Indian Economy Part 9 – WTO & Reforms in Agriculture

World Trade Organisation (WTO)

  • The WTO was founded in 1995 as the successor organisation to the General Agreement on Trade and Tariff (GATT).

  • GATT was established in 1948 with 23 countries as the global trade organisation to administer all multilateral trade agreements by providing equal opportunities to all countries in the international market for trading purposes.

  • WTO is expected to establish a rule-based trading regime in which nations cannot place arbitrary restrictions on trade.

  • The WTO agreements cover trade in goods as well as services to facilitate international trade (bilateral and multilateral) through the removal of the tariff as well as non-tariff barriers and providing greater market access to all member countries.

  • As an important member of WTO, India has been at the forefront of framing fair global rules, regulations and safeguards and advocating the interests of the developing world

  • As an important member of WTO, India has been at the forefront of framing fair global rules, regulations and safeguards and advocating the interests of the developing world


  • The reform process has completed one and a half decades since its introduction

  • In economics, the growth of an economy is measured by the Gross Domestic Product

  • There has been an increase in the overall GDP growth in the reform period.

  • During the reform period, the growth of agriculture and industrial sectors has declined whereas the growth of the service sector has gone up.

  • This indicates that the growth is mainly driven by the growth in the service sector.

  • The Tenth Plan (2002-07) has projected the GDP growth rate at 8 per cent.

  • In order to achieve such a high growth rate, the agriculture, industrial and service sectors have to grow at the rates of 4, 9.5 and 9.1 percentage points respectively.

  • The foreign investment, which includes foreign direct investment and foreign institutional investment

  • India is seen as a successful exporter of auto parts, engineering goods, IT software and textiles.

  • The reform process has been widely criticised for not being able to address some of the basic problems facing our economy especially in the areas of employment, agriculture, industry, infrastructure development and fiscal management.

Growth and Employment

Scholars point out that reform-led growth has not generated sufficient employment opportunities in the country.

Reforms in Agriculture

  • Public investment in agriculture sector especially in infrastructure, which includes irrigation, power, roads, market linkages and research and extension (which played a crucial role in the Green Revolution), has been reduced in the reform period.

  • The removal of the fertiliser subsidy has led to increasing the cost of production, which has severely affected the small and marginal farmers.

  • Since the commencement of WTO, this sector has been experiencing a number of policy changes such as the reduction in import duties on agricultural products, removal of minimum support price and lifting of quantitative restrictions on agricultural products

  • These have adversely affected Indian farmers as they now have to face increased international competition.

  • Because of export-oriented policy strategies in agriculture, there has been a shift from production for the domestic market towards production for the export market focusing on cash crops in lieu of production of food grains.

Reforms in Industry

  • Industrial growth has also recorded a slowdown. This is because of the decreasing demand for industrial products due to various reasons such as cheaper imports, inadequate investment in infrastructure etc.

  • In a globalised world, developing countries are compelled to open up their economies to the greater flow of goods and capital from developed countries and rendering their industries vulnerable to imported goods.

  • Domestic manufacturers are facing competition from imports. The infrastructure facilities, including power supply, have remained inadequate due to lack of investment.

  • A developing country like India still does not have access to developed countries’ markets because of high non-tariff barriers.

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