The PM?s express concern on energy and food security at the BRIC?s meeting last week is appropriate, given our national interests and emerging global profile. I have always held that food ( and water and energy) will be our contributions to the high table. It?s time, therefore, to focus on agriculture, both in domestic policy and international forums like WTO and G-8/G-20.
Manmohan Singh?s government managed to reverse the decline in the agricultural growth rate that took place in the 1990s, but the current agricultural growth rate of a little over 3% is incapable of sustaining the economy?s high level of growth. The spurt in food demand expected at India?s income levels (now above $3,000 per capita in PPP terms), the limited success of its water management programmes, hostility by globally networked NGOs towards newer seeds and pesticides, and the shortage of land staring the country in its face, have all made the problem more urgent. The country now faces food inflation. India increasingly demands both grain and non-grain food and agriculture. Its agricultural demands are growing faster than any measured agricultural growth rate anywhere in the world over a period of time. Like China, India is at present a net importer of food and agricultural products.
For example, India?s edible oil imports went up by 77.7% and pulses import by 34.6% in the 2009-10 period. It is not only importing food but also subsidising imports to protect food baskets of the vulnerable section of its population, in real terms.
While most countries are being mildly protectionist in the stimulus period to protect domestic jobs and output, India has slashed tariffs and subsidised agricultural imports. It is clearly in India?s interest that the rich countries and others from whom we import do not follow distortionary policies. Economists interested in agriculture, like me, have argued for mild tariffs on agricultural imports to protect domestic agricultural incomes and to incentivise domestic production. But the government?s concerns about food inflation, in the country?s roaring economy, do not permit such nuanced policies. Having said this, since we are paying the price at home, we must take advantage of our stance in negotiations abroad.
At the G-8, India?s security concerns in the subcontinent will be its main preoccupation and it will make every effort to consolidate its position, say, in Afghanistan, where it has substantially invested in development of physical and human capital . It will also carry forward the main thrust on developing its new stance on nuclear power and the more aggressive intellectual contribution it made at the Copenhagen summit. On agriculture, India must pitch for a reform of the global system. We now need to be shoulder to shoulder with the Brazilians.
Given the larger processes within which India?s agricultural trade interest stands, it is important to recognise that permanent interests do not change radically. India will need to push the stand it has developed since Cancun and Doha. It should agree to place non-tariff interventions in the negotiation basket, like limits on the interventions of its large parastatals in domestic agricultural markets, something it was willing to do in the Special Committee on Agriculture even earlier. However, it should not give up its stance that public support to infrastructure development, including markets, communication and agro-processing investments and the development of agricultural technology not be counted as aggregate measure of support (under its agreement with the WTO). India must project that it is going through a renaissance in the organisation of agriculture, agro-processing and rural infrastructure through mechanisms like self-help groups, producer companies of farmers and cooperatives. Many develop strategic alliances with corporate and public agencies. The newer strategies, developed by its agricultural policymakers, are largely in the public-private partnership mould but these require handholding by the state. Global negotiations will have to support these important initiatives for widespread agricultural and rural development. India?s stand on tariff negotiations and SPS is clear.
There may be some flexibility on the tariff component but the distance to be covered on these issues is large and at some stage the world will need political initiatives to cover the last mile. Our negotiators must push the idea that we hope that the G-8 will no longer postpone the Doha deadline as in the last few meetings ?for the next year?.
The author is a former Union minister