Public Sector Banks recapitalization plan

Can be also read at our blog

Public Sector Banks recapitalization plan

Indian government has come up with intent to strengthen the Public sector banks. The national financial system had been observing the alarming rate of rising NPAs of the PSBs and that had been a major concern in the economy. The total amount of   Rs. 2,11,000 Crore to Clean Up Legacy of NPAs will be released in next 2 years through budgetary provisions of Rs. 18,139 crore, recapitalisation bonds to the tune of Rs. 1,35,000 crore, and the balance through raising of capital by banks from the market while diluting government equity (estimated potential Rs. 58,000 crore).

Biggest thing to consider is that government’s actions will not be confined solely to mere recapitalization program. Owing to a fact that PSBs have a share of more than 70 % in financial system, further steps will be taken to enhance their role in financial system.MSMEs growth will also be paid special attention.GOI concluded that aggressive loaning to sectors with excessive capacity created large stressed assets as high as 12% by 2014.Asset quality reviews carried out in 2015 revealed high level of stress among the PSU banks. Gross NPA rose in PSBs from from 5.43% (Rs. 2,78,466 crore) in March 2015 to 13.69% (Rs. 7,33,137 crore) as of June 2017.

The need for such stimulus package.



Gross NPA rose in PSBs from from 5.43% (Rs. 2,78,466 crore) in March 2015 to 13.69% (Rs. 7,33,137 crore) as of June 2017.There had been consistent fears about the strain faced by banks and various rating agencies had been time again emphasising the need to make some revamp in the existing banking system. By March 2017 8 of major PSU banks had NPA s as high as 10 %.However few banks had been able to let their NPA ratio come down ,and their seemed an indication that this trend may continue in the future.

Steps taken by government in this regards over last few years.


Indradhanush Plan for recapitalising PSBs was announced by the Government on 14.8.2015. Government envisaged capital need of Rs. 1,80,000 crore till 2018-19. Accordingly, Government made provision   of  Rs.  70,000   crore   and projected market-raising of capital by banks to the tune of Rs. 1,10,000 crore. The launch of Indradhanush before the sharing of AQR findings by RBI with PSBs in December 2015 enabled PSBs to successfully remain Basel III compliant despite high NPA and consequential provisioning requirement identified through AQR. The present decision further builds upon Indradhanush.

Government also undertook several legislative changes to facilitate recovery and resolution of stressed assets. The Insolvency and Bankruptcy Code, 2016 was enacted as a unified framework for resolving insolvency and bankruptcy matters. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (which governs Debt Recovery Tribunals) were amended in 2016 to facilitate faster recovery. Further, the Banking Regulation Act, 1949 was amended this year to enable Government to authorize RBI to direct banks to initiate the insolvency resolution process under the Insolvency and Bankruptcy Code.




Industries’s reaction

Industry had a cautious welcome to the steps announced. Moody’s services indicated that government’s plan is a positive move to recapitalise the PSU banks. It expects that this will help in addressing the issue of weak capitalisation of PSU banks. US-based agency expects that all rated PSU banks would get enough capital to satisfy their Basel III capital requirements ( as well as adequately address their asset quality challenges.

Industry, lawyers and economist sought a greater detail on the roadmap for the recapitalisation plan. A general consensus existed that this move will enhance public investment, which will boot private investment,but the roadmap has to be disclosed.  Government’s statements that the ‘recap bonds’ concept has to be worked out and that it was possible that these bonds may not involve cash flow. International Monetary Fund, such bonds may not be included under fiscal deficit — as it does not add to the spending.

Market’s reaction



Indian markets reacted positively to government stimulus plan. Shares in some of India’s largest banks surged by more than a quarter on the government’s program. The share price of Punjab National Bank, the second-largest state-controlled bank by assets, rose 49 while that of State Bank of India, the country’s largest lender, jumped 27 per cent. Other major state banks such as Bank of Baroda and Canara Bank jumped 28 per cent and 38 per cent respectively.



Other announcements


Government also made few other announcements about the macroeconomic stability of Indian economy, the way growth is expected to grow and also the efforts which have resulted into containing the inflation.There has been good increase in FDI. The gross FDI flows to India in 2016-17 amounted to US$ 60.2 billion, as compared to US$ 55.6 billion in 2015-16 and US$ 45.1 billion in 2014-15. As on 13th October 2017 the foreign exchange reserves exceeded US$ 400 billion.


Transformational reforms like GST , Insolvency and Bankruptcy Code, Housing Development, Improved ease of doing business, Institutional reforms{schemes like Ujwal DISCOM Assurance Yojana (UDAY) programme for DISCOMs; liberalization of FDI norms in various sectors; and approval of National Intellectual Property Rights Policy were mentioned} and highest ever disinvestment program were mentioned.



Government’s expectations now


GOI feels that such steps will have a positive impact over the next medium to long term strengthening of PSU banks. Lately SBI and its associated banks have been consolidated into one single identity which has now enabled it to be one among 50 largest banks in the world. So the government expects it to have a noticeable impact over the next coming years.










Press information bureau link on 24th October.



Msc Economics

Doon University{2011-16},

RBI Monetary Policy stance of October,2017.

Can be also read at out blog.

RBI Monetary Policy stance of October,2017.



RBI Monetary Policy Committee decided to keep the key rates constant keeping in mind the the rising inflation rate which may settle within 4.0-4.5 % for the rest of fiscal 2018.This neutral stance has been consistent with the policy objective to keep CPI within 4% in a band of  -/+2, and also ensuring that growth momentum is also supported. During the August meet of MPC repo rate had been cut by 25 basis points to 6 % due to fall in inflation. However there had been genuine concerns raised due to loan waivers given to farmers of 88,000 cr which were expected to raise the inflation rate permanently by .2 %


RBI’s assessment


Since the last meet conducted in August 2017, Global economic activities have broadened.

Q 2 results in USA have been promising, although in near term the growth may be affected due to recent hurricanes which caused immense destruction of property. A positive opinion can also be made about the Euro zone economic activities too.Chinese; Japanese, Russian, Brazilian economies continued to be on trajectory of global growth thus enhancing global demand.

WTO assessment has also been positive for fiscal 2017 as compared to the 2016 financial year.OPEC crude production has been cut ,resulting in decline in the supplies and growth in demand, resulting in 2 year high price witnessed in the global crude price. Indian capital markets touched year high in September, before showing little decline due to conflicting situations in Korean peninsula. Equity markets have been on rise in most of the advanced economies. Same has been trend witnessed in the emerging markets. Capital inflows have been rising in the emerging market economies, but they also depend upon the stance of US Federal reserve.

