VIDYASAGAR UNIVERSITY JOURNAL OF COMMERCE

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WTO AND INDIA: TIME FOR RENAISSANCE <strong>OF</strong> THE FARM SECTOR relationship. This theoretical concept has not worked out well in Indian economy, where one sector’s (industry) growth is on a continuous acceleration and the other sector’s (farm) growth is on a continuous deceleration. Hence, the mutual dependence has not proved prolific in the last few years. Indian farm sector is also playing a significant role in the international trade. The export of farm products constitutes a significant portion of the total exports. In percentage terms, agricultural products constituted 10.95 % of total national export in 2005-06. Indian farm sector has still not entered the phase of take-off. Besides the conventional challenges of inadequate production and less productivity, new challenges are also posing newer threats. The WTO agreement at this juncture is also enhancing the criticality of the farm sector by way of its Agreement on Agriculture (AoA) clause. The AoA clauses specifically ask for withdrawing domestic and export subsidies, and allow market accessibility to member nations. Both the internal and external challenges are issues of concern for the farm sector. Indian farm sector has not matured enough in the last few decades. The following table (Table-1) highlights the facts on probably all important characteristics viz., area, production, yield and percentage coverage under irrigation. The contemporary scenario suggests that time has come for renaissance of farm sector to meet the challenges and grab the opportunities created in the post-reform and WTO era. Table-1: All-India Area, Production and Yield of Food grains from 1991-92 to 2006-07 (along with percentage coverage under Irrigation) Area – Million Hectares, Production – Million Tonnes & Yield – Kg. /Hectare Year Area Production Yield % Coverage under irrigation 1991-92 121.87 168.38 1382 37.4 1992-93 123.15 179.48 1457 37.4 1993-94 122.75 184.26 1501 38.7 1994-95 123.86 191.50 1546 39.6 1995-96 121.01 180.42 1491 40.1 1996-97 123.58 199.44 1614 40.0 1997-98 123.85 192.26 1552 40.8 1998-99 125.17 203.61 1627 42.4 1999-00 123.10 209.80 1704 43.9 2000-01 121.05 196.81 1626 43.4 2001-02 122.78 212.85 1734 43.0 2002-03 113.86 174.77 1535 42.8 2003-04 123.45 213.19 1727 42.2 2004-05 120.00 198.36 1652 NA 2005-06 121.60 208.60 1715 NA 2006-07* 124.07 211.78 1707 NA * Advance Estimates as on 04.04.2007 Note: The yield rates given above have been worked out on the basis of production & area figures taken in ’000 units. Vidyasagar University Journal of Commerce 93
Vijay Kumar Mishra Source: Department of Agriculture and Cooperation, Ministry of Agriculture, Govt. of India. WTO and Farming – Encouraging Liberalization World Trade Organization is an internationally recognized trade organization, created by an international treaty, established in 1995. It has a legal status and has a right to enforce the rules of international trade. Its basic objective is to promote trade in the international market by the removal of barriers. India is one of the founder members of WTO and also hopes to garner the advantages associated with its association. WTO replaces GATT and promotes multilateral trade in goods, services, protection of intellectual property rights, foreign investments, etc. . It has fixed a set of rules and regulations which are mutually agreed upon by the member-nations. Agreements by member-countries are binding on all the membernations of WTO and if any member dishonours them then complaint can be lodged with the Dispute Settlement Body of WTO. India’s joining of WTO was not a bandwagon effect, it was a rational discretion based on the advantages associated with it. Economic reforms came in 1991 and Liberalization, Privatization and Globalization (LPG) process was initiated. To make the LPG process realize its full potential it was imperative to join WTO. It promises to help in the process of enhancing the foreign trade, increasing the inflow of foreign investments, inflow of better technology and most importantly the end of quota system. The biggest advantage associated with an organization like WTO is reaping the benefits of multilateral trade i.e., when a trade agreement is signed between member-countries, it promotes foreign trade of one country with all other member-countries which have signed this agreement. Before the formation of WTO, trade was bilateral whereas WTO new promotes multilateral trade. If the multilateral trading system would not have happened due to WTO then India would have to enter into separate trade agreements with each nation. The process of Indian economy’s globalization also got further momentum with WTO’s promotion of free trade through the trading agreements. India also benefitted with the inflow of foreign investments due to globalization process. WTO’s Agreement on Agriculture (AoA) talks of rules and regulations regarding trade in the farm sector products. The AoA relates to domestic subsidies, export subsidies and market access commitments. The agreement asks for withdrawing domestic and export subsidies and opening up of the national markets for international competition. To further enhance trade the agreement promotes the replacement of non-tariff barriers with tariff and the same to be progressively reduced in a stipulated time period. The basic objective regarding reducing government support (via subsidies) is to check overproduction of goods. The surplus products are generally disposed of through export subsidies and this discourages the main aim of WTO, which is free and fair trade. The subsidies issues are still under negotiations and it is hoped that a consensus would be arrived at soon. Once the level playing field is made, huge options will emerge for the growth of the farm sector. In essence, the AoA asks for liberating the farm sector from the government support to operate it optimally. 94 Vidyasagar University Journal of Commerce
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National Seminar on ‘Current Tren
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CORPORATE GOVERNANCE AND TRANSPAREN
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