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Indian farmers were implicitly taxed $120 billion in 2023, the highest among 54 countries, due to export bans, duties or other policies which lower the price of agricultural commodities like rice, to benefit consumers, the latest Organisation for Economic Co-operation and Development (OECD) assessment on agricultural policy and support globally has revealed.
In 2023, the Indian government introduced various export restrictions on commodities like rice, de-oiled rice bran, sugar and onions to keep food prices low for consumers. While this kept domestic prices from rising for the consumers, it also meant that producers’ (farmers) receipts were lower than they would have been had these policies not been in place.
In fact, according to the Agricultural Policy Monitoring and Evaluation 2024 report, which analysed 54 countries, net support to farmers in India has been negative throughout the last two decades but fluctuated markedly.
In 2023, these domestic marketing regulations and trade policy measures drove the overall market price support (MPS) to farmers in negative as budgetary provisions could not offset their price depressing effects.
The positive support, in the form of minimum support price (MSP), budgetary transfers and subsidies, was to the tune of $10 billion. Overall, this led to a negative total market price support of $110 billion.
Between 2021-23, while budgetary transfers corresponded to 8.8 per cent of gross farm receipts, negative MPS came out to be 26.1 per cent of gross farm receipts for different commodities. Overall, this led to negative net support of 15.4 per cent of gross farm receipts.
India had the highest negative price support, followed by Vietnam and Argentina. India’s negative support constituted 62.5 per cent of all such taxes globally in 2023.
Among 54 countries analysed in the report, implicit taxation to farmers was about $192 billion per year in 2021-23. “India’s already large share of implicit taxation among countries has grown from 61 per cent of all negative support in 2000-02 to 75 per cent in 2021-23,” said the report released on November 6.
Meanwhile, across the 54 countries, total support directed to the sector totalled $842 billion per year during 2021-23. Transfers to the sector have declined in 2022 and 2023 relative to their peak in 2021, but remain significantly above those just before the COVID-19 pandemic.