Euro currency grew strong while Japanese Yen witnessed volatility. In India real gross value added (GVA) growth slowed significantly in Q1 of 2017-18.South west monsoon arrived at time but its activity slowed during the time from Mid July to August, thus registering a shortfall of 5 % by September end. This also reflected a decline of reservoir filling capacity to 65 % as compared to 75 % a year ago .Index of Industrial productivity figures grew as compared to June where they had contracted. Manufacturing has been weak although. Inflation figures did hit a 5 month high. Liquidity in the system persisted and at the same time currency in circulation also increased at moderate pace. Indian export growth picked up, better from previous declines over last 3 recorded months. Although Indian exports remained less as compared to many major economies. Gold import has declined, but the current account deficit has also increased considerably.Net FDI has been higher compared to previous fiscal. India’s foreign exchange reserves stood at 399 Bn $.Debt investment saw considerable rise, although there was equity outflow due to global uncertainties.


RBI’s Outlook and growth concern


MPC has assessed that food inflation will be around 4.2-4.6 % for the rest half of the year. Loan waiver given to farmers may put pressure on prices. State’s implementation of salaries similar to centre’s is also bound to put pressure on the inflation figures.Khariff production seems to be falling and so far GST has also seemed to have had adverse affect in manufacturing and thus may have slow investment over period of time.  The projection of real GVA growth for 2017-18 has been revised down to 6.7 per cent from the August 2017 projection of 7.3 per cent, with risks evenly balanced.

The MPC insisted the need to fasten up investment activity which, in turn, would revive the demand for bank credit by industry. Recapitalisation of public sector banks adequately will ensure that credit flows to the productive sectors. Infrastructure bottlenecks need to be checked. Stalled investment projects need to be restarted, particularly in the public sector; enhancement in ease of doing business, along with further simplification of the GST is needed; and ensuring of faster rollout of the affordable housing programs is  must  along with rationalisation of excessively high stamp duties by states.

Next MPC meet will be in December, 2017.


Opinion and expectations


Indian economic growth had slowed to 5.7 % for the first quarter of fiscal 2018, due to effects of demonetisation and change to GST regime. Many prominent economists believed a need to cut the rate to give a boost to the economy. But a slow growth accompanied with a rise in inflation left less room for RBI to cut rates. The policy has been in stance with RBI mandate to keep inflation in check.

Home loan rates are lowest and are unlikely to go down further. Few prominent investors viewed that inflationary pressures are on upside and considered it as a cautious approach. Some had opinion that downside risk to growth has increased. Dampened activities have shown negative effect in all sectors. If such price pressures continue then government will have to boost its spending that may affect fiscal deficit targets.










Budget improvements-Change to new financial year.

Taken from out blog,”Brinks of economic thoughts”


Budget improvements-Change to new financial year.


Indian budget making process is witnessing many steps to the direction of improvement in budget making process. From 2017 we have seen merger of plan and non plan expenditure and now the budget dates, the day on which annual financial statement is laid on the table of house have also been changed to 1st February. A federal nation needs to check into the aspiration of the population who are residing even to far remote areas. Concept of cooperative federalism has gained prominence and now we are witnessing a scenario when more and more competitive cooperative federalism is taking place.


Our financial year starts from 1st April and continues till 31st  March .It is interesting history that how we arrived at this date which replicates the same dates on which budgetary exercises were conducted in UK,when we were  among the  colonial rule of the British crown. In UK 25thMarch is observed as Lady Day. Cultural reasons played a major role for commencement of financial year from 1stApril.

East India Company when ceded the administrative powers to British crown post 1857 war of Independence, we had budget dates as 1st May. It was in 1867 the financial year was changed from 1st April to 31st March. This enabled to align Indian accounting system to the British crown accounting systems at that time.

Post Independence we had Indian Independence Act 1935, which formed the major basis of our constitution. Article 112 for centre and 202 marked a point about the Annual financial statement for president and governor respectively, by central and state governments.


Our entire polity studies are in dilemma about what exactly is definition of a financial year. Although article 367 {1}.General clauses Act, makes a point about commencing from 1st April.


Till date many commissions conducted studies concluding that 1April-31st March FY is not suited for India.

Chamberlain commission 1913, Dinshaw Wacha 1921,1stARC 1966,LK Jha 1984 ,C Rangrajan 2011 and even lately Shankar Acharya commission in Dec 2016 concluded same findings.


India is dependent on good monsoons. A good monsoon enhances demands for FMCG to all consumer goods, increasing tax collection.

While drought years make it difficult to enhance income and so we see low demands, food inflation, and thus tight monetary policy by RBI. This will also lower water storage at dams and multipurpose projects thus lower electricity generation. It will altogether make difficult for industries to flourish and interest rates will also be high. Expenditure will be more while the Actual receipts will be less.


Many experts suggested to negate impact of less monsoon it is essential to change the FY.Actually currently Budget is tabled in February and passed till June, which makes it possible to send money to government agencies by July. In case monsoon fails, agencies since receive money late are unable to built irrigation facilities. Also by next year the assessments which are made are made by data which might be as old as 6 months.


Now in case if altogether the FY year is changed we may have latest data. Suggested dates can be 1st Jan, which has been consented by Central Statistic Organisation at UN will not be problematic in providing data. There are many other suggestion for better dates which actually ensure that money is at hands of agencies before commencement of monsoons, Things like advance tax collection have also been kept in mind.

It is transformation from reactionary to proactive policy making.

Nations like US have FY commencing from 1st October. Many nations like Pakistan have from 1st July. Many MNCs and nations like China have year from 1st Jan.

Altogether change may be problematic, so transitional stages can be done by phased manner.

Many complex tax issues may come up, but have got to be looked after. Interestingly few studies have suggested that we have overrated impact of monsoon on agriculture.

Overall it seems that we are moving towards a phase wise transition of our FY which would take into consideration the impacts of monsoon to fiscal deficit containment .


Harsh Vardhan Pathak

One of biggest conducted exercises in India in recent times-Scrapping of old notes, Demonetization

This has been taken from our blog,”Brinks of economic thoughts”

One of biggest conducted exercises in India in recent times-Scrapping of old notes, Demonetization

With the advent of new year we remembered previous year as one which saw a major initiative being taken by the government to end the use of old notes of 500 and 1000.Being a student of economics, many knew that in a way to curtail unchecked flow of black parallel economy it is essential to end up the use of notes with higher denomination. But it also depended on the courage of the leader as peoples in government always knew where the problem lay.

