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India’s newly elected, so-called “trade friendly government”, vetoed the implementation of a trade agreement that promised a trillion-dollar boost to the global economy. The deal, inked last December at World Trade Organization meetings in Bali, was the WTO’s first successful multilateral trade negotiation in 20 years. This sudden change in the stance of the Indian government, however, will have repercussions. One consequence is that India’s reputation as a trustworthy negotiating partner will be further tarnished.
Essentially, the Indian government pays its farmers above-market prices for their crops, which are then stockpiled and doled out in India’s notorious city slums (particularly when elections loom). Much of the grain rots or is stolen. The Bali deal already gave the Indians a four-year “peace clause,” allowing New Delhi to increase temporarily the otherwise WTO-incompatible subsidies. The four years were to give India time to come up with a more economically defensible system. But the four-year exemption was not enough for Mr. Modi, who demands a permanent exemption to subsidize as much as he wants.
How many more rupees does India intend to dole out in the name of “food security”? The last time any Indian government honored its WTO obligations to report how much it spends on agriculture subsidies was 2011—and even then, no data was provided beyond the 2003 crop year.
In the light of the above facts, it becomes very dubious as to what the honorable Prime Minister wants. On the one hand he swept the Indian general elections 2014 promising the people a progressive economic future, while one the other hand he obstructs the global trade facilitation, citing the plea of the poor state of affairs in the country. India is a nation with rich and enviable resources. Trade is one platform which, if used wisely, can take the country from the depth of misery to the summits of grandeur. Its people have potential to contribute in making the country one of the greatest in the world. What our country needs is not policies that guise charity, but measures that create opportunities; not dreams of utopia, but tools to tackle reality; not crutches for its crippled economy, but the empowerment of its residents. It is, as they say:
Give a man a fish, you feed him for a day;
Teach a man how to fish, you feed him for a lifetime!