Difference between Green Box subsidies and Blue Box subsidies

Difference between Green Box subsidies and Blue Box subsidies

In WTO terminology, subsidies in general are identified by “Boxes”with different colours:

  • green (permitted subsidies)

  • amber (slow down — i.e. subsidies to be reduced),

  • red (forbidden subsidies)

But the Agreement on Agriculture AoA is an international treaty of WTO and has the following boxes:

  • Amber (de-minimis)

  • Green

  • Blue (for subsidies that are tied to programs that limit production)

  • S&D (exemptions for developing countries)

There are three categories of support measures that are not subject to reduction under the Agreement, and support within specified de-minimis level is allowed.

  1. Measures which have a minimum impact on trade i.e. Green Box criteria

Ex: Government of India assistance on general services like

  1. research, pest and disease control, training, extension, and advisory services;

  2. public stock holding for food security purposes;

  3. domestic food aid; and

  4. direct payment to producers like governmental financial participation in income insurance and safety nets, relief from natural disasters, and payments under environmental assistance programmes.

  1. Developing country measures otherwise subject to reduction i.e. S&D Box criteria Examples

  1. investment subsidies which are generally available to agriculture in developing countries; and

  2. agricultural input services generally available to low income and resource poor producers in developing countries.

  1. Direct payments under production limiting programme i.e. Blue Box criteria

These are relevant from the developed countries point of view only.

  1. Green Box

  1. Green subsidy is allowed in terms of support example: MSP or Subsidies

  2. Measures with minimal impact on trade can be used freely

  3. They include government services such as research, disease control, infrastructure and food security.

  4. They also include payments made directly to farmers that do not stimulate production, such as certain forms of direct income support, assistance to help farmers restructure agriculture, and direct payments under environmental and regional assistance programmes.

  1. Blue Box

  • Subsidy is also permitted

  • Cover certain direct payments to farmers where the farmers are required to limit production called “blue box” measures.

  • Covers certain government assistance programmes to encourage agricultural and rural development in developing countries

  • Also covers other support on a small scale (“de minimis”) when compared with the total value of the product or products supported (5% or less=developed countries &10% or less=developing countries).



GST : An overview


The proposed GST is expected to streamline the indirect tax regime. It contains all indirect taxes levied on goods, including central and state-level taxes. Billed as an improvement on the VAT system, a uniform GST is expected to create a seamless national market.

Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain.

Not only it will replace Central Indirect taxes but will replace state levied indirect taxes too. Experts say that GST is likely to improve tax collections and boost India’s economic development by breaking tax barriers between States and integrating India through a uniform tax rate.

France was the first country to introduce it. In India, a dual GST is being proposed wherein a central goods and services tax (CGST) and a state goods and services tax (SGST) will be levied on the taxable value of a transaction.

Features of GST:

  • It will be collected on VAT method ie tax at every stage of value addition.
  • It will be imposed at an uniform rate @ 20% (Centre state share = 12 and 8 percent respectively)


2000 NDA setup empowered committee under Asim Das Gupta to design GST model.
2006-07 Then, Union Finance Minister Mr Chidambaram announced GST would be implemented from Apr 1 , 2010 and asked the empowered committee with state finance ministers to submit their views.
2009 1.Committee of Principle Secretaries of the states setup

2.Detailed Discussion Papers prepared

3. Tax Rate Proposal : World over mostly the GST rates are between 15-20% and the same is expected for India too

2011 Constitution 115th Amendment Bill introduced to enable state legislatures to frame laws for levying GST

1.     It seeks to enable The President of India to setup within 60 days of passage of the bill a GST COUNCIL with Union Finance Minister as Chairperson & MoS for Revenue + Finance Ministers of all the states as members. GST Council will thus work on GST rates , exemption lists etc.

2.    Setup a GST DISPUTES SETTLEMENT AUTHORITY : with a chairperson and 2 members.

3.    It was referred to the Parliamentary Committee on Finance for examinations.

·       It recommended that sections proposing a Dispute Settlement Authority to decide disputes arising among states and take action against the states should be removed from the Bill, and that the GST Council itself should evolve a mechanism to resolve the disputes.

