As per the Union Budget 2026-2027, India continues its robust support for the agrarian economy, allocating 1.70 lakh crore for fertiliser subsidies and 63,500 crore for the PM-KISAN scheme to ensure national food security and farmer welfare.

WTO Agreement on Agriculture: Classification of Agricultural Subsidies

Types of Subsidies and Support Provided to Agriculture

1. Input Subsidies: State provides fertilisers, seeds, and power below market rates.

   • Eg: Fertiliser Subsidy outlay of 1.70 lakh crore for 2026-2027.

2. Direct Income Support: Fixed cash transfers reach farmer households directly.

   • Eg: PM-KISAN provides 6,000 annually, 2026 guidelines.

3. Price Support Mechanism: State guarantees minimum prices against market volatility.

   • Eg: PM-AASHA with 7,200 crore 2026 allocation for oilseeds and pulses.

4. Irrigation and Infrastructure Subsidies: Aid covers micro-irrigation and cold chain systems.

   • Eg: PMKSY provides 60 percent micro-irrigation subsidies.

5. Credit and Interest Subvention: Institutional credit utilizes interest waivers and guarantees.

   • Eg: KCC Scheme and Agriculture Infrastructure Fund (AIF) provide 3 percent subvention.

6. Mechanization Support: Grants promote modern machinery use to improve efficiency.

   • Eg: Sub-Mission on Agricultural Mechanization (SMAM) provides 40-50 percent subsidies.

7. Risk Mitigation Support: Insurance covers crop failures from disasters or pests.

   • Eg: PMFBY provides comprehensive risk coverage and low premiums.

8. Horticulture and Niche Sectors: Financial aid promotes high-value crop diversification.

   • Eg: MIDH provides 50 percent subsidies, August 2026.

Issues Pertaining to the WTO Agreement on Agriculture

1. De Minimis Ceiling Breaches: India exceeds the 10 percent trade-distorting support limit.

   • Eg: Peace Clause invoked May 2026 for seventh year for rice.

2. Public Stockholding (PSH) Conflict: Developing nations demand permanent food security solutions.

   • Eg: MC14, March 2026: India retained existing PSH programs.

3. Calculation Methodology Disputes: US and EU challenge the 1986-88 base year.

   • Eg: US notification, March 2026: India rice support at 86 percent.

4. Export Subsidy Allegations: Domestic schemes face challenges as trade-distorting subsidies.

   • Eg: Sugar subsidies disputes: Brazil and Australia at WTO.

5. Amber Box Restrictions: Agreement on Agriculture (AoA) limits production-influencing subsidies.

6. Dispute Settlement Paralysis: Non-functioning WTO Appellate Body stalls Indian appeals.

7. Special Safeguard Mechanism (SSM): India advocates protecting farmers from import surges.

   • Eg: Special and Differential Treatment (S&DT) at MC14 negotiations, 2026.

India must balance its WTO obligations with the National Food Security Act 2013 by diversifying into Green Box subsidies and securing a permanent solution for Public Stockholding to safeguard its 80 crore beneficiaries.