Is Indian agriculture competitive? This is the title of one of the chapters in ‘WTO Negotiations on Agriculture and Developing Countries,’ by Anwarul Hoda and Ashok Gulati (www.oup.com).
In assessing the price competitiveness of a commodity, we have to consider it separately under the importable and exportable hypotheses, the authors explain. “A commodity may be export competitive, an efficient import substitute, or neither. A priori, in a liberalised scenario, India can expect to export commodities that belong to the first group, but not those that belong to the other groups.”
To assess the competitive advantage of different commodities, the authors empirically map NPC (nominal protection coefficient), which reflects the price ratio of the domestic and world reference prices of commodities. “In the computation of the NPCs, it is important to note that the domestic prices considered typically exclude any internal taxation, which is often as high as 12 per cent for commodities such as wheat.”
Instructive study.
