WORLD TRADE ORGANISATION : IMPACT ON INDIANAGRICULTURE

ST. ANDREWS COLLEGE OF ARTS, SCIENCE AND COMMERCE

BANDRA (W), MUMBAI 400050.

PROJECT TITLE IN UPPER CASE Submitted for the Course ECONOMICS OF GLOBAL TRADE IN SEMESTER I MASTER OF COMMERCE PROGRAMME OF THE UNIVERSITY OF MUMBAI BY STUDENTS NAME:STEFFI LEITAO

ROLL NO: 9011

UNDER THE GUIDANCE OF GRACELLIA TAVARES 2013 -2014

DECLARATION

I hereby declare that this project report entitled ______________________________________________________________ which is being submitted in partial fulfilment of the requirement of the course on HUMAN RESOURCES MANGEMNT to the award of the Master of Commerce Degree by the University of Mumbai is the result of the research carried out by me under the guidance and supervision of Dr./Prof. ______________________.

I further declared that I have not previously submitted this project report to any other institution/university for any other degree/ diploma or for any other person.

Date:

Place: Mumbai

Signature of Student

CERTIFICATE

It is certified that this project title has been prepared and submitted by STEFFI LEITAO Roll no 9011 under my guidance during the academic year 20132014.

Date:

Signature (Dr. ________________

Place:
Signature of the Internal Examiner Signature of the External Examiner

(AssociateProfessor)
Signature of the P

ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide professor Gracellia Tavares for monitoring and encouraging me throughout of this thesis. I am thankful to the University of Mumbai for offering the project in the syllabus. I must mention my hearty gratitude towards my family, other faculties and friends who supported me to go ahead with the project

Index Sr.No.
Chapter I 1.1 1.2 1.3 1.4 1.5 1.6 Chapter 2 2.1 2.2 2.3 2.4 2.5 Chapter 3 3.1 3.2 3.3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 WTO Introduction Functions Objectives Advantages Disadvantages The Millennium Development Goals Agriculture Importance AoA History of AoA WTO Agreement Implications of WTO Agreement Case study :impact of WTO on Indian Agriculture Role of WTO in Indian Agriculture Impact of Polices Criticism Suggestion Limitations Conclusion Annexures Bibliography

Topic

Page No.
7 7 10 11 12 14 15 16 16 18 18 19 20 22 25 26 29 30 32 34 35 38

CHAPTER 1 Definition of 'World Trade Organization - WTO' An internationalorganization dealingwith the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably, and freely as possible. INTRODUCTION: The World Trade Organization (WTO) was established in 1995. As of the 15th of December, 2005, there were 153 member countries. In the WTO, agreements are made on trade between countries. The GATT agreement which means that countries have to lower barriers to international trade, such as tax on goods crossing8 borders. This means that businesses can operate in many different countries. There are about 30 such agreements. Based on these agreements, the member countries trade with each other. They sell items to each other and follow a set of rules. They have to give the other country a most favoured country job. From 2004, if a member sells any item to another member country, the same type of item should be offered to all other member countries. The World Trade Organization the WTO is the international organization whose primary purpose is to open trade for the benefit of all..

What they do?

The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who usually meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva).

While the WTO is driven by its member states, it could not function without its Secretariat to coordinate the activities. The Secretariat employs over 600 staff, and its experts lawyers, economists, statisticians and communications experts assist WTO members on a daily basis to ensure, among other things, that negotiations progress smoothly, and that the rules of international trade are correctly applied and enforced.

Trade negotiations The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They include individual countries commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets. They set procedures for settling disputes. These agreements are not static; they are renegotiated from time to time and new agreements can be added to the package. Many are now being negotiated under the Doha Development Agenda, launched by WTO trade ministers in Doha, Qatar, in November 2001. Implementation and monitoring WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted. Various WTO councils and committees seek to ensure that these requirements are being followed and that WTO agreements are being properly implemented. All WTO members must undergo periodic scrutiny of their trade policies and practices, each review containing reports by the country concerned and the WTO Secretariat. Dispute settlement The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring disputes to the WTO if they think their rights under the agreements are being infringed. Judgements by specially appointed independent experts are based on interpretations of the agreements and individual countries commitments. Building trade capacity WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity, to handle disputes and to implement technical standards. The WTO organizes hundreds of technical cooperation missions to developing countries annually. It also holds numerous courses each year in Geneva for government officials. Aid for Trade aims to help developing countries develop

the skills and infrastructure needed to expand their trade.

Outreach
The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of WTO activities.

WHAT THEY STAND FOR?

The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.

Non-discrimination A country should not discriminate between its trading partners and it should not discriminate between its own and foreign products, services or nationals. More open Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers include customs duties (or tariffs) and measure such as import bans or quotas that restrict quantities selectively. Predictable and transparent Foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition choice and

lower prices. More competitive Discouraging unfair practices, such as export subsidies and dumping products at below cost to gain market share; the issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade. More beneficial for less developed countries Giving them more time to adjust, greater flexibility and special privileges; over threequarters of WTO members are developing countries and countries in transition to market economies. The WTO agreements give them transition periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions. Protect the environment The WTOs agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health. However, these measures must be applied in the same way to both national and foreign businesses. In other words, members must not use environmental protection measures as a means of disguising protectionist policies.

