ABSTRACT
The analyses in previous chapters show that during the post-WTO period the international prices started declining and reached almost 25-year low levels around year 2000. Though there has been some recovery in the price cycle in the recent past, yet the level of prices in 2009 were 15 to 44 per cent lower than the prices prevailing in the beginning of the WTO period. The period also witnessed a decline in Indian export and import of commodities in which India did not have a strong competitive edge or in which international prices registered a sharp decline during the period. Therefore, the behaviour of international prices has a potential consequence that can damage domestic agriculture by price-induced decline in the profitability/ competitiveness of production. In this context, trade policy instruments also acquire greater connotation, and certain crucial questions regarding the role played by them arise. However, as discussed in the previous chapter, the government has made frequent changes in trade policy instruments during the post-WTO period in order to keep the domestic prices at a ‘reasonable level’. But the question that remains unanswered is whether these changes in trade policy instruments (tariff rates/subsidy level) were sufficient enough to maintain the profitability/competitiveness of domestic producers.
