8.46         ndian     onom
     the boxes                                           either the blue or green box) must be reduced by
                                                         the countries to the prescribed levels.
     The agricultural subsidies, in the WTO
     terminology have in general been identified by            In the current negotiations, various proposals
                                                         deal with issues like deciding the amount by
     ‘boxes’ which have been given the colours of the
                                                         which such subsidies should be reduced further,
     traffic lights—green (means permitted), amber
                                                         and whether to set product-specific subsidies
     (means slow down, i.e., to be reduced) and red
                                                         or to continue with the present practice of the
     (means forbidden).                                  ‘aggregate’ method.
           In the agriculture sector, as usual, things
     are more complicated. The WTO provisions on         blue box
     agriculture has nothing like red box subsidies,     This is the amber box with conditions. The
     although subsidies exceeding the reduction          conditions are designed to reduce distortions. Any
     commitment levels is prohibited in the ‘amber box’. subsidy that would normally be in the amber box,
     The ‘blue box’ subsidies are tied to programmes     is placed in the blue box if it requires farmers to
     that limit the level of production. There is also a go for a certain production level.69 These subsidies
     provision of some exemptions for the developing     are nothing but certain direct payments (i.e.,
     countries sometimes called the ‘S & D box’.67       direct set-aside payments) made to farmers by the
           We may see them individually though they are  government in the form of assistance programmes
     very much connected in their applied form. The      to encourage agriculture, rural development, etc.
     objective meaning of each one of them becomes             At present there are no limits on spending
     clear, once one has gone through all of them.       on subsidies in the blue box. In the current
                                                         negotiations, some countries want to keep blue
     Amber box                                           box as is because they see it as a crucial means of
                                                         moving away from distorting the amber box
     All subsidies which are supposed to distort
                                                         subsidies without causing too much hardship.
     production and trade fall into the amber box,
                                                         Others want to set limits or reduction
     i.e., all agricultural subsidies except those which commitments on it while some advocate moving
     fall into the blue and green boxes.68 These include these subsidies into the amber box.
     government policies of minimum support prices
     (as MSP in India) for agricultural products or any  green box
     help directly related to production quantities (as
                                                         The agricultural subsidies which cause minimal or
     power, fertilizers, pesticides, irrigation, etc).   no distortions to trade are put under the green
           Under the WTO provisions, these subsidies     box.70 They must not involve price support.
     are subject to reduction commitment to their              This box basically includes all forms of
     minimum level—to 5 per cent and 10 per cent         government expenses, which are not targeted at a
     for the developed and the developing countries,     particular product, and all direct income support
     respectively, of their total value of agricultural  programmes to farmers, which are not related to
     outputs, per annum accordingly. It means,           current levels of production or prices. This is a very
     the subsidies directly related to production        wide box and includes all government subsidies
     promotion above the allowed level (which fall in    like—public storage for food security, pest and
       67.   WTO, Article 6.2, AoA, 1994.                  69.   WTO, Article 6, Para 5 AoA, 1994.
       68.   WTO, Article 6, AoA, 1994.                    70.   WTO, Annexure 2, AoA, and Para 1 AoA, 1994.