US Tariffs and Global Agricultural Trade
The decision by the US to impose a 50% tariff on Indian agricultural products underscores the inequality in global farm trade. The US claims this is in response to India's protectionist stance on its markets, but it highlights the disparity between rich and developing nations in agriculture support and trade practices.
Impact on Indian Agriculture
- Agriculture is vital to India’s economy:
- Employs 46% of the workforce.
- Contributes less than 20% of GDP.
- The average farming household earns Rs 13,661 monthly, with only Rs 4,476 from farming.
- US agricultural subsidies:
- $48 billion annually in domestic support.
- Covers crop insurance and provides price guarantees.
Challenges in Indian Agriculture
- Structural weaknesses in the sector:
- Average farm size decreased from 2.28 hectares (1971) to 0.74 hectares (2021).
- High input costs and small farm sizes hinder mechanization.
- Employment in agriculture is high compared to developed countries.
Strategic Shifts Needed
- Labour transition:
- Shift workforce to manufacturing and services sectors.
- Focus on labor-intensive sectors like textiles and food processing.
- Farm consolidation and mechanization:
- Promote cooperative farming and reform land leasing.
- Support Farmer-Producer Organizations (FPOs).
- Boost value addition and export competitiveness:
- Improve logistics and reduce post-harvest losses.
- Enhance branding and quality certification.
India's Response to Global Trade Dynamics
India should take a stand in international forums to recalibrate subsidies under the WTO’s Agreement on Agriculture to protect developing countries' interests. The need for a separate agricultural budget like the Rashtriya Kisan Kalyan Kosh is emphasized to secure the future of Indian agriculture.
