The era of liberalization is undergoing a slow death in India. One of the apparent causes of this process is an unlikely one: the present government, which was seen by most people to be a champion of economic reforms and liberalization. The government of Narendra Modi stopped a world trade treaty. This could have been the first global trade reform since the formation of the World Trade Organization a little short of two decades ago. The principal reason behind India’s refusal to sign the treaty was the clause that bars countries from stockpiling more than 10 per cent of the value of the food produce in a country. The WTO’s position is that excessive stockpiling artificially affects global food prices. India’s argument is that it cannot put a cap on its stock of food since that undermines the food security programme which seeks to feed millions of poor people. There is a body of opinion that believes that India’s veto could mean the end of the WTO. Even if such a prediction is seen to be too dire, there is a need to look at the arguments being put forward on both sides.
Proponents of the treaty argue that red tape would have been drastically reduced and this obviously would have facilitated the movement of goods. Their estimate is that the treaty would have added $1 trillion to the global economy and also 21 million jobs (18 million of those in developing countries). The gains are thus tangible. India’s opposition to the deal is based on some weak premises. Economic processes in India are mired in red tape and so the removal of that cannot be a valid ground for objection. The opposition to a cap on stockpiling is not based on the aim of providing subsidies to the poor or helping marginal farmers. The objections are about skewed world prices and about the price mechanism. There needs to be the realization that India stands to gain, not lose, from this trade agreement. There is another bigger point to consider. India, in the past, has been a champion of world trade reform. India needs to advocate multilateralism; otherwise, it runs the risk of becoming isolated. Moreover, for its own sake, India, in an increasingly globalized world, cannot afford to be perceived as a spoiler or as a country that has no consistent policy on trade reforms. India is a major global economic player and thus it needs to facilitate trade rather than erecting barriers to it.