1.2 What are the functions and objectives of WTO? Some of the important functions and objectives of WTO are:Functions of WTO : The former GATT was not really an organisation; it was merely a legal arrangement. On the other hand, the WTO is a new international organisation set up as a permanent body. It is designed to play the role of a watchdog in the spheres of trade in goods, trade in services, foreign investment, intellectual property rights, etc. Article III has set out the following five functions of WTO; (i) The WTO shall facilitate the implementation, administration and operation and further the objectives of this Agreement and of the Multilateral Trade Agreements, and shall also provide the frame work for the implementation, administration and operation of the plurilateral Trade Agreements. (ii) The WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the Agreement in the Annexes to this Agreement. (iii) The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes. (iv) The WTO shall administer Trade Policy Review Mechanism. (v) With a view to achieving greater coherence in global economic policy making, the WTO shall cooperate, as appropriate, with the international Monetary Fund (IMF) and with the International Bank for Reconstruction and Development (IBRD) and its affiliated agencies.

1.3 Objectives of WTO Important objectives of WTO are mentioned below: (i) to implement the new world trade system as visualised in the Agreement; (ii) to promote World Trade in a manner that benefits every country;

(iii) to ensure that developing countries secure a better balance in the sharing of the advantages resulting from the expansion of international trade corresponding to their developmental needs; (iv) to demolish all hurdles to an open world trading system and usher in international economic renaissance because the world trade is an effective instrument to foster economic growth; (v) to enhance competitiveness among all trading partners so as to benefit consumers and help in global integration; (vi) To increase the level of production and productivity with a view to ensuring level of employment in the world; (vii) To expand and utilize world resources to the best; (viii) to improve the level of living for the global population and speed up economic development of the member nations.

1.4 ADVANTAGES OF WTO

World Trade Organization helps member states in various ways and this enables them to reap benefits such as: Helps promote peace within nations: Peace is partly an outcome of two of the most fundamental principle of the trading system; helping trade flow smoothly and providing countries with a constructive and fair outlet for dealing with disputes over trade issues. Peace creates international confidence and cooperation that the WTO creates and reinforces. Disputes are handled constructively: As trade expands in volume, in the numbers of products traded and in the number of countries and company trading, there is a greater chance that disputes will arise. WTO helps resolve these disputes peacefully and constructively. If this could be left to the member states, the dispute may lead to serious conflict, but lot of trade tension is reduced by organizations such as WTO.

Rules make life easier for all: WTO system is based on rules rather than power and this makes life easier for all trading nations. WTO reduces some inequalities giving smaller countries more voice, and at the same time freeing the major powers from the complexity of having to negotiate trade agreements with each of the member states. Free trade cuts the cost of living: Protectionism is expensive, it raises prices, WTO lowers trade barriers through negotiation and applies the principle of non-discrimination. The result is reduced costs of production (because imports used in production are cheaper) and reduced prices of finished goods and services, and ultimately a lower cost of living. It provides more choice of products and qualities: It gives consumer more choice and a broader range of qualities to choose from. Trade raises income: Through WTO trade barriers are lowered and this increases imports and exports thus earning the country foreign exchange thus raising the country's income. Trade stimulates economic growth: With upward trend economic growth, jobs can be created and this can be enhanced by WTO through careful policy making and powers of freer trade. Basic principles make life more efficient: The basic principles make the system economically more efficient and they cut costs. Many benefits of the trading system are as a result of essential principle at the heart of the WTO system and they make life simpler for the enterprises directly involved in international trade and for the producers of goods/services. Such principles include; non-discrimination, transparency, increased certainty about trading conditions etc. together they make trading simpler, cutting company costs and increasing confidence in the future and this in turn means more job opportunities and better goods and services for consumers. Governments are shielded from lobbying: WTO system shields the government from narrow interest. Government is better placed to defend themselves against lobbying from narrow interest groups by focusing on trade-offs that are made in the interests of everyone in the economy.

The system encourages good governance: The WTO system encourages good government. The WTO rules discourage a range of unwise policies and the commitment made to liberalize a sector of trade becomes difficult to reverse. These rules reduce opportunities for corruption

1.5 DISADVANTAGES OF WTO

There are several criticisms of the World Trade Organization. One criticism is the role it takes over governing and implementing policy around the world. By being a world organization it implies that it should be democratic and it should be held accountable by the people of the world, or the very least the parts of the world of which it participates in. The WTO by and large is not democratic there are many closed door meetings, and there is no transparency to who runs the WTO or who makes the decisions of the WTO. In the WTO rounds in Cancun in 2003 the poorer countries refused to negotiate with the more powerful members of the WTO until they had an equal say in the issues being discussed behind the closed doors. The World Trade Organization is not the only institution that takes on the role of international governing. These criticisms can also be applied to the World Bank and the International Monetary Fund to varying degrees. Another criticism is the prominent role of neo-liberalism in policies of structural adjustment in the past few decades. In the 70s and 80s there was a large debt crisis due to proliferation of petrodollars to developing countries. Interest rates rose, and the once abundant oil supply receded. This caused many developing countries to go into massive debt and needed to be bailed out, and needed funds from the IMF and the World Bank. In order for these countries to get the money it needed it had to fulfill certain conditions by liberalizing their economy. The tenants of structural adjustment were: minimize the role of the state and cut back on social programs, privatization of many national industries, and open up trade by lowering tariffs and trade restrictions.

