CURRENT AFFAIRS
CURRENT AFFAIRS
Description
In 2022, Indian farmers faced $169 billion in implicit taxation as a result of export bans, levies, and permits on commodities such as wheat and rice. According to the Organization for Economic Cooperation and Development's (OECD) most recent review of global agricultural policy and support, this taxation was established to stabilize consumer prices.
Negative Market Price Support (MPS) Policy In India
In 2022, India's negative MPS policy taxation accounted for more than 80% of such taxes globally, making it a substantial contributor to the problem. The analysis found that the implicit levy imposed on farmers in the 54 nations studied was almost $200 billion globally.
Recognizing Market Price Support (MPS)
Market Price Support (MPS) quantifies the gain or loss experienced by farmers as a result of domestic prices that differ from world prices. MPS is the monetary worth of annual gross transfers from consumers and taxpayers to agricultural producers. These transfers result from governmental actions that generate a difference between domestic market pricing and farm gate prices for specific agricultural commodities.
Budgetary Transfers And Offset
While other emerging nations were able to overcome negative MPS by additional budgetary support, India experienced difficulties. Budgetary transfers to Indian farmers, including subsidies for variable inputs such as fertilizer, energy, and irrigation water, as well as the PM-KISAN project, did not entirely compensate for the price-depressing effects of domestic marketing laws and trade policies.
The Effect Of Export Restriction
In response to the advent of war in Ukraine and a heatwave, India imposed export bans, taxes, and permissions on a number of commodities in 2022. While these regulations attempted to keep domestic prices consistent for consumers, they resulted in lower revenues for producers (farmers) than they would have earned otherwise. Rice, wheat, sugar, onions, and allied goods were among the commodities affected.
Findings Of The OECD Report
According to the OECD analysis, which was released on October 30, practically all gross producer transfers, whether positive or negative, frequently take forms that distort production and trade. Over the last two decades, India's net support to producers has been negative, with fluctuations.
Global Agricultural Support
From 2020 to 2022, total agricultural subsidies in the 54 countries analyzed by the report totaled $851 billion per year. This was a rise from the $696 billion averaged in the three years preceding 2020, owing mostly to responses to the COVID-19 epidemic, inflationary pressures, and the impact of the Ukraine war.
Forms Of Support And Their Impact
Two-thirds of the $630 billion in positive producer support across 54 nations were considered "potentially most distorting" to output and trade. These types of assistance included output-based compensation and the unrestricted use of variable inputs. Such assistance is notorious for its inefficiency and lack of targeting, which frequently results in higher input or land prices.
Differences Between Emerging eEconomies And OECD Nations
In 2020-22, emerging economies had a higher incidence of possibly most distorting policies, generating positive assistance equal to 10% of total agricultural receipts and implicit taxation equal to 6% of gross farm receipts, according to the analysis. OECD countries, on the other hand, had positive support equal to 7% of gross farm income but did not implicitly tax producers.
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