Dec 01 2014 : The Economic Times (Delhi)

Don't Wait for WTO to Reform Food Subsidy





It is highly significant that all 160 member countries of the World Trade Organisation have reached consensus on what would be the first global agreement on trade liberalisation in two whole decades, that on trade facilitation and easier customs procedures. The deal would reduce transactions costs, red tape, and corruption at sea ports and cargo airports, by standardising norms, improving logistics and reducing delays in the movement of goods. Trade experts estimates that global incomes could rise by as much as $2 trillion.India did succeed in stalling the deal by several months on the issue of subsidy expenditure on food security; it has now been agreed that food stockholding programmes in the devel oping world will not be subject to WTO dispute procedures, until a permanent agreement is arrived at a later date. Note that in the Bali ministerial last December it was decided that there would be a four year window for the purpose, but there would now be no such deadline. Yet the Modi government needs to promptly reform our high cost food subsidy regime and the effective nationalisation of grain stockholding and attendant trade, with its cost-plus padding and routine inefficiencies. One recent report mentioned how FCI loaders earned up to Rs 4 lakh per month thanks to generous overtime payments. What is desirable is higher stockings for private trade, and streamlining of public grain procurement to avoid distress sales.
In tandem, we need to purposefully boost trade in both goods and services, to realise huge economic gains. It would be extremely costly to be trade-myopic. The WTO, instead of always seeking unanimity , should actually be seeking more pluri-lateral agreements among like-minded nations, with others welcome to sign on at a later date.