These liberalization policies were put in place to increase the economy welfare of the countries while paying back their debts and structural adjustment policies were successful in increasing the economic indicators of wealth. The biggest controversy with structural adjustment was that it eliminated all the social safety nets, increased poverty in many countries, and depleted many countries industries. Government poverty reduction programs and the domestic food industry were also eliminated and countries became very vulnerable to the precariousness of the world market. Evidence of this can be seen in the recent food crisis in the summer of 2008.

1.6 The Millennium Development Goals (MDGs)

There are eight international developmentgoals that were officially established following the Millennium Summit of the United Nations in 2000, following the adoption of the United Nations Millennium Declaration. All 189 United Nations member states and at least 23 international organizations have agreed to achieve these goals by the year 2015. The goals are: 1. Eradicating extreme poverty and hunger, 2. Achieving universal primary education, 3. Promoting gender equality and empowering women, 4. Reducing child mortality rates, 5. Improving maternal health, 6. Combating HIV/AIDS, malaria, and other diseases, 7. Ensuring environmental sustainability, and 8. Developing a global partnership for development. 9. Halve by 2015 the proportion of people without sustainable access to safe drinking water [1] Each of the goals has specific stated targets and dates for achieving those targets. To accelerate progress, the G8 Finance Ministers agreed in June 2005 to

provide enough funds to the World Bank, the International Monetary Fund (IMF), and the African Development Bank (AfDB) to cancel an additional $40 to $55 billion in debt owed by members of the Heavily Indebted Poor Countries (HIPC) to allow impoverished countries to re-channel the resources saved from the forgiven debt to social programs for improving health and education and for alleviating poverty. Progress towards reaching the goals has been uneven. Some countries have achieved many of the goals, while others are not on track to realize any. A UN conference in September 2010 reviewed progress to date and concluded with the adoption of a global action plan to achieve the eight anti-poverty goals by their 2015 target date. There were also new commitments on women's and children's health.

CHAPTER 2 AGRICULTURE:
Agriculture is the science of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool, and other products. Agriculture and related products are the main economic drivers of thirds world countries as opposed to manufacturing in developed nations.

2.1 Importance of Agriculture

Agriculture plays a crucial role in the life of an economy. It is the backbone of our economic system. Agriculture not only provides food and raw material but also employment opportunities to a very large proportion of population. The following facts clearly highlight the importance of agriculture in this country. 1. Source of Livelihood:In India the main occupation of our working population is agriculture. About 70 per cent of our population is directly engaged in agriculture. In advanced countries, this ratio is very small being 5 per cent in U.K., 4 per cent in USA., 16 per cent in Australia, 14 per cent in France, 21 per cent in Japan and 32 per cent in USSR.This high proportion in agriculture is due to the fact that the non-agricultural activities have not been developed to absorb the rapidly growing population. 2. Supply of Food and Fodder:Agriculture sector also provides fodder for livestock (35.33 crores). Cow and buffalo provide protective food in the form of milk and they also provide draught power for farm operations. Moreover, it also meets the food requirements of the people. Import of food grains has been very small in recent years, rather export avenues are being looked for. 3. Importance in International Trade:It is the agricultural sector that feeds country's trade. Agricultural products like tea, sugar, rice, tobacco, spices etc. constitute the main items of exports of India. If the development process of agriculture is smooth, export increases and imports are reduced considerably.Thus, it helps to reduce the adverse balance of payments and save our foreign exchange. This amount can be well utilized to import other necessary

inputs, raw-material, machinery and other infra-structure which is otherwise useful for the promotion of economic development of the country. 4. Marketable Surplus:The development of agricultural sector leads to marketable surplus. As country develops more and more people are to be engaged in mining, manufacturing and other non- agricultural sector. All these people depend upon the food production which they can meet from the marketable surplus.As agricultural development takes place, output increases and marketable surplus expands. This can be sold to other countries. Here, it is worth mentioning that the development of Japan and other countries were made possible by the surplus of agriculture. There is no reason why this could not be done in our own case. 5. Source of Raw Material:Agriculture has been the source of raw materials to the leading industries like cotton and jute textiles, sugar, tobacco, edible and non-edible oils etc. All these depend directly on agriculture.Apart from this, many others like processing of fruits and vegetables, dal milling, rice husking, gur making also depend on agriculture for their raw material. According to United Nations Survey, the industries with raw material of agricultural origin accounted for 50 per cent of the value added and 64 per cent of all jobs in the industrial sector. 6. Importance in Transport:Agriculture is the main support for railways and roadways which transport bulk of agricultural produce from farm to the mandies and factories. Internal trade is mostly in agricultural products. Besides, the finance of the govt, also, to the large extent, depends upon the prosperity of agricultural sector. 7. Contribution to Foreign Exchange Resources: Agricultural sector constitutes an important place in the country's export trade. According to an estimate, agricultural commodities like jute, tobacco, oilseeds, spices, raw cotton, tea and coffee accounted for about 18 per cent of the total value of exports in India. This shows that agriculture products still continue to be significant source of earning foreign exchange.

