Question

Whether the financial benefits transferred to farmers under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme are exempted from reduction commitments under WTO? If yes, name the domestic support exemption box (Amber, Blue, Green, Development).

• A. Yes, Green box
• B. No (Not exempted)
• C. Yes, Amber box
• D. Yes, Development box

Hint:

PM-KISAN: Green box (WTO) – direct income support, no trade distortion.

Answer 1

The Correct Option is A

The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)\scheme, launched in 2019, provides direct income support of Rs 6,000 annually to eligible farmers in three installments. Under the World Trade Organization (WTO) Agreement on Agriculture, domestic support is classified into boxes:
- Green box: Subsidies that are minimally or non-trade-distorting, exempted from reduction commitments (e.g., direct income support decoupled from production, research, environmental programs).
- Amber box: Trade-distorting subsidies (e.g., price supports, input subsidies) subject to reduction commitments.
- Blue box: Production-limiting subsidies, also exempted.
- Development box: Special provisions for developing countries, allowing certain subsidies for rural development.
PM-KISAN qualifies as a Green box subsidy because it is a direct income transfer not linked to production levels or prices, thus minimally distorting trade. It supports farmers’ livelihoods without incentivizing overproduction. Options (2) (not exempted), (3) (Amber, distorting), and (4) (Development, less applicable here) are incorrect. Thus, option (1) is correct.

Answer 2

WTO Annex 2 criteria test:
The WTO Agreement on Agriculture exempts a domestic support measure from reduction commitments and places it in the Green box only if it meets specific Annex 2 criteria: the support must be publicly funded rather than from consumers, it must not involve price support to producers, and it must be decoupled from current production levels, prices or factors of production. Applying this test to PM-KISAN, the scheme pays a fixed amount per year directly to farmer bank accounts, funded entirely from the government budget, and the amount does not vary with what or how much a farmer produces. Since it satisfies every Annex 2 requirement for decoupled income support, PM-KISAN qualifies for the Green box, confirming option (1).