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:

Direct cash transfers that are decoupled from production (not linked to prices or volumes produced) are always classified under the WTO Green Box.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
Under the World Trade Organization (WTO) Agreement on Agriculture (AoA), domestic agricultural subsidies are categorized into different 'boxes' based on their trade-distorting effects.
These boxes determine whether a country is required to reduce its level of domestic support.

Step 2: Detailed Explanation:
The WTO Agreement on Agriculture defines the following boxes:
1. Amber Box: Subsidies that directly distort trade and production (e.g., input subsidies, minimum support prices). These are subject to reduction commitments.
2. Blue Box: Amber box subsidies that require farmers to limit production. These are exempt from reduction commitments.
3. Green Box: Subsidies that cause minimal or no trade distortion. These must be funded publicly and must not involve price support. They are exempt from reduction commitments.
4. Development Box (S&D Box): Subsidies given by developing nations for agricultural development.
The PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) scheme provides direct income support of ₹6,000 per year in three equal installments to farmer families.
This is a direct cash transfer decoupled from production decisions (i.e., the payment is not linked to what crop, or how much, a farmer produces).
Decoupled income support programs are classified under the Green Box of the WTO and are completely exempt from reduction commitments.

Step 3: Final Answer:
Therefore, the support is exempted and falls under the Green Box.