Discuss the different types of subsidies and supports provided by the Government of India to agricultural sector. Examine the related issues pertaining to Agreement on Agriculture of World Trade Organisation (WTO).
Approach · directive: “discuss / examine”
What it asks · Classify the direct and indirect support India gives to agriculture, then examine how it interacts with the WTO Agreement on Agriculture's rules and disputes.
The question has 2 parts — answer each
- Discuss the different types of subsidies and supports the Government of India provides to agriculture
- Examine the related issues under the WTO Agreement on Agriculture
Open with · Indian farm support ranges from input subsidies to price support and income transfers, while the WTO Agreement on Agriculture sorts support into boxes by how much it distorts trade.
Cover
- Input subsidies: fertiliser (urea and Nutrient Based Subsidy), power, irrigation, seeds and farm machinery.
- Credit and risk: interest subvention on crop loans, Kisan Credit Card, PM Fasal Bima Yojana.
- Price support: MSP with procurement for rice and wheat, PM-AASHA for pulses and oilseeds; food subsidy through PDS.
- Income support: PM-KISAN (₹6,000 a year) — decoupled, Green Box-compatible support.
- AoA rules: Amber Box support capped at 10% of production value for developing countries; Article 6.2 exempts input subsidies to low-income, resource-poor farmers.
- Issues: MSP support measured against 1986–88 reference prices inflates India's support figures; India invoked the Bali peace clause for rice.
- Other issues: permanent solution for public stockholding, Special Safeguard Mechanism, export curbs, developed countries' large Green Box and historical subsidies.
Close with · India must defend its food-security space at the WTO while gradually shifting towards less distorting, income- and investment-based support.
Add value (verified)
- The 2014 WTO General Council decision keeps public stockholding for food security protected until a permanent solution is agreed. PIB — Exemption for India's food stockholding from WTO subsidy rules ↗“WTO members will not challenge the public stockholding programme of developing Members for food security purposes, in relation to certain obligations under the WTO Agreement on Agriculture, will remain in place in perpetuity”
Question: UPSC's CS (Main) 2026, GS Paper III — paper ↗. Approach: Minimalist IAS, checked 30 Sept 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer · 286 words (UPSC limit 250) · Minimalist IAS
Indian farm support ranges from cheap inputs to price guarantees and cash transfers, while the WTO Agreement on Agriculture (AoA) sorts such support into boxes by how far it distorts trade.
Types of subsidies and support
- Input subsidies: fertiliser (urea and the Nutrient Based Subsidy), electricity and irrigation water, seeds and farm machinery.
- Credit and risk: interest subvention on crop loans, the Kisan Credit Card and PM Fasal Bima Yojana.
- Price support: MSP backed by procurement for rice and wheat; PM-AASHA for pulses and oilseeds; the food subsidy that funds the PDS.
- Income support: PM-KISAN's ₹6,000 a year, a decoupled transfer compatible with the Green Box.
- General services: research, extension and market infrastructure, which the AoA treats as non-distorting.
Issues under the WTO Agreement on Agriculture
- Box logic: Green Box support is unlimited; Amber Box support is capped by the de minimis limit of 10% of the value of production for developing countries; Article 6.2 exempts input and investment subsidies to low-income, resource-poor farmers.
- Reference-price problem: market price support is measured against fixed 1986-88 external reference prices, so inflation alone inflates India's notified support; India invoked the Bali peace clause for rice.
- Public stockholding: the 2013 Bali interim mechanism and the 2014 General Council decision shield procurement for food security until a permanent solution, which remains unresolved.
- Other frictions: no Special Safeguard Mechanism against import surges; questions over India's export restrictions; developed countries' large Green Box and historically entrenched subsidies leave the rules asymmetric.
- Domestic side: open-ended rice-wheat procurement distorts cropping and strains water, so reform is needed on its own merits, not only for WTO compliance.
India must defend its food-security space at the WTO while gradually shifting towards less distorting income- and investment-based support.
Written by Minimalist IAS from facts checked at source (how we verify) — a little fuller than exam length, so every part of the question is covered; in the hall, keep the structure and trim the detail. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.