The India’s stand for increasing the minimum support price for rice has collapses the rice related talks at the World Trade Organisation in july 2014.
The farm subsidy notification released by the India offers the rice subsidy prices at higher rates than the permissible by the W.T.O , if there is no relief than it may happen that the Indian government may not able to increase the M.S.P on rice.
As per the data ,the minimum subsidy for rice was in 2010-11 which is 7% of the value of production for rice which is not so far from the 10% limit allowed by W.T.O which the government could reach by 2017.
For wheat the administered price was lower than the fixed price of 1986-88, the base on which the minimum subsidy limit is calculated.
Abhijit Das, professor at the Center for W.T.O Studies said that the they will be hitting the 10% limit for rice within coming few years,which will provides the rationale for India’s keenness to negotiating a permanent solution for public procurement for food security,
The government official said that according to a 27 paged notification document, India spent $56.1 billion on support for farmers in 2010-2011 and if India reaches the 10 per cent mark then the government can either reduce M.S.P or reduce the quantity procured, but it will have implications on stock holding and public distribution system.
The WTO has provided the 10% limit on total value of production of a particular crop.But the prices for M.S.P are calculated on 1986-88 prices. G-33 has sought a revision of base to a more recent year or the incorporation of inflation.
India blocked the adoption of a trade facilitation pact on July 31, which strongly demand a concurrent deal on a permanent solution to public stockpiling.
India has proposed a food security bill in which it aims at the problems which the developing countries face due to outdated WTO normss which are based on calculation of reference of 1986-88 even though global food prices have increased manifold since then
This outdated norms has made India to experience an inflation of 650% since the year 1986-88.The reference prices in the year were almost doubled between 2004-05 and 2010-11 from $187 million per tonne to $329, exceeding 1986-88 reference price of $263 per tonne.
The US in July asked for a review of food security and procurement schemes of developing countries.