India’s $48 bn input subsidy for power and agri raises hackles

The US, EU, UK and Australia, along with four others, raised concerns at India’s input subsidies for power, irrigation and fertilisers reaching $48 billion in 2022-2023. The US said at a meeting at the World Trade Organization (WTO) last week that this was more than twice the value of all tradedistorting support that it had notified in 2021-22 and called for greater transparency from India.

Input subsidies available to lowincome or resource-poor producers in the country amounted to $32 billion in 2021-22. As per the Agriculture Census for 2015-16, 99.43% of farm holdings in the country are of low-income or resource poor farmers.

The input subsidies, covered in Article 6.2 of the Agreement on Agriculture of the WTO, allow developing countries additional flexibilities in providing domestic support. They are not subjected to caps as other farm subsidies, such as price and income support, included in Aggregate Measurement of Support (AMS) which is fixed at 5% of agriculture production for developed countries and 10% for the developing ones. The AMS are called de minimis entitlements.

“The US said the scale of India’s input subsidies and the rapid increase in expenditures are matters of concern,” said a Geneva-based official, who did not wish to be identified.

As per the official, India explained that the input subsidies, which are mainly for power, irrigation and fertilisers, saw an increase due to inflation and higher cost of fertilisers. It also insisted that the information had been notified to the WTO.

Similar concerns were raised by Canada, Brazil, New Zealand and Japan.