Opinion Don’t blink in Bali

THE WTO’s proposed restrictions on the UPA’s Food Security Act are sourced from its Indian pundits,who also work as experts with the Manmohan Singh government. But first,a bit of totally non-representative field reporting: during my wanderings in my old van,I crossed the border of Gujarat into Rajasthan,driving on the NH8 from Ratanpur to Udaipur. As it was election season,I got off the road and walked into an Adivasi village. The Congress was overwhelmingly popular there. The only two things that mattered in the village were the 100 days of guaranteed employment and the subsidised wheat rations. The news that wheat would become even cheaper had also reached the people there. With bated breath,they also asked whether the rations would stop if Ashok Gehlot loses the election. Such forest areas are thinly represented in poll samples. As in Gujarat,pollsters don’t like going to villages that are not connected with pucca roads.

Studies on poverty removal by the UN’s Food and Agriculture Organisation show that a two-track approach — providing subsidised grains along with a price support programme — is a viable option if government budgets can support it. The counterfactual argument uses similar general equilibrium models to show how lower prices will hurt agricultural incomes and food consumption,and result in poorer calorific intake. A little history of the WTO’s opposition to India’s price support programmes is required at this point. Earlier,World Bank studies by Ashok Gulati,currently chief of the Commission for Agricultural Costs and Prices,and Gary Purcell had asserted that India taxed its agriculture. But,in this century,both cannot be argued: that India taxes its agriculture and that it should cut down on its agricultural subsidies. Pursell and the World Bank have subsequently changed their stance and now argue that India subsidises its agriculture. Statements of the following kind have become common. Mary Whelan,chairing India’s trade policy review,said,“Concerns were expressed over subsidies for agricultural products and inputs,which have contributed to large grain stocks and export restrictions on agricultural goods.” In a 2005 piece,Gulati admitted that “we report less disprotection of Indian agriculture in the 1990s than in earlier studies”. The present argument,which is supposedly pro-agriculture and anti-subsidies,harks back to those World Bank studies. The attack is on food security.

The WTO has picked up on the general equilibrium calculations that were presented by Gulati. According to his argument,poverty will decline more through agricultural investment than through food security entitlements. This conclusion rests on the assumption that we must choose between agricultural investment and food security. Of course,agricultural growth reduces poverty. However,many of the poor still remain poor. Why must we make this terrible choice? Can we not cut down on some other not-so-desirable expenditures? The same models can be used to show how it is possible to incentivise agriculture and feed the poor at the same time. This could provide the basis for the “no-challenge clause”,which the commerce ministry was reportedly working on,to defend public stockholding over the 10 per cent subsidy limit. This is important if India wants to escape the so-called “peace clause”,which would give us temporary relief but ultimately force us to abandon food security. The problem is all the more severe for the fact that the Food Security Act also provides for non-grain subsidies to the poor,like a glass of milk for lactating mothers. It should be easy to establish a knowledge network to support the no-challenge clause.

We need to take a stand. When the WTO was set up,Rajiv Gandhi and his Brazilian counterpart held out till the end and changed the discourse. At Doha,Murasoli Maran fought up to the end for the livelihood clause,inspite of his poor health. This is terribly important,for in a county with widespread smallholder agriculture and malnourishment,models that do not take the nuances of size into account can do more harm than good. We must take a strong stand at Bali,for as the director general of the WTO pointed out,they will press for trade facilitation,and our bargaining space is set to get narrower.

The writer is chancellor,Central University of Gujarat

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