: Cost reduction can happen either by creating efficiencies by plugging leakages or, by cost-cutting — including reducing farmers’ margins.
    • In the recently-reached understanding with the farmers, the government has agreed to constitute a committee on MSP.
    • Hopefully, a formula can be arrived at by which costs of domestic agricultural produce can be reduced while ensuring a “remunerative price” for the farmers.

    [2] Protecting landholdings

    • There is also a need to protect landholdings.
    • Farmers’ fears in this regard are not exaggerated.
    • Under the erstwhile laws, orders of payment made by an SDM/Collector could be recovered as “arrears of land revenue”.
    • While agricultural lands were protected from such recovery, non-agricultural (immovable and movable) assets appeared to be fair game.
    • Further, circumstances such as sustenance and payment of debts could force a farmer to sell their agricultural landholdings.
    • Large-scale loss of landholdings could lead to their consolidation in the hands of a few.
    • This could have the impact of turning the clock back, reminiscent of the Zamindari system.

    [3] Need to reconsider the dispute resolution mechanism

    • The government should also reconsider the dispute resolution mechanism provided in the erstwhile laws.
    • In an MSP driven regime, the government is likely to be a party in any potential dispute.
    • Conflict of interest: There will be a direct conflict of interest since the SDM/Collector is an arm of the government.
    • Land records are within the jurisdiction of the patwari and tehsildar, who report to the SDM/Collector.
    • Fast track courts: It would be advisable to think in terms of fast-track courts, and remove the provision of recovery through arrears of land revenue.
    • It would also be advisable to have only one dispute resolution mechanism for all farm laws.

    [4] Avoid over-corporatisation without the creation of the requisite efficiencies

    • We should not ask our farmers to brave corporatisation without levelling the playing field and enough jobs in the non-agricultural sector.
    • Over-corporatisation without the creation of the requisite efficiencies could lead us to become heavily import-dependent, killing the benefits of the Green Revolution.

    Conclusion

    Perfunctory reforms and those that don’t work for all constituents — corporates as well as farmers — could have long-term deleterious effects for not only the agricultural sector, but the economy as a whole.

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  • Issues with summoning CEC, EC to PMO

    Context

    The Chief Election Commissioner and two Election Commissioners were summoned by the PMO to attend a meeting with the Principal Secretary to the PM.

    Why the meeting raises questions?

    • The PMO summoning or “inviting” not just the CEC but the full bench is in violation of the Constitution, irrespective of how important or urgent the issue.
    • Violation of the principle of distancing from executive: When a person is appointed as CEC or EC, that person has to resign from his executive post in order to adhere to important constitutional principle of distancing from the executive/government.
    • The executive could appoint a person to these posts but could not order them, or remove me because of the constitutional scheme of things.
    • Violation of independence: An independent ECI is a gift of the Constitution to the nation. Free and fair and credible elections are sine qua non of the EC.
    • The Supreme Court has repeatedly stressed this point, calling it part of the basic structure of the Constitution.
    • Violation of warrant of precedence: The CEC is very high in the warrant of precedence — ninth, while the PS to PM is 23rd.
    • How can such a high constitutional functionary be summoned to attend a meeting with an officer, howsoever high and mighty?
    • It raises suspicions:  A meeting of the PS to the PM, formal or informal, online or in the PMO or ECI, just before elections raises unnecessary suspicions.

    Conclusion

    This incident is a transgression that should not happen again. The distance of an arm’s length in interactions between institutions envisaged in the Constitution is sacrosanct. It should not only be maintained but also “seen” to be maintained.

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  • The WTO’s challenge to MSP

    Context

    Amid the demand for legal backing to MSP, the question remains about whether India can provide a legal guarantee violating its international law obligations enshrined in the Agreement on Agriculture (AoA) of the World Trade Organization (WTO)?

    Classification of subsidies under AoA: Trade distorting and non-trade distorting

    • The objective of AoA: One of the central objectives of the AoA is to cut trade-distorting domestic support.
    • Three categories: In this regard, the domestic subsidies are divided into three categories: ‘green box’, ‘blue box’ and ‘amber box’ measures.
    • Non-trade distorting: ‘Green box’ subsidies (like income support to farmers de-coupled from production) and ‘blue box’ subsidies (like direct payments under production limiting programmes subject to certain conditions) are considered non-trade distorting.
    • Countries can provide unlimited subsidies under these two categories.
    • Trade-distorting subsidies: Price support provided in the form of procurement of crops at MSP is classified as a trade-distorting subsidy and falls under the ‘amber box’ measures, which are subject to certain limits.

    So, how do countries measure ‘amber box’ support?

    • Compute AMS: To measure ‘amber box’ support, WTO member countries are required to compute Aggregate Measurement of Support (AMS).
    • AMS is the total of product-specific support (price support to a particular crop) and non-product-specific support (fertilizer subsidy).

    Understanding the  de minimis limit

    • Under Article 6.4(b) of the AoA, developing countries such as India are allowed to provide a de minimis level of product and non-product domestic subsidy.
    • This de minimis limit is capped at 10% of the total value of production of the product, in case of a product-specific subsidy; and at 10% of the total value of a country’s agricultural production, in case of non-product subsidy.
    • Subsidies breaching the de minimis cap are trade-distorting.

    Possibility of India overshooting the de minimis limit

    • Relation between MSP and AMS: The procurement at MSP, after comparing it with the fixed external reference price (ERP) — an average price based on the base years 1986-88 — has to be included in AMS.
    • Widening gap between ERP and MSP: Since the fixed ERP has not been revised in the last several decades at the WTO, the difference between the MSP and fixed ERP has widened enormously due to inflation.
    • According to the Centre for WTO Studies, India’s ERP for rice, in 1986-88, was $262.51/tonne and the MSP was less than this.
    • However, India’s applied administered price for rice in 2015-16 stood at $323.06/tonne, much more than the 1986-88 ERP.
    • Procuring all the 23 crops at MSP, as against the current practice of procuring largely rice and wheat, will result in India breaching the de minimis limit making it vulnerable to a legal challenge at the WTO.
    • Even if the Government does not procure directly but mandates private parties to acquire at a price determined by the Government, as it happens in the case of sugarcane, the de minimis limit of 10% applies.

    Way forward

    • Peace clause: Although a permanent solution is nowhere in sight, the countries have agreed to a peace clause.
    • The peace clause forbids bringing legal challenges against price support-based procurement for food security purposes even if it breaches the limit on domestic support.
    • The peace clause is applicable only for programmes that were existing as of the date of the decision and are consistent with other requirements.
    • India’s procurement for rice and wheat, even if it violates the de minimis limit, will enjoy legal immunity.
    • However, India will not be able to employ the peace clause to defend procuring those crops that are not part of the food security programme (such as cotton, groundnut, sunflower seed).
    • Move from MSP to income-based support: Arguably, India can move away from price-based support in the form of MSP to income-based support, which will not be trade-distorting under the AoA provided the income support is not linked to production.
    • Supplement price-based support with income-based support: Alternatively, one can supplement price-based support (keeping the de minimis limit in mind) with an income-based support policy.

    Conclusion

    The Government needs to engage with the farmers and create an affable environment to convince them of other effective policy interventions, beyond MSP, that are fiscally prudent and WTO compatible.

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