2.2 The Agriculture Agreement

AOA

The Agreement on Agriculture is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on January 1, 1995

2.3 History of the Agreement

Original idea
The idea of replacing agricultural price support with direct payments to farmers decoupled from production dates back to the late 1950s, when a Panel of Experts, chaired by Professor Gottfried Haberler, was established at the twelfth session of the GATT Contracting Parties to examine the effect of agricultural protectionism, fluctuating commodity prices and the failure of export earnings to keep pace with import demand in developing countries. The 1958 Haberler Report stressed the importance of minimising the effect of agriculture subsidies on competitiveness, and recommended replacing price support by direct supplementary payments not linked with production, anticipating discussion on green box subsidies. Onlymore recently, though, has this shift from price support to producer support become the core of the reform of the global agricultural system.]

2.4 WTO AGREEMENT ON AGRICULTURE For the first time, agriculture was brought under the world trading system in the Uruguay Round of negotiations, which concluded in Marrakesh in April 1994. The Agreement on Agriculture (AoA) was one of the many agreements that were negotiated during the Uruguay Round. Most assessments of the agreement hail it as a historic shift in the way it establishes new multilateral rules governing market access, domestic support and export subsidies for agriculture. In terms of future trade liberalization, its most important provisions may be those requiring the elimination of Quantitative Trade Restrictions and their conversion to sound tariffs. These sound tariffs, even though extremely high, can provide a starting point for future negotiations of tariff reduction. A. Market Access commitment requires conversion of all non-tariff barriers into equivalent tariff barriers. Ordinary tariffs including those resulting from tariffication of non-tariff barriers are to be reduced by an average of 36% with minimum rate of reduction of 15% for each tariff item over a 6-year period. Developing countries are required to reduce tariffs by 24% in 10 years. Developing countries that were maintaining Quantitative Restrictions due to Balance of Payments problems were allowed to offer ceiling bindings instead of tariffication. It was also been stipulated that minimum access equal to 3% of domestic consumption in 1986-88 should be established by the year 1995 rising to 5% at the end of the implementation period. B .Domestic Support to agriculture was also to be reduced considerably in countries where the aggregate measure of support exceeded the level specified in the member schedule. The limit for developed and developing countries was fixed at 5% and 10% of the total value of agricultural output respectively. There are three categories of support measures that are not subject to reduction under the agreement, they are:

i. Green Box Measures: Policies that have minimum impact on the patterns of production and flow of trade. ii. Blue Box Measures: These measures include direct payment to the farmers for production limiting programme and are relevant only from the point of view of the developed countries. iii. Amber Box Measures: These are the most important measures from the point of view of producers in developing countries. The AoA demands commitment to reduce support to be achieved by first quantifying, and then progressively reducing domestic support, i.e. the Aggregate Measure of Support (AMS). C. Export Subsidies are also to be reduced. The Agreement contains provisions regarding

members commitment to reduce export subsidies. Developed countries are required to reduce their export subsidy expenditure by 36 per cent and volume by 21 per cent in six years, in equal installments from 1986-1990 levels. For developing countries the corresponding cuts are 24 per cent and 14 per cent in equal annual installments spread over ten years. The least developed countries are not subject to any reduction commitments

. 2.5 IMPLICATIONS OF AoA FOR INDIAN AGRICULTURE

The repercussions of the WTO Agreement and the removal of Quantitative Restrictions on imports are quite alarming. The fall in the prices of agricultural goods and dumping of cheap agriculture commodities from other countries is causing harm to the welfare of Indian farmers. Developed countries have imposed heavy tariffs to minimize imports, whereas in India tariffs are low. Due to this, various commodities are being dumped in India. The US is dumping five primary farm commodities in global markets in clear violation of WTO Agriculture rules. It is exporting corn, soybean, wheat, rice and cotton at prices far below their production cost in an effort to wipe out global competition.

The continuation of high domestic support to agriculture in developed countries is a cause of concern as they encourage overproduction in these countries leading to low levels of international prices of agricultural products. At the same time the rich industrialized countries continue to subsidize farmers by giving them direct payments which are exempt from any reductions requirement and which essentially are cash handouts contingent on making adjustments in production. These payments are neither affordable nor helpful in a developing country. The result is that the industrialized countries continue to dominate world trade in agriculture while preventing India and other developing countries from achieving selfsufficiency in food production.

The AoAs requirement to reduce domestic support will prevent the Indian government from providing the necessary support to farmers to compensate for shortage or overabundance caused by climatic fluctuations in market prices or any other factors. In fact subsidies are essential for Indian agriculture as 65 per cent of people are directly or indirectly dependent upon agriculture. It is no longer the question of mere economics because the social and political implications of developments in agriculture cannot be ignored. The domestic support provision also affects Indias food security. The Agreement exempts governmental expenditures relating to public stockholding for food security purposes from reduction requirement if the operation of such a programme is transparent and follows officially published objective criteria. This automatically subjects these programmes to external scrutiny. A developing country may acquire and release foodstuffs at administered prices; however, the difference between the international market price and the administered price will be included in the calculation of AMS. Therefore, the public stockholding system will be subject to reduction requirements if the AMS exceeds the de minimise level.