·       The committee also recommended that decisions in the GST Council be taken by voting and not by consensus. It said one-third weightage for central representatives and two-third weightage for state representatives may be provided, with the decision taken by the Council being passed with more than three-fourth votes of the representatives present. The quorum for holding meetings of the Council is proposed to be raised to half from one-third.

2011 GST NETWORK : IT strategy of GST led by the AADHAR team.

Objective : Common portal for centre and states to enable electronic processing of registrations, returns , payments etc.

NSDL (National Securities Depository ltd.) : technology partner to operate as IT backbone of GST.

2012 Finance ministry formed a committee of seven members under the chairmanship of Yogendra Garg, commissioner export, Mumbai, to frame a model legislation of GST for the Centre.
2013 The Goods and Services Tax Bill is likely to be taken up in the Parliament

Rational or Apprehensions behind the proposal:

  1. The States feel that when 246A is there, then the Centre should not have to incorporate GST into the Union List. Clause 246A proposes additional powers to the Centre to tax sale of goods and for the States (to tax services).
  2. At present, the Centre can tax services but not sale and distribution of goods. The States can now tax sale and distribution of goods but not services.
  3. Including GST in the Union List will imply that in case of any disagreement between the Centre and the States, Parliament’s decisions will be overriding and binding on the States.
  4. Administrative mechanism: In India, a merger between two government agencies is next to impossible, as long as appraisals and promotions are linked to seniority and regretfully, not performance. And integrating the revenue collection services of all states and an extremely powerful Central Service into one GST collection agent.
  5. Federal structure of the Indian constitution. Taking away the power of the states to tax items under the state list is tantamount to infringing upon the basic structure of the Constitution.

Why are some States against GST; will they lose money?

  • The governments of Madhya Pradesh, Chhattisgarh and Tamil Nadu say that the “information technology systems and the administrative infrastructure will not be ready by April 2010 to implement GST”.
  • States have sought assurances that their existing revenues will be protected.
  • The central government has offered to compensate States in case of a loss in revenues.
  • Some States fear that if the uniform tax rate is lower than their existing rates, it will hit their tax kitty. The government believes that dual GST will lead to better revenue collection for States.
  • However, backward and less-developed States could see a fall in tax collections. GST could see better revenue collection for some States as the consumption of goods and services will rise.


  1. Ambiguous definitions- Taxation at Manufacturing Level is levied on goods manufactured or produced in India which gives rise to definitional issues as to what constitutes manufacturing.
  2. Less Complexity-A strong single taxation system wherein various Central and State statutes will be subsumed into one comprehensive enactment. Process of judicial decisions would be speedy too with one statute covering all aspects of indirect taxes.
  3. Exclusion of Services from state taxation- Services remain outside the scope of state taxation powers and GST would include tax on all such services where states cannot legislate.

What are the benefits of GST?

  • Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions.
  • GST will be is levied only at the destination point, and not at various points (from manufacturing to retail outlets).
  • Currently, a manufacturer needs to pay tax when a finished product moves out from a factory, and it is again taxed at the retail outlet when sold.
  • It is expected to help build a transparent and corruption-free tax administration.

How will it benefit the Centre and the States?

  • It is estimated that India will gain $15 billion a year by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth.
  • It will divide the tax burden equitably between manufacturing and services.

What are the benefits of GST for individuals and companies?

  • In the GST system, both Central and State taxes will be collected at the point of sale.
  • Both components (the Central and State GST) will be charged on the manufacturing cost. This will benefit individuals as prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.
  • Thus, the prices of commodities are expected to come down in the long run as dealers will be allowed to avail the CENVAT credit of Excise duty paid by Manufacturers and more over he will be allowed to avail the CENVAT credit of tax paid on services also. This passing of the benefits of reduced tax incidence to consumers by slashing the prices of goods will definitely reduce the prices.