Few have forgotten the times when Mr P Chidambaram had taken a step in his general budget during UPA 1 regime to levy taxes whenever there is any cheque transaction more than 25,000 INR.

It was a step which had not gone well that time with opposition, [which is now ruling government] opposing the step severely. Finance minister that time had insisted that this is all major exercise to bring all the monetary transaction into cheque transactions or cheque economy..

This may have been a surprise but owing to  a fact that tax evasion is a very major problem in the nation and also it is difficult to know for which purpose the money has been getting used from various rangers of unlawful activities to anti nation activities, it was crucial to take some kind of a drastic and unexpected measure.

We had seen an anti draft campaign carried in the nation during UPA 2 regime, seeking Lokpal acts and seeking more and more transparency in the public life. Even with the new regime we had been watching that the government had been pretty concerned about raising the issue of disclosing the names of people who have stashed illegally  huge amount of money into safe tax heavens .At various international summits issues of money laundering had been gaining attention. This issue had been getting reciprocated by major financial powers at major summits also like G-20,etc.

The issues related to the execution could have been discussed, for the matter, but how could then this be ensured that secrecy of matter would remain. India has shown at instances that if we wish we can surely conduct secretive exercise.We have not forgotten the time of Pokhran Nuclear test 1998,where best of satellites of USA  could not find a clue that India would be conducting nuclear test.

Global financial giants like Goldman Sachs , Ernst & Young have come with the forecast of slowing down of economy for a quarters or so. But gradually they have all, assumed that the in totality this exercise will have fruitful impact on whole. The best positive out of this exercise will be the broadening of tax base, which earlier was very minimal, Our nation had very less numbers of peoples who had been paying taxes, and now the rest will have to disclose their income.

Given the kind of deficits the economy had been facing and also that we are trying to implement various social welfare schemes it was necessary that majority of people who are not paying taxes must pay and the whole nation must grow in totality.

With advent of thing like digital transactions and cashless economy, it is vital that data breach must be checked along with availability of strong broadband connectivity. As we are planning to completely digitalise the economy ,it is also vital that the peoples who are illiterate or have less idea of use of new digital transactions , must be taught about the use of modern IT uses. Some far areas still lack in it, and we have seen sincere steps by governments over past years to ensure that many of villages are connected with internet connectivity.

Questions can be raised about timings, or about the execution, or about the problem faced by masses, but intent does not seem wrong, We saw a good amount of money already disclosed under Income disclosure scheme.

Strangely many nations in past have conducted similar exercise, like Myanmar did in 1990,,or even Russia, Even lately we have seen Venezuela doing similar exercise.

Hoping for the transparency and now availability of huge funds back into banking system we can expect low interest rates and availability of huge money for important infrastructural projects or loans.

This will remain very controversial exercise but hoping that it gives good results.IMF and WB have also indicated that for long run  benefits certain pains can be taken and economic activities are bound to regain their pace with passage of time.


Harsh Vardhan Pathak

Msc Economics


A short note on the Recommendations of Malhotra committee on insurance sector,,,

This has been taken from our blog,Brinks of economic Thoughts.

A short note on the Recommendations of malhotra committee on insurance sector,,,




In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector. The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein, among other things, it recommended that the private sector be permitted to enter the insurance industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners.


Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market.


In its report submitted in 1994, the committee recommended, among other things, that:


Private players be included in the insurance sector.

Foreign companies be allowed to enter the insurance sector, preferably through joint ventures with Indian partners.

The Insurance Regulatory and Development Authority (IRDA) be constituted as an autonomous body to regulate and develop the insurance sector.


The key objectives of the IRDA would include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums while ensuring the financial security of the insurance market.


Brokers representing the customer be brought in as another marketing and distribution channel, a practice prevalent in most developed markets

Raise the level of professional standards in risk management and underwriting and speed up settlement of claims.


Following the recommendations, the IRDA was constituted as an autonomous body in 1999 and incorporated as a statutory body in April 2000. With the coming into force of the IRDA Act, 1999, the insurance industry was opened up to the private sector

Under the IRDA Act, an Indian insurance company will be allowed to conduct insurance business provided it satisfies the following conditions:


It must be formed and registered under the Companies Act, 1956; The aggregate holdings of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees, should not exceed 26% paid up equity capital of the Indian insurance company;


 Its sole purpose must be to carry on the life insurance business or general insurance business or reinsurance business.2 To operate the insurance business in India, the Indian insurance company has to obtain a certificate of registration from IRDA.


It has also been provided in the IRDA Act that on or after the commencement of the IRDA Act, no insurer will be allowed to carry on the life and general insurance business in India, unless it has a paid up equity capital of Rs. 1 billion. For carrying on the reinsurance business, the minimum paid up equity capital has been prescribed as Rs. 2 billion. The Reserve Bank of India(RBI) has also issued guidelines for banks entry into the insurance business.

Harsh vardhan pathak

Msc economics integrated


while studying insurance sector i came across with malhotra committee recommendations to invite foreign players in indian insurance sector..,,i prepared this note from online news material,,,it was more of copy pasted,,,but i read each line in my continuous journey to explore field of contemporary finance]


Changes in monetary stance in last Decade

This has been taken from our blog,”Brinks of economic thoughts.”

Changes in monetary stance IN LAST DECADE


[This had been written when Raghuram Rajan was appointed the RBI governor.

Last year we saw many issues which came up during the time when he left the job at RBI.

Given a fact that he has had immense contribution to the economy and we as a student respect him with high regards.]



We know that central banks follow a policy of minimising inflation level,,,so wee did see many times in past 5 years,,that RBI did prefer hiking rates to control excess liquidity in the market,,sucking liquidity ,,thus making its efforts to contain inflation.


Even during when newly appointed governor of RBI  raguram rajan,,there was lots of hype that RBI may now prefer easing prime rates,,,but even he did prefer containing inflation as his prime target,,


The link between the real interest rate and nominal interest rate is provided by the famous Fisher equation which postulates that the nominal interest rate is the sum total of a real interest rate and expected inflation.5 One implication of this is that the nominal interest rates should move in tandem with inflation. In the real world, nominal interest rates may not change one for one with the inflation rate but the direction more often is similar. Countries with higher inflation tend to have higher nominal interest rates than countries with lower inflation. Accordingly, the nominal interest rates in advanced countries tend to be lower than in emerging market and developing countries.


  • A central bank can influence real interest rates through financial repression/reforms and lagged monetary policy response to inflation. Real interest rate is a real phenomenon, but it could change in the short-run depending on how monetary policy responds to inflation and inflation expectations.
  • For the determination of growth and investment at the macroeconomic level the real interest rate is more relevant, even though the nominal interest rate is important for investment planning at the firm level.


In the last 10-year period from 2003-04 to 2012-13, monetary policy response can be broadly categorised into four phases based on growth-inflation outcome and the rapidly changing monetary policy response:


Phase I of 5 years of 2003-08 of high growth but rising inflation concern towards the later part of the period when repo rate was raised from 6 per cent to 9 per cent and the cash reserve ratio (CRR) was raised from 4.5 per cent to 9 per cent.


  • Phase II of 2 years of 2008-10 following the global financial crisis when the repo rate was reduced from 9 per cent to 5.25 per cent and CRR was reduced from 9 per cent to 5.75 per cent.


  • Phase III of 2 years of 2010-12 of monetary tightening responding to rising inflation when policy rate was raised from 5.25 per cent to 8.5 per cent but CRR was reduced to 5.5 per cent.


Phase IV of over a year of monetary easing in 2012-13 and 2013-14 so far with the repo rate reduced to 7.25 per cent and CRR lowered to 4.0 per cent; though since mid-July 2013, the RBI has tightened the monetary and liquidity conditions without changing the policy repo rate and CRR to address exchange market volatility


Harsh Vardhan Pathak


Mutual Funds In India

This has been used from our blog ,Brinks of economic thoughts.

Mutual funds in india,



A mutual fund is a financial intermediary that pools the savings of investors for collective investment in a diversified portfolio of securities. The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 defines a mutual fund as a ‘a fund established in the form of a trust to raise money through the sale of units to the public or a section of the public under one or more schemes for investing in securities, including money market instruments’. The definition has been further extended by allowing mutual funds to diversify their activities in the following areas: 


· Portfolio management services

· Management of offshore funds

· Providing advice to offshore funds

· Management of pension or provident funds

· Management of venture capital funds

· Management of money market funds

· Management of real estate funds


A mutual fund serves as a link between the investor and the securities market by mobilising savings from the investors and investing them in the securities market to generate returns.


Benefits of Mutual Funds


An investor can invest directly in individual securities or indirectly through a financial intermediary. Globally, mutual

funds have established themselves as the means of investment for the retail investor.


1.       Professional management:

2.       Portfolio diversification:

3.       Reduction in transaction costs:

4.       Liquidity:

5.       Convenience:

6.       Flexibility:

7.       Tax benefits

8.       Transparency

9.       Stability to the stock market

10.   Equity research



Growth of Mutual Funds in India


The Indian mutual fund industry has evolved over distinct stages. The growth of the mutual fund industry in India can be divided into four phases: Phase I (1964-87), Phase II (1987-92),Phase III (1992-97), and Phase IV (beyond 1997).


Phase I: The mutual fund concept was introduced in India with the setting up of UTI in 1963.


Phase II: The second phase witnessed the entry of mutual fund companies sponsored by nationalised banks and insurance companies. In 1987, SBI Mutual Fund and Canbank Mutual Fund were set up as trusts under the Indian Trust Act, 1882. In 1988, UTI floated another offshore fund, namely, The India Growth Fund which was listed on the New York Stock Exchange (NYSB).


Phase III: The year 1993 marked a turning point in the history of mutual funds in India. Tile Securities and Exchange Board of India (SEBI) issued the Mutual Fund Regulations in January 1993. SEBI notified regulations bringing all mutual funds except UTI under a common regulatory framework. Private domestic and foreign players were allowed entry in the mutual fund industry. Kothari group of companies, in joint venture with Pioneer, a US fund company, set up the first private mutual fund the Kothari Pioneer Mutual Fund, in 1993.


Phase IV: During this phase, the flow of funds into the kitty of mutual funds sharply increased. This significant growth was aided by a more positive sentiment in the capital market, significant tax benefits, and improvement in the quality of investor service.


Types of Mutual Fund Schemes


The objectives of mutual funds are to provide continuous liquidity and higher yields with high degree of safety to

investors. Based on these objectives, different types of mutual fund schemes have evolved.


Functional Portfolio Geographical Other

Open-Ended Event           Income Funds   Domestic       Sectoral Specific

Close-Ended Scheme       Growth Funds   Off-shore       Tax Saving

Interval Scheme               Balanced Funds ELSS

                                             Money Market Special

                                             Mutual Funds

                                                                                                     Gilt Funds                                               

                                                                                                     Index Funds


                                                                                                     PIE Ratio Fund

1.      Open-ended schemes: In case of open-ended schemes, the mutual fund continuously offers to sell and repurchase its units at net asset value (NAV) or NAV-related prices. Such funds announce sale and repurchase prices from time-to-time. UTI’s US-64 scheme is an example of such a fund. The key feature of open-ended funds is liquidity.


2.      Close-ended schemes: Close-ended schemes have a fixed corpus and a stipulated maturity period ranging between 2 to 5 years. Investors can invest in the scheme when it is launched. The scheme remains open for a period not exceeding 45 days. Investors in close-ended schemes can buy units only from the market, once initial subscriptions are over and thereafter the units are listed on the stock exchanges where they dm be bought and sold.



3.      Interval scheme: Interval scheme combines the features of open-ended and close-ended schemes. They are open for sale or redemption during predetermined intervals at Nonrelated prices.


Portfolio Classification

1.       Income funds:

2.      Growth funds:

3.      Balanced funds:

4.      Money market mutual funds:

5.      Gilt funds:

6.      Load funds:

7.      Index funds:

8.      PIE ratio fund:

9.      Exchange traded funds:


Mutual Fund Investors

Mutual funds in India are open to investment by

a. Residents including

· Resident Indian Individuals, including high net worth

individuals and the retail or small investors. Indian


· Indian Trusts/Charitable Institutions

· Banks

· Non-Banking Finance Companies

· Insurance Companies

· Provident Funds

b. Non-Residents, including

· Non-Resident Indians

· Other Corporate Bodies (OCBs)

c. Foreign entities, namely, Foreign Institutional Investors

(FIIs) registered with SEBI. Foreign citizens/ entities are

however not allowed to invest in mutual funds in India


harsh vardhan pathak

World trade organisation;Agriculture and India

{Amidst various contentious issues of dispute between India and WTO,this was written as an assignment and various references were were used which have been mentioned at the end of the work}


Indian is no exception to these general trends, with a few special features. During last two decades India’s agricultural exports as a part of total merchandise exports have continued to decline from the preponderant position they occupied in the pre-independence. But with the achievement of self-sufficiency in food grains and some other major agricultural commodities, which used to account for large portion of import bill, overall imports of agricultural commodities have sharply declined. The outlay on agricultural imports as a proportion of earnings from agricultural exports has progressively declined, and all the balance has become progressively more favourable. Discussion on these issues has, naturally, to take into account the new trade regime as the stated objective of firstly to study the performance of India’s agricultural exports under WTO regime. Secondly, to analyze the competitiveness of top agri-exports of India under WTO regime. Finally, to suggest policy measures in the identified India’s agricultural. In the first part of discuss briefly introduce, the developments in agricultural trade specially the agricultural exports at the world level in the recent years and discuss the performance of Indian agriculture in this respect finally shaped the shifts in this policy. Final part, I will try to spell out the ingredients of a strategy to augment agricultural exports in the changing, and more demanding, global economy.



According to the Indian Census 2001, the share of cultivators and agriculture labourers in the total labour force of India declined from 64.8 per cent in 1991 to 58.2 per cent in 2001, while the share of agriculture value added in total value added of the country dropped from 31.3 per cent to 24.5 per cent. Thus, a 6.8 per cent shift in the output from agriculture to non-agriculture resulted in a shift of just about 6.6 per cent labour from farming to non-farming sector. If this were the case, then even if the share of agriculture is completely overtaken by the other sectors, the problem of huge income inequality between rural and urban will remain daunting. The ratio of income defining the poverty line in urban and rural India has increased from 1.29 in 1983-84 to 1.4 in 1999-00. Nevertheless, the urban-rural income differential in India is much smaller than that of developed countries (Table 1). In order to bridge these inequalities, the developed countries generally tend to resort to heavy subsidies to their agricultural sector. The rural-urban divide in India is increasing steadily and it would have to face the same problem as other developed countries are facing at present (Table 1). However, India could not afford to employ the same balancing strategy as practiced by the developed countries of providing subsidy to the agricultural sector, because its rural population is very large.

Therefore, the solution to reduce the rural-urban divide in India lies in employment-generating large-scale industrialization and expansion of agriculture processing and exports, so that each percentage point shift in the share of agriculture value added to other sectors leads to at least two percentages points shift in the labour force from farm sector to non-farm sector. Maintaining this target itself will inherently lead to a comparable growth in per capita income of the farm sector.

Agreement on Agriculture (A-o-A) and India


The success of the Agreement on Textiles and Clothing has given legitimate boosts and seriousness to multilateral trading system. Agreement on Textiles and Clothing, which promised to put an end to the country-by-country quotas on imports of textiles and clothing imposed by the major developed countries including the United States and European Union became a reality from January 1, 2005. On the other hand, the success of the Agreement on Agriculture in liberalizing agriculture was less than expected but it has opened the door to future liberalization and concrete results are expected in near future.

Agreement on Agriculture (A-o-A) or URAA:

The core objective of A-o-A is to establish a fair and market-oriented agricultural trading system. Its implementation period was six years for developed countries and nine for developing countries, starting with the date the agreement came into effect – January 1, 1995. These dates are now extended under a built-in provision of A-o-A of own review and renewal. That renegotiation is now underway, under the terms set at the fourth WTO ministerial conference in Doha and the Framework Decision agreed at the WTO General Council on August 1, 2004. The AoA comprises three sections referred to as three pillars of the agreement:

1. Market access,

2. Domestic support and

3. Export subsidies.


However at the outset, the agreement notes that the reform program should be made in an equitable way among all Members, having regard to non-trade concerns, including food security and the need to protect the environment; having regard to the agreement that special and differential treatment (SDT) for developing countries is an integral element of the negotiations, and taking into account the possible negative effects of the implementation of the reform program on least-developed and net food-importing developing countries. In addition, there are provisions of Special Products and Sensitive Products, which are to be exempted from stringent discipline of the above provisions of the A-o- A



Provision of Special Products designates a certain number of products of the developing countries that would be exempt from tariff reduction requirements and other disciplines in order to protect and promote food production, livelihood security and rural development. The key issues here are associated with the mechanism to decide on country-w ise crops. In the case of developed countries also, certain products, based on political, social and cultural considerations are designated as Sensitive Products, which will be treated less stringently. Here the main dispute lies between the United States, which has proposed 1 per cent of the tariff lines for such products while the EU is asking for 8 per cent of the tariff line.


Market Access: 

 The market access requires that tariffs fixed by individual countries be cut progressively to allow free trade. Since different countries fixed their tariffs at different levels confronting the interest of each other, several harmonizing formula such as Uruguay Round formula , Swiss formula, Girard formula, and Canadian “income tax” formula were suggested to cut tariffs in which steeper cuts are suggested on higher tariffs, so as to bring all the international tariffs closer to almost the same level. All these formula have unique coefficients with different effects. The developed countries preferred Swiss mathematical Formula in which the coefficients also determine the maximum tariff where the starting tariffs will end up. For example, if the coefficient is 20, then a very high starting tariff will end up with a national tariff of exactly 20 percent and lower starting tariffs will end up proportionately lower, close to 20 percent as well. The developing countries do not like this formula because it quickly brings them closure to the competition, a situation they are not prepared. The key arguments is that the developed countries want to deprive developing countries a facility that has been extensively used by them to achieve current state of their economy.

Other formulae are more flexible. For example the formula used in the Uruguay Round for agricultural tariff reductions required that tariffs be cut by a percentage average over a number of years; in that the developed countries agreed to cut tariffs by an average of 36 percent over six years with a minimum of 15 percent on each product; some cuts could be greater than others and thus the combination of average and minimum reductions allows countries the flexibility to vary their actual tariff reductions on individual products.

Domestic support and the little boxes

The A-o-A broadly subdivides domestic support programs into three boxes with colours, green, blue and amber and two other categories namely Development measures and de minimis. Under current WTO rules, countries are free to employ subsidies under the “green” and “blue” boxes, certain development measures, and the de minimis subsidies. In addition there are some Non-trade concerns (NTCs) listed in the preamble to the A-o-A, which can be used to legitimize government programs that run contrary to the market-oriented agricultural trading system. They include food security, rural development and environmental protection. The European Union wants to include animal welfare and eco-labeling as NTCs. 