The export commitment requirements, in turn, prevent India from providing subsidies to industry that are necessary for it to expand its share of world export markets. This limitation will also adversely affect the future of Indian agriculture.

The reduction in custom duties and non-tariff barriers as well as guaranteed minimum market share for imports will force Indian farmers to compete against large Transnational Corporations which have excessive financial power resulting from their oligopolistic control over world food markets. Indian farmers cannot compete on equal terms against the enormous financial and technological clout of the transnational giants of the rich countries, particularly when custom duties and other import barriers are reduced, and these companies are guaranteed a share of Indian market. Compliance with market access requirements will devastate domestic food production and India will become dependent on foreign foodgrains. To conclude, it is feared that the Agreement is not favorable to India due to the following reasons: i. The country will be compelled to import at least 3% of the domestic demand for agricultural products.

ii. The government will be forced to reduce subsidies to farmers.

iii. The Public Distribution System and Public Procurement System will have to be abandoned.

CHAPTER 3

INDIAN AGRICULTURE

Agriculture has an extensive background which goes back to 10 thousand years. At present, in terms of agricultural production, the country holds the second position all over the world. In 2007, agriculture and other associated industries such as lumbering and forestry represented around 16.6% of the Gross Domestic Product of the country. In addition, the sector recruited about 52% of the entire manpower. Regardless of the fact that there has been a gradual slump in its contribution to the gross domestic product of the country, India agriculture is currently the biggest industry in India. On the whole, it has a key role in the socioeconomic growth of the country. In terms of agricultural contribution, the following states in India are the most developed states:

Punjab Uttar Pradesh Madhya Pradesh Haryana Bihar Andhra Pradesh Maharashtra West Bengal

All these states play a key role in the agrarian development of India. The total arable territory in India is 1,269,219 km2, which represents about 56.78% of the overall land zone of the country. Arable land in India is diminishing because of continuous strain from an ever-increasing number of inhabitants and growing urbanization. The overall water surface area of the country is 31440 km2 and the country experiences a mean yearly precipitation of 1,100 mm. Irrigation represents 92% of the consumption of water and in 1974, it was 380 km2. By 2025, the capacity will probably increase to 1,050 km2, with the equilibrium justifying both household and industrial usage.

The population of India is increasing at a faster pace than its capacity to produce wheat and rice. India holds the second position in production of wheat, rice, cotton, sugarcane, and groundnuts. It is also the second biggest harvester of vegetables and fruit, representing 8.6% and 10.9% of the overall vegetable and fruit production in the world correspondingly. The country is the top producer of jute, milk, and pulses and holds the second rank in the production of silk and it is the biggest consumer of silk in the world. In 2005, the country produced 77,000 million tons of silk.

What are the initiatives taken by Government?

In a huge country like India, the necessary extent of outlay for the expansion of merchandising, warehousing, and cold storage arrangement is expected to be massive.

The Government of India has been earnestly trying to put into operation different plans to increase investment or outlay in merchandizing and commercializing. Some of the known plans and strategies of the Indian Government include the following:

Market Research and Information Network Construction of Rural Godowns Grading and Standardization Development/Strengthening of Agricultural Marketing Infrastructure

The Indian Council of Agricultural Research (ICAR) is the principal authority in farming and ancillary industries, which comprise learning and research.

The post of the President of the ICAR is held by the Union Minister of Agriculture and at present, Mr. SharadPawar is holding the position.

The Indian Agricultural Research Institute (IARI) was set up in the year 1905. The institute had a key role in the studies and explorations that resulted in the Green Revolution in the decade of the 1970s. The Indian Agricultural Statistics Research Institute formulates new methods for the planning of agricultural testing. It also evaluates information associated with cultivation and offers expert advices in statistical methods for livestock and tree raising.

Of late, the Government of India has established Farmers Commission to fully assess the cultivation plan. Nonetheless, the suggestions received varied responses. Other interesting facts about Indian Agriculture

India enjoys the second position all over the world in terms of agricultural production. During the period of 2009-10, farming and associated industries such as lumbering, forestry, and fishing represented approximately 15.7% of the Gross Domestic Product of the country. These industries also recruited 52.1% of the overall manpower of India.

Outputs on a unitary basis for every type of harvest have increased from 1950. This has been possible since the government has put particular focus on farming operations in the five-year plans (PanchabarshikiParikalpana) and stable developments in the domains of engineering science, irrigation, implementation of contemporary farming operations, and supply of cultivation loans and grants after the Green Revolution took place in the country.