Implications of GST on imports and exports

  • Imports would be subject to GST.
  • Exports, however, will be zero-rated, meaning exporters of goods and services need not pay GST on their exports. GST paid by them on the procurement of goods and services will be refunded as similar to the present scenario.


  1. http://gstindia.com/
  2. http://articles.economictimes.indiatimes.com/2013-08-13/news/41374977_1_services-tax-state-gst-goods-and-services
  3. http://www.dnaindia.com/money/report-all-you-ever-wanted-to-know-about-gst-1265576
  4. http://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India)
  5. http://centreright.in/2013/02/why-gst-is-not-a-good-idea/#.UmEVm9KBnPI
  6. http://www.dnaindia.com/money/1265576/report-all-you-ever-wanted-to-know-about-gst

Africa – Land of opportunity for India- Part II

India’s Economic relations with Africa

  • India has acquired observer status in a number of regional organisations in Africa such as the Common Market for Eastern and Southern Africa, the Southern African Development Community and the Economic Community of West African States
  • In 2002, launched the Focus Africa Programmeinitially focused on sub-Saharan Africa, with emphasis on seven major trading partners in the region and was broadened in 2003 to accommodate North Africa.
  • The Confederation of Indian Industry, in partnership with the Indian government, Export–Import Bank of India (EXIM) and the African Development Bank initiated the India–Africa project partnership conclaves. Since 2005, four conclaves have taken place in New Delhi, along with mini-conclaves in Africa. These conclaves serve as a meeting ground between decision makers and industrialists from African countries and heads of Indian companies involved in various projects in Africa. The latest conclave was 10th CII EXIM bank conclave held in New Delhi in 2014.
  • India launched an initiative in 2004 called Techno-Economic Approach for Africa–India Movement (TEAM–9), together with eightenergy and resource-rich West African countries viz. Burkina Faso, Chad, Cote D’Ivoire, Equatorial Guinea, Ghana, Guinea Bissau, Mali, Senegal, and India.
  • In 2008, the India–Africa Forum Summit: which involves co-operation in capacity building, agricultural infrastructure development, health and food security, energy security and technological co-operation
  • China’s deepening engagements in Africa has eclipsed India’s growing relationship with the continent.
  • ONGC has invested in oil production & refinery in Nigeria and Sudan through OVL
  • The Southern African Development Community (SADC) is an inter-governmental organization with a goal to further socio-economic cooperation and integration as well as political and security cooperation among 15 Southern African states, The Government of India signed the Memorandum of Understanding on economic cooperation with SADC on 14th Oct, 1997.
  • Indian Technical and Economic Cooperation (ITEC) programme, which launched in 1964 provides training, deputation of experts and implementation of projects in African countries
  • Pan African e-Network Project (PAENP), India has set up a fibre-optic network to provide satellite connectivity, tele-medicine and tele-education to countries of Africa. M/s. TCIL, a Government of India undertaking, is implementing the project on behalf of Government of India. (The project cost is approximately Rs. 542 crores.)

Initiatives taken by Government of India for Africa:

  • India-Africa Forum Summit.
  • 2nd India-Japan dialogue on Africa was held in New Delhi in 2011. It is an institutionalised event held biannually.
  • IGNOU to establish Indo-Africa Virtual University.
  • Team -9 (Techno-Economic Approach for Africa India Movement) framework to enhance commercial cooperation with West Africa (Burkina Faso, Chad, Cote d’Ivoire, Equatorial Guinea, Ghana, Guinea-Bissau, Mali, Senegal).
  • Putting in place US$500 mn Lines of Credit (LOC) and identifying priority sectors in the 8 countries which would be financed out of the LOC.
  • The Ministry of Commerce and Industry, GOI, Ministry of External Affairs, Export-Import Bank of India and Africa Development Bank initiated the India- Africa Project partnership Conclave, in New Delhi. The Conclave created platforms for decision maker from Africa countries to meet heads of India companies involved in engineering, consultancy, construction and supply of project goods, etc.
  • The India-Brazil-South Africa (IBSA), Trilateral Commission of the foreign ministers of India, Brazil and South Africa (2004) would meet in regular intervals.
  • