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Kathmandu Friday June 22, 2001 Ashadh 08, 2058.
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Indian agriculture export
policy could affect Nepal
By Bhaskar Sharma
KATHMANDU, June 21 - The proposal of the
Indian government to grant direct subsidies to farm produce export, in addition to
removing all existing quantitative restrictions on their exports, may come as a boon to
Indian farmers, but for their brethren in Nepal, it might spell a disaster.
The proposal, first of its kind in India,
which still awaits Cabinet approval, was presented by the Indian Commerce Ministry this
week. According to The Economic Times, June 20 edition, traders exporting agro-products
— like rice, wheat, sugar and pulses – will be paid back the difference between
their total costs and the final realized export price.
Though aimed at improving the
competitiveness of the Indian products vis-a-vis the American and European products, once
approved, the decision could provide a heavy blow to the Nepali farmers. Indian farmers
already enjoy the competitive edge in terms of cost of production over the Nepali farmers.
This is likely to aggravate the already
worsening price situation for the Nepali farmers. Low priced agro-imports from India last
year pulled down the prices of most of the domestic agro-products, making food grain
production an unfeasible venture.
"If India moves forward with the
export subsidies, Nepali farmers will have a tough time surviving since the prices of
Indian agro-products in the Nepali markets are already lower," says Ratneshwor Lal
Kayastha, Secretary at the Ministry of Agriculture and Cooperatives.
"If the Indian Cabinet endorses the
proposal, some counter action for protecting farmers’ rights would be more than just
necessary," says Kayastha, adding, "With a giant economy like India to the
south, and the 1,700 kilometers long open border, we cannot sit on the rot of the failed
policy."
The effect of the latest decision would be
more severe since import tariffs for agro-products presently stand at only 10 per cent.
The latest proposal of the Indian
government is also a major blow to the anti-subsidy drive in Nepal led by the Asian
Development Bank (ADB) Nepal, which already had one of the lowest subsidy bills in the
world, had to revoke the remaining subsidies in fertilizers and most irrigation facilities
since 1999, though India continue to subsidize its agriculture inputs, including
electricity, fertilizers and irrigation. It was the ADB that successfully coaxed the
government in scrapping subsidies during the signing of the Second Program Loan during mid
nineties.
With the latest move in India to grant
export subsidies, experts here say that Nepal has no option but to reintroduce subsidy in
basic agriculture inputs.
"It is high time that Nepal resolve
subsidy issue. There is a need for subsidy not just in irrigation facilities, but also in
fertilizers and exports," says Ratnakar Adhikari, General Secretary of South Asia
Watch on Trade, Economics and Environment (SAWTEE). "The agriculture sector must be
protected."
The contribution of agriculture to
Nepal’s Gross Domestic Product (GDP) presently stands at around 40 per cent and
absorbs 80 per cent of the total work force.
The proposed export subsidies in India are
a part of a new agricultural export policy aimed at encouraging Indian agro-products
export. The latest Indian move was prompted due to the lack of enough food grain storage
facilities, aggravated by an unprecedented favourable monsoon for twelve consecutive years
that raised the aggregate agro-production in India to new heights.
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