Nonetheless, worldwide evaluative studies disclose that the mean agricultural output in the country is typically 30%-50% of the maximum average output in the world

3.1 Role of WTO in Indian agriculture

India will be able to expand its exports of agricultural products in which it has tremendous comparative advantage. The provisions of W.T.O offered ample opportunities to India to expand its export market. Contrary to this, the price situation changed dramatically after 1996, which was the first year after implementation of Urguay Round Agreement and formation of W.T.O. International price of agricultural commodities have since then plummeted, because of which domestic price turned higher than international price, which made India an attractive market for import of most agricultural commodities. This situation resulted in a wide spread decline in agricultural export and had also pressure on domestic prices. The impact of W.T.O on agriculture was severely felt by India as cheap imports have frequently hit the Indian market, causing shock waves among the agriculture producers. The changes in agricultural exports reveal that during pre W.T.O period the increase was significantly remarkable than post W.T.O period and the rising export trend could not be sustained in the post W.T.O period whereas imports rose steadily. The agricultural products from India can be made competitive in international market and the prices of agricultural goods in the domestic market can be improved by taking serious steps of reform.

"Globalize or perish" is now the buzzword synonymous to "Do or Die" which conveys that there is no alternative to globalization and everybody should learn to live with it. India, being a signatory to the agreement that led to W.T.O, can no way step backwards.

3.2 Impact of the Policies of WTO on Indian Agriculture

Summary The World Trade Organization (WTO) was established on 1 January 1995 by an agreement signed by 125 member countries. It is the only international body dealing with the creation of rules and procedures of trade between nations. At its heart are the WTO agreements and the legal ground rules for international trade. The WTO is functioning with the fundamental principles of non-discrimination, free trade, transparency and predictable policies, encouragement to competition and special provisions for least developed countries.

This book examines and evaluates the impact of the policies of the WTO on Indian Agriculture in respect of various key aspects over a period of twenty years from 1985-86 to 2004-05, that is, both pre-and post-WTO periods. It describes the interface between the new rules of international trade laid down by the WTO and its impact on different segments of Indian Agriculture.

They include: tracing the emergence of the WTO, its rationale, objectives and policies, charting the growth and trends in agricultural area and production, analyzing the extent of diversification in Indian Agriculture, examining the variability and trends in agricultural prices and evaluating the rate of growth and composition of Indias agricultural exports and import

IMPACT OF W.T.O ON INDIAN AGRICULTURAL SECTOR

Trade is an engine of economic development. The establishment of W.T.O is an important landmark in the history of international trade. When developing countries were liberalizing their economies, they felt the need for better export opportunities. The W.T.O provides opportunities for countries to grow and realize their export potentials, with appropriate domestic policies in place. The issue of globalization in the Indian context has occurred in the patterns of trade and capital flow in recent years; unfortunately, so far we have not made much use of it. At one time a countrys trade pattern was determined by its natural resources and the productivity of its land. Leaving aside political and institutional factors, a countrys level of income was also largely determined by the global demand for its natural resources and its relative efficiency in exploiting them. The importance of land as a source of comparative advantage, however, changed dramatically after the industrial revolution. Today, it is almost insignificant. After the industrial revolution, the availability of capital became the most dominant source of comparative advantage.

India will be able to expand its exports of agricultural products in which it has tremendous

comparative advantage. The provisions of W.T.O offered ample opportunities to India to expand its export market. Contrary to this, the price situation changed dramatically after 1996, which was the first year after implementation of Urguay Round Agreement and formation of W.T.O. International price of agricultural commodities have since then plummeted, because of which domestic price turned higher than international price, which made India an attractive market for import of most agricultural commodities. This situation resulted in a wide spread decline in agricultural export and had also pressure on domestic prices. The impact of W.T.O on agriculture was severely felt by India as cheap imports have frequently hit the Indian market, causing shock waves among the agriculture producers. The changes in agricultural exports reveal that during pre W.T.O period the increase was significantly remarkable than post W.T.O period and the rising export trend could not be sustained in the post W.T.O period whereas imports rose steadily. The agricultural products from India can be made competitive in international market and the prices of agricultural goods in the domestic market can be improved by taking serious steps of reform Globalize or Perish is now the buzzword synonymous to Do or Die which conveys that there is no alternative to globalization and everybody should learn to live with it. India, being a signatory to the agreement that led to W.T.O, can no way step backwards. This is not the time to curse the darkness but to work for making India emerge as a global market leader. Mechanisms for developing countries During Doha negotiations,developing countries have fought to protect their interest and population, afraid of competing on the global market with strong developed and exporting economies. Many still have large rural populations composed of small and resource-poor farmers with limited access to infrastructure and few employment alternatives. Thus, these countries are concerned that domestic rural populations employed in import-competing sectors might be negatively affected by further trade liberalization, becoming increasingly vulnerable to market instability and import surges as tariff barriers are removed. Several mechanisms have been suggested in order to preserve those countries: the Special Safeguard Mechanism (SSM) and treatment of Special Products (SPs). Special Safeguard Mechanism A Special Safeguard Mechanism would allow developing countries to impose additional safeguard duties in the event of an abnormal surge in imports or the entry of unusually cheap

imports.[6] Debates have arise around this question, some negotiating parties claiming that SSM could be repeatedly and excessively invoked, distorting the normal flow of trade in the process. In turn, the G-33 negotiating bloc of developing countries, which has been the major proponent of the SSM, has argued that breaches of bound tariffs should not be ruled out if the SSM is to be an effective remedy.[6] A study by ICTSD simulated the consequences of SSM on global trade for both developed and developing countries