Development measures cover direct or indirect permitted (A-o-A article 6.2) assistance aimed at encouraging agricultural and rural development in developing countries and is allowed. They include investment subsidies generally available to agriculture such as research and development, extension programs, and soil and water conservation; and agricultural input subsidies available to low-income or resource-poor farmers such as fertilizer, water, and electricity. Under the de minimis provision, developed countries are allowed to use other subsidies with an aggregate value of up to 5 percent of the total value of domestic agricultural production in the case of developed countries and 10 per cent in the case of developing countries.

The Amber Box (A-o-A Article 6) contains category of domestic support that is scheduled for reduction based on a formula called the “Aggregate Measure of Support” (AMS). The AMS calculates the amount of money spent by governments on agricultural production, except for those contained in the Blue Box, Green Box and de minimis. It required member countries to report their total AMS for the period between 1986 and 1988, bind it, and reduce it according to an agreed-upon schedule. Developed countries agreed to reduce these figures by 20% over six years starting in 1995. Developing countries  agreed to make 13% cuts over 10 years. Least-developed countries do not need to make any cuts.

Export support

 Export support include trade distorting programs such as Export Subsidy, State Trading Enterprises 2 Export Credits, Special and Differential Treatment, Special Products, and Sensitive Products aimed at benefiting the domestic producers against the international competition. A-o-A tends to eliminate or minimize such supports. Export subsidies are government payments to the exporting firms directed to encourage use of inputs from the domestic resources. Accordingly, an export subsidy program will pay the difference between a more expensive domestic input and a cheaper imported alternative in order to encourage exporters to buy inputs from domestic market. Dairy products and sugar in EU continue to receive considerable export subsidies. The U.S. Step 2 program subsidizes its cotton production through U.S. exporting firms. Export credits given by a government to underwrite the cost of doing business on commercial terms also amounts to export subsidy. Often, the United States is criticized for such policies where the United States Government gives credit to its domestic companies to deliver goods in another country but the payments are recovered from the importing countries government in long instalments and cheaper interest rate making it more lucrative for the poor countries to import from the United States. This is also one of the major points of dispute between the United States and the EU and it is now agreed that such credit line will not exceed 180 days.

 Doha Round:

Brief of the package encompassing A-o-A .The Fourth WTO Ministerial Conference was held in Doha , Qatar from 9 to 14 November 2001. In fact, the Doha Ministerial was a starting of a new round with unique feature foc used on implementation of A-o-A and “Development” of the developing countries so that they could meaningfully become part of the agreement.

 Article XVII of the GATT 1994 deals with state trading enterprises and their operations multilateral global trading system. The following Fifth WTO Ministerial Conference held in Cancun, Mexico from 10 to 14 September 2003 was dedicated to stock taking of progress in negotiations and other work under the Doha Development Agenda (DDA). However, the DDA required correcting the imbalances that penalize developing countries and improve the commitment of WTO members. The modalities3 for the Doha Round are to be completed by the end of April 2006, the draft schedule based on these modalities by 31 July 2006 and the Round is expected to conclude by the end of 2006, a date chosen carefully for the Ministerial Meeting when the term of ‘Trade Promotion Authority of the United States’ ends. In this round the latest Ministerial was held in Hong Kong Ministerial (Dec 13-18, 2005), which has given some hope for success as for the first time developing countries have managed to get a mention from developed countries of reduction in their subsidies otherwise most of the previous commitments have been falsified. The issues related to implementation of A-o-A dominate the Doha Round and they include:

1. High agriculture trade distorting subsidies granted by rich countries.

2. Agriculture export subsidies .

3. High tariffs on exports of agricultural and industrial products of interest to developing countries .

However, at various Ministerial negotiations new items from other agenda have been added to make it a comprehensive round. For example, the modalities of the A-o-A are being coupled with GATS, and investment issues. Therefore, the proposals for negotiation have transformed to include among others the following (list of all items is provided in following sub-section):

1. On agriculture, 2013 as the end date for the elimination of export subsidies with an important part frontloaded by 2010 .

2. Agreement that the EU, US and Japan will undertake the biggest reductions on agricultural subsidies that distort trade and that these will be effective cuts, which is a serious improvement as compared to the previous round.

3. On cotton, which is of key importance to many African countries, export subsidies on cotton to be eliminated by 2006 and cuts to domestic subsidies will be greater and faster than for the rest of products.

4. Special agriculture products and a safeguard to protect those agricultural products of developing countries with concerns about livelihood security, food security and rural development .

5. On industrial products, a Swiss formula to cut tariffs, with high tariffs subject to bigger cuts, thus addressing tariffs peaks and tariff escalation in particular on products of interest for developing countries. Developing countries will for a start cut tariffs only in proportion to the cuts by developed countries.

6. A step forward towards a completely duty-free and quota -free access for the world poorest country Members of the WTO .

7. On Services, the door has been opened to plurilateral negotiations .

8. Countries have started tabling collective requests in the services of sectors that are of particular interest to them.

9. Aid for Trade package, to help developing countries address their supply-side constraints.


India’s Ministerial Positions at Doha rounds and on A-o-A 

Pascal Lamy, WTO General Secretary visited India on April 5 2006 for the second time in last six months, which is an indicator of the gravity of problems being faced by Indians in meeting the demands of developed countries. The Indian position is that the development agenda and the farmers’ interest cannot be diluted and that the industrial and agriculture issues should not be mixed, while at the same time the Indian negotiators feel that no change is made in subsidy position of the developed countries, yet new elements are being introduced. Nevertheless the Indian leadership has come up to the age of globalization and is slowly shedding its defensive posture and it has been demonstrating dynamism in the WTO negotiations. India rejected the idea of introducing new issues such as Investment, Competition, Trade Facilitation or Transparency in Government Procurement, and did not consider the basic trade principles like non-discrimination or market  access appropriate for dealing with issues like Investment and Competition. The Minister for Commerce and Industry raised the concerns that sensitive industries in developing countries including small-scale industries, which sustain a large labour force, could be destroyed. India was firmly opposed to any linkage between trade and labour standards and recalled that the Singapore Declaration had once and for all dealt with this issue and there was no need to refer to it again. Similarly, on environment, India was strongly opposed to the use of environmental measures for protectionist purposes and to imposition of unilateral trade restrictive measures and considered that the existing WTO rules were adequate to deal with all legitimate environmental concerns. In fact the Minister termed them as Trojan horses of protectionism.Doha Ministerial was saved from failure to continue the work program. The African countries, deserted Indian hopes because they were promised the continuation of their trade preferences into the EU marke t for some more years. However, to the windfall pleasure of India, the round was launched with services brought into the fold of international rules through the General Agreement on Trade in Services (GATS).

At the Cancun Ministerial (10-14 September 2003), India felt that the draft Cancún Ministerial Text was grossly inadequate on implementation issues, precision, operational and effectiveness and fixing responsibility and would severely affect the interests of developing countries in agriculture, industrial tariffs and Singapore issues. There was no progress in removing barriers to export from developing countries to the developed countries. India argued that all the time-lines set at Doha for their resolution have been breached. On certain issues even the mandate itself has been questioned. To make matters worse, the draft Ministerial text accords low priority to these issues. It does not envisage any time-frame for taking decisions for resolving outstanding issues. This is in sharp contrast to the issues of interest to developed countries for which time-lines have been provided for taking decisions. On agriculture subsidies, India argued that the prevailing subsidies in the developed countries were not targeted to keeping small struggling family farms  in business but to provide hefty rents to large farmers or corporates. On the other hand, against equity, justice and fair play, developing countries are being asked to liberalize their agriculture. India felt there was an urgent need to bring down the high tariffs and non-tariff barriers on products of export interest to developing countries while ensuring that special and differential treatment for developing countries and policy space to deal with sensitive products remain an integral part of all elements of negotiations. India reiterates that under no circumstances can it accept any form or harmonization of tariffs in agriculture or obligations to create and expand tariff rate quotas.

On market access negotiations on non-agricultural products (NAMA), India favored the formula mandated by the Doha Declaration, without any amendment in any aspect of the formula.


Contentious issues and on-going Debate

The main complaint about policies supporting domestic prices, subsidized production and subsidised exports is that they encourage over-production. This works as deterrent to imports and promotes low-priced dumping on world markets. However, there are also arguments in favour of subsidies, particularly in the case of net importers of agriculture products. Such countries do benefit from imports at suppressed prices, (see for example (Panagariya, 2005). Nevertheless, depending on prolonged food aid program could render a country net importer of food due to the dependency created by circumstances and could discourage domestic production. Once such a vicious circle is created it becomes difficult to come out of it.

Agriculture subsidies

About 84 percent of farmer households in India survive with less than 2.0 hectare of land with average size of their holding being 0.63 hectare, while average size of all holdings in India is just about 1.4 hectare. Survival of such farmers is at stake if they do not get alternative means of livelihood. Where will these farmers get employment if Indian markets are flooded with foreign agricultural products under the market access program?  In India the product-specific support is negative, while the non-product specific support i.e., subsidies on agricultural inputs, such as, power, irrigation, fertilisers etc., is well below the permissible level of 10 per cent of the value of agricultural output. Therefore, India is under no obligation to reduce domestic support currently extended to the agricultural sector. Yet, subsidies are wisely considered burden in India and they are being rationalized. On the other hand, domestic subsidies in OECD countries during 2002 accounted for about US$ 226.5 billion (Table 6), which has increased to US$279.5 billion in 2004. United States spent US$4 billion as subsidy to support its 25,000 cotton producers (US$160, 000 per producer) in 2003. 4

It is also argued that in countries such as United States, subsidies are enjoyed by a selected few, mostly producing corn, wheat, cotton, soybean, and rice, while growers of 400 other crops hardly get any such subsidy. Because of income and price support programs, the farmers in OECD countries are reported to use high levels of pesticides, fertilizers and herbicides in order to increase productivity of the land and maximize profits. But, these acts also lead to pollution of rivers and lakes. Therefore, in overall assessment, it is argued that the social benefits of subsidies may be much less and deserve to be curtailed (Cooper 2004) and also see information uploaded at Table (6) compares 2002 values of subsidy for India and selected OECD countries. Subsidy constitutes almost 54 percent of the agriculture value added in OECD as compared to seven per cent in India. This figure will further go down when taken as percentage of value of agriculture output. Opposition to subsidy is also from within than outside. In the case of United States six reasons are promoted to kill farm subsidy: (1) Lower Food Prices for American Families, (2) Lower Costs and increased Exports for American Companies, (3) Budget Savings and Equity for the U.S. Tax Payers, (4) More Environment friendly Land Use, (5) Lager Market for U.S. Farmers


Oxfam, “Agriculture Dumping in Africa.” July 8, 2003.

Economic Diversification for Rural America, and (6) A more Hospitable World (Griswold, Slivinsy and Preble 2006).It is not that, the farmers in OECD countries will become jobless if subsidies are removed. The population dependency on farm is extremely thin in these countries. It is not like India, where more than 60 per cent of the population depends on farm. In OECD countries the farmers can easily switch to better options quickly as demonstrated in New Zealand, which was heavily subsidizing its sheep farmers until 1984. The sheep farm subsidy was completely removed within a span of one year after 1984 and today New Zealand is one of the least subsidized countries among OECD countries, with a subsidy incidence of just about 0.3 billion (3 per cent of total farm receipt as compared to 30 per cent in OECD)5 in 2004.

India’s Readiness: Agriculture Policy Regime

As a general policy of trade reforms in India, some 1,400 quantitative restrictions including those on agriculture products were replaced by the custom tariffs. While tariff rates have been declining and aimed to achieve the level of ASEAN countries, the average MFN tariff7 is still over 20 per cent. However, almost all the tariff lines in the case of agriculture are bound 8

The MFN tariff is based on “standard” rates of duty, which are statutory tariffs and may only be changed through legislation. Binding plays an important role in signalling to the business community an upper limit for possible tariff increases. As a result of the Uruguay Round negotiations, India had bound about 67 per cent of its tariff lines, while applied tariff were kept below bound rates. Subsequently, India submitted rectification and modifications of its schedule under Article XXVIII: 1 of the GATT, 1994 and increased the number of bound tariffs from 67%, to 72.4% in 2001. Bindings have been undertaken for previously unbound products, such as textiles and clothing, while India renegotiated some commitments on previously bound . applied tariff on agriculture products in 2004 was about 49 per cent while the average bound rate was 125 per cent. In addition, anti-dumping measures have become an important element in India’s trade policy.With the removal of QRs on India’s imports, apprehensions have been expressed that such removal may impact the domestic producers adversely and result in a surge and dumping of imports into the country. However, necessary mechanisms have been put in place to provide adequate protection and a level playing field to domestic players vis-à-vis imports. Appropriate tariffication, at peak customs duty, have been effected for these QRs. A number of agricultural and horticultural products placed on the free list of imports in earlier years have also been brought to the peak rate to ensure adequate protection to Indian farmers. Tariff binding for such products have also been renegotiated at substantially higher levels. For sensitive agricultural products, suitable enabling provision has been made to fix the statutory tariff rates at appropriate high levels. It has also been decided to amend the 1992 Foreign Trade (Development & Regulation) Act for vesting the Government with necessary powers to impose QRs as a temporary safeguard measure. EXIM Policy announced on 31.3.2001 further provides for the following measures to protect the domestic producers:  Import of agricultural products like wheat, rice, maize, other coarse cereals, copra and coconut oil has been placed in the category of State Trading. The nominated State Trading Enterprise will conduct the imports of these commodities solely as per commercial considerations. Similarly, import of petroleum products including petrol, diesel and ATF has also been placed in the category of State Trading. Import of urea will also be done through the mechanism of State Trading.Imports have also been made subject to various existing domestic regulations like Food Adulteration Act and Rules there under, Meat Food Product Order, Tea Waste (Control Order) and import of textile material using the prohibited dyes has been banned. To ensure that import of agricultural products do not lead to unwanted Infiltration of exotic diseases and pests in the country, it has been decided to subject imports of all primary products of plant and animal origin to ëBio .Security & Sanitary and Phyto-Sanitary Permití. Import of foreign liquor, processed food products and tea wastes have been subjected to already existing domestic regulations concerning health and hygiene.

. What are the main features of the WTO Agreement on Agriculture which are of concern to India?

. The main features of the WTO Agreement in Agriculture which are of concern to India are:

i)                   India has been maintaining Quantitative Restrictions (QRs) on import of 825 agricultural products as on 1.4.1997. Under the provisions of the Agreement, such Quantitative Restrictions will have to be eliminated. India has sought to remove them in three phases within an overall time frame of six years upto 31.3.2003. These Quantitative Restrictions will have to be replaced with appropriate tariffs.

ii)                ii) The Agreement also imposes constraints on the level of domestic support provided to the agricultural sector. In India’s case, it may have in future some implications on minimum support prices given to farmers and on the subsidies given on agricultural inputs. However, the Agreement allows us to provide domestic supportto the extent of 10% of the total value of agricultural produce.

iii)               Disciplines on export subsidy do not affect us as India is not providing any export subsidy on agricultural products.

iv) The Agreement allows unlimited support to activities such as (i) research, pest diseases control, training, extension, and advisoryservices; (ii) public stock holding for food security purposes; (iii) domestic food aid; and (iv) Income insurance and food needs, relief from natural disasters and payments under the environmental assistance programmes. Moreover, investment subsidies given for development of agricultural infrastructure or any kind of support given to low income and resource poor farmers are exempt from any commitments. Most of our major rural and agricultural development programmes are covered under these provisions. Therefore, the Agreement does not constrain our policies of investments in these areas.


Though India has demonstrated that there exists broad political support to its economic reform programme, as has been proved by the transition of several Governments in the last decade through the political space, agricultural trade policy reforms need to be accelerated much more than what has been done so far. The challenge is to mitigate the inefficiency that exists in the Indian agriculture to close the gap between its potential and actual performances through a proper policy framework. India being a net exporter in agriculture products, it has more to gain from the trade reforms. It has sufficiently high bound rates on most of the products and therefore, flexibility can be ensured against unfair competition. India does not have to worry about its subsidy, as it is already below the required line and it also does not have any domestic support to recon with. All these place India in an advantageous position. Moreover, the ongoing negotiations are likely to yield enough flexibility in product choice and tariff selection. A multilateral trading system is in the interest of India, given the fact that it is placed in such a situation where no clear group fits well. Therefore, India should work towardthe success of the Doha round and in the mean time make use of the opportunity to reform its domestic market to bring in more efficiency. The interests of India are certainly at variance from the common interest of least developed countries, which became amply clear during the Tokyo and Doha Ministerials, when the least developed countries left India alone. Many of these countries are net importers of food and the subsidy in the exporting countries makes them better off. Moreover, under the Everything But Arms (EBA) initiative of the European Union, the LDCs have quota- and duty-free access to the EU market9, a facility that was never available to India. The services sector for India is critical to its growth and increasing the pace of industrial growth is its necessity. With favourable bound rates for agriculture onboard, the Negotiating framework of India must be different from that of other developing

countries. The situation is highly tenacious for India, particularly in view of the fact that the developed countries have managed to link agriculture subsidy with the market access in services and industry. If the European Union needs to do more on agricultural tariffs, and the US needs to do more on reducing agricultural subsidies, then the G-20 group of countries, where India is a key member, are also needed to do more on industrial tariffs. This is a hard ball game. Moreover, all these issues are dynamically linked to the future agenda of the WTO inter-alia in terms of substantial opening up trade in services; rules governing transparency in bilateral trade agreements, anti-dumping and Traditionally, India has fallen prey to the group dynamics because its interests do not fully confirm to the least developed countries, whose cause it used to champion nor does it radically differ from those of developed countries, who it confronts. Therefore, the time has come for India to come out of ambiguity and take a rational step in the negotiation process to harness best of its own interests. Some sacrifices are worth taking in order to gain a wider market.



Anderson, Kym and Martin, Will (eds) 2005 Agricultural Trade Reform and the

Doha Development Agenda, New York: The World Bank and Palgrave


Bathla, Seema 2006 ‘Trade Policy Reforms and Openness of Indian Agriculture:

Analysis at the Comodity Level’, South Asia Economic Journal 7(1): 19-53.

Bhagwati, Jagdish 2005 ‘From Seattle to Hong Kong’, Foreign Affairs December

2005 — WTO Special Edition.

Birthal, P.S., Joshi, P.K. and Gulati, A. 2005 ‘High Value Food Commodities

and Vertical Coordination in India: Implications for Smallholders.”‘ Toward

High-Value Agriculture and Vertical Coordination: Implications for

Agribusiness and Smallholders, National Agricultural Science Centre, Pusa,

New Delhi, 7 March 2005.

Cooper, Sarah Fitzgerald 2004 ‘A Tough Row to Hoe’, Research Reports:

American Institute for Economic Research LXXI(18): 101-10







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