(a) Discuss the characteristic features of Agreement on Agriculture (AOA) under Uruguay Round of GATT and examine its impact on…

(a) Agreement on Agriculture (Uruguay Round) and its impact on Indian agriculture

The Agreement on Agriculture, in force from 1995 under the WTO, brought farm trade under multilateral rules through three pillars.

(i) Market access. Non-tariff barriers were converted into bound tariffs ("tariffication"), to be cut by 36 per cent (developed countries, over six years) and 24 per cent (developing countries, over ten years), with minimum access quotas.

(ii) Domestic support. Trade-distorting support measured by the Aggregate Measurement of Support (amber box) was to be reduced by 20 per cent (developed) and 13.3 per cent (developing), with exemptions for the green box and blue box and a de minimis limit (5 per cent developed, 10 per cent developing).

(iii) Export competition. Export subsidies were to be cut (36 per cent by value and 21 per cent by volume for developed countries, with smaller cuts for developing countries).

(iv) Special and differential treatment and the Sanitary and Phytosanitary rules.

Impact on India. India bound its tariffs at high levels (about 100 per cent on primary and 150 per cent on processed products), and removed quantitative restrictions in 2001. Gains came in exports of rice, cotton and other products, but import surges in edible oils and pulses hurt farmers, and price volatility rose. India's support stayed within limits because product-specific support is measured against 1986-88 reference prices, but it became concerned that minimum support prices and public stockholding could breach the limits as prices rose, which led to the Bali (2013) "peace clause". Overall, effects were mixed, with exposure to world prices and subsidies in rich countries.

(b) Targeted Public Distribution System (TPDS)

Features. TPDS began in June 1997 to target households below the poverty line with subsidised foodgrains: (i) two-tier prices for families below and above the poverty line; (ii) central issue prices and allocation from the Food Corporation of India, with states responsible for identifying beneficiaries and distribution through fair price shops; (iii) Antyodaya Anna Yojana (2000) for the poorest, with 35 kg per family; (iv) since the National Food Security Act 2013, priority households (up to 75 per cent of rural and 50 per cent of urban population) get 5 kg per person a month at Rs 3, 2 and 1 for rice, wheat and coarse grains.

Success? Partly. It has improved food access, buffers prices and cushioned the poor in crises. But targeting errors (exclusion of the eligible and inclusion of the ineligible), leakage and diversion (the High Level Committee of 2015 estimated leakage near 40 per cent or more), poor quality grain and fiscal cost reduce its success. Reforms such as computerised records, Aadhaar seeding, electronic point-of-sale machines and One Nation One Ration Card have reduced leakage in many states.

(c) FEMA, 1999 and its deviation from FERA

Features of FEMA (in force June 2000). (i) Its aim is to facilitate external trade and payments and promote orderly development of the foreign exchange market. (ii) Current account transactions are free unless restricted, while capital account transactions are regulated by the RBI and the Centre. (iii) Dealing in foreign exchange is through "authorised persons". (iv) Contraventions are civil offences with monetary penalties (up to three times the amount involved), decided by adjudicating officers, and appealed to an Appellate Tribunal. (v) Compounding of contraventions is permitted.

Deviation from FERA (enacted 1973). FERA aimed at conserving scarce foreign exchange, treated most transactions as prohibited unless permitted, made violations criminal offences with arrest and a presumption of guilt, and imposed special limits on firms with foreign equity above 40 per cent. FEMA shifts from control to management, from criminal to civil liability, and treats foreign investment more liberally, in line with the post-1991 reforms.