3.3 Criticism
The AoA has been criticised by civil society groups for reducing tariff protections for small farmers a key source of income for developing countries. At the same time, the AoA has allowed rich countries to continue paying their farmers massive subsidies which developing countries cannot afford.The Agriculture Agreement has been criticised by NGO's for categorizing subsidies into trade-distorting domestic subsidies (the amber box) which have to be reduced, and non-trade distorting subsidies (blue and green boxes) which escape disciplines and thus can be increased. As efficient agricultural exporters press WTO members to reduce their trade-distorting amber box and blue box support, developed countries green box spending has increased a trend widely expected to continue. A book from the International Centre for Trade and Sustainable Development shows how green box subsidies do in fact distort trade, affect developing country farmers and can also harm the environment. While some types of green box payments probably have only a minor effect on production and trade, others have a significant impact. According to countries latest official reports to the WTO, the United States provided $76 billion in green box payments in 2007 over ninetenths of its total spending while the EU notified 48 billion ($91 billion) in 2005, or around half of all support provided by the bloc. In the case of the EU, a large and growing

share of green box spending was on decoupled income support, which the book shows can have a particularly significant impact on production and trade.[1] Third World Network states that; "This has allowed the rich countries to maintain or raise their very high subsidies by switching from one kind of subsidy to another... like a magicians trick. This is why after the Uruguay Round the total amount of subsidies in OECD countries has gone up instead of going down, despite the apparent promise that Northern subsidies will be reduced." Moreover, Martin Khor argues that the green and blue box subsidies can be just as trade-distorting - as "the protection is better disguised, but the effect is the same".[4] At the WTO meeting in Hong Kong in 2005, countries agreed to eliminate export subsidy and equivalent payments by 2013. However, Oxfam has stated that EU export subsidies account for only 3.5% of its overall agricultural support. In the US, export subsidies for cotton were announced to be removed but these represent 10% of overall spending which "does notaddress the core issue of domestic payments that have been proven to distort trade and facilitate dumping".

CHAPTER 4 SUGGESTIONS and RECOMMENDATIONS Suggestions The farmers have felt the heat of WTO and the challenges posed by international competitors in the last three years. Cases of suicides by farmers have been reported from many States. Agricultural prices are drastically falling. Farmers have been kept out of market by the pricing policies pursued by the government in terms of the minimum support prices of food grains and the issue prices in Public Distribution System. Apart from seeking better deals from WTO so as to support domestic measures adopted for poverty alleviation and rural employment, policy measures need to be taken to strengthen the agricultural sector to safeguard the interests of the farming community.

Listed below are some suggestions to meet the challenges facing Indian agriculture a. There is a need to formulate a consistent policy for exports of agricultural products and processed products in which the country has a comparative advantage. b. Anti-dumping safeguard measures must be evoked in time to control imports of agricultural products, if so warrants. c. Agriculture Research and Extension should be revamped so as to meet the challenges. d. Crop rotation system should be promoted to increase the fertility of the soil and improve the cash flow of the farming community. e. More investment in latest technology and rural infrastructure especially in irrigation system so as to utilize fully the already available irrigation potential. f. Provide better incentives to farmers to increase the farm productivity and quality standards. g. Ensure adequate credit support and crop insurance to the farmers h. To reduce the cost of production by cultivation of hybrids and adopting integratedpest management strategies. i. Emphasis should be laid on imparting training to the farmers on increasing productivity and reducing cost. jAreas having potential for production of different agricultural commodities should earmarked and their production and marketing should be encouraged there.

k.Special incentives should be given for encouraging export-oriented production with a view to improving market access for Indian agricultural products in world markets.

Recommendations :Future agenda for India

The WTO agricultural agreement provides a vast opportunity for the Indian agricultural sector but for the realization of those benefits, India has to be alert and has to catch up in numerous direction in the liberalized trade serine backed by the WTO regime .Indian agricultural would be fully irrigated with the global trading system aggregate measurement of support and sanitary and photo sanitary .measures of seeds and technology and food security etc .are the areas of real concern .WTO regime has many save grades relaxation and exception for the developing countries which India must exploit to its favor .The new regime would have far reaching implication for the Indian agriculture both positive and negative .India should try to maxims its gains and minimize its losses in the changing environment .The government of India should take the advantages of save grades laid down within the WTO farm work to protect Indian agriculture and promote its global competaencyniesd it is heartening to know that India has a great potential to increase its agricultural production by the rising periodicity improving quality providing irrigation facilities ,developing rural infrastructure ,spending liberally on agricultural research and strengthens marketing network .Beside India should organize developing countries to get WTO agreement on agriculture amended to their beefiest .Specially it shows except pressure for inclusion of food scarcity clauses developing countries to adopt a suitable police regime required to create an maintain food scarcity .shifting of a sizeable proportion of work force to the non agricultural factors. Diversification per sector of agricultural rising per hector yield to the global level protecting on the on sledge of competition are some of the challenges to be met for competition are some of the challenges to be met for the increasing the global competences of Indian agriculture .in order to met the above challenges the government of India will have to take serious and bold steps at the policy level .one serious problem has been lacked preparedness for negotiation obvisoly the process of preparedness requires a high level of professional expertness with analytical and practical wisdom they has to be a close nexus between the negotiators of government on the one hand business circles and academic research of bides on the other .

CHAPTER 5 LIMITATIONS TO INDIAN AGRICULTURE The challenges before Indian agriculture are immense. India is not where it should have been in the world market for agricultural products despite being one of the top producers. The country needs to put greater emphasis on cultivation of international varieties. Until India takes some steps in this direction, it will continue to produce more only to earn less. The major challenges for Indian agriculture system would always be increasing production and productivity to ensure food security for the raising population.

Rigid quality control is a major challenge for Indian agriculture. The global agricultural market is influenced to a great extent by the quality of products, especially when exporting to developed nations. Indian agricultural exports have to face tough competition, which is a matter of serious concern. The right type of technology for growing and processing must be adopted so that there is good quality production at lower costs, which in turn will reduce the prices and place India in a better position to compete globally. Indian producers produce agricultural goods at competitive prices. Yet low global prices resulting from subsidies by the developed nations mainly the European Union and United States, deprives India of any advantage on the price front. The US is exporting wheat at prices 40 per cent lower than production costs. In the case of soybean, the price difference has been increasing steadily over the last four years and is currently at 30 per cent while for maize it is 25-30 per cent. In 2001, cotton was being sold in the international markets at a price 57 per cent lower than its production cost, while the price difference for rice has stabilized at 20 per cent. As a result of these prices, the US is the worlds largest exporter of wheat, corn, cotton and soybean, and the second largest in rice.

While agricultural trade liberalization was justified on the grounds that Northern agricultural markets would open to India, Indias exports to Europe have actually declined from 13 to 6 per cent. This is because the North still maintains high subsidies and trade barriers. The WTO regime has become a challenge because it has shown that agriculture trade liberalization has become a unidirectional phenomenon that opens markets in the South for Northern business corporations but closes markets in the North for trade from South. Such trade will destroy

livelihood opportunities for resource-poor farming families and agricultural labour.

Global forces are now playing an important role in determination of cropping patterns, investment levels, price structures, quality of production and level of international trade. Indian farmers are facing multiple challenges. Firstly, they are being asked to provide a greater variety of better quality products at lower cost, and in a safer manner than ever demanded before. Secondly, they are being asked to produce this abundance on a shrinking natural resources base that is often subject to government regulations.

As far as India is concerned there are some danger signals. Population growth rate and higher per capita income suggest that demand for foodgrains is growing. But there are doubts about the supply response. In terms of acreage, area under foodgrains has not increased. Yield growth rates of food grains are also stagnating in most parts of the country. The productivity of soil has also started declining. The underground water table in most Indian states is getting rapidly depleted. Based on these facts, various studies have pointed out that India will be a net importer of rice in the near future.

In such a competitive environment, India should be prepared to meet the challenges that are detrimental to the interests of her people.

CHAPTER 6 CONCLUSION Under the existing circumstances, the liberalization of world trade in agriculture will benefit developed countries more than developing countries. Given the conditions of high tariffs in the developed world and low or nil tariffs in developing countries, the removal of Quantitative Restrictions on agricultural commodities will tilt the balance of global trade in favour of the developed nations with detrimental effects on the producers in Third World countries. India must be alert to the implications of the WTO and its policies, and decide its own national priorities while taking policy decisions in the future. It is our duty not only to protect our national interest but also to promote it so as to take advantage of the situation. The situation is inescapable but there is scope to manipulate it in the national interest.

CHAPTER 7 ANNEXURES Import and Export Volume of India before and After the WTO The chain indices of exports (as percentage of GDP) was 220 before the WTO and it is 200 after the WTO which reveals that rate of increase in exports in eleven years have been slided down after the WTO. While the chain index of imports (as percentage of GDP) before the WTO was 115 and after the WTO it is 217 (see Annexure 1), which shows that imports have been increased rapidly after the WTO. It is concluded that after the WTO the trade has been increased but that is totally contributed by increase in imports not exports

Agricultural raw materials imports (% of merchandise imports) in India The Agricultural raw materials imports (% of merchandise imports) in India was last reported at 1.78 in 2010, according to a World Bank report published in 2012. Agricultural raw materials comprise SITC section 2 (crude materials except fuels) excluding divisions 22, 27 (crude fertilizers and minerals excluding coal, petroleum, and precious stones), and 28 (metalliferous ores and scrap).This page includes a historical data chart, news and forecasts for Agricultural raw materials imports (% of merchandise imports) in India.

Agricultural raw materials exports (% of merchandise exports) in India The Agricultural raw materials exports (% of merchandise exports) in India was last reported at 2.01 in 2010, according to a World Bank report published in 2012. Agricultural raw materials comprise SITC section 2 (crude materials except fuels) excluding divisions 22, 27 (crude fertilizers and minerals excluding coal, petroleum, and precious stones), and 28 (metalliferous ores and scrap).This page includes a historical data chart, news and forecasts for Agricultural raw materials exports (% of merchandise exports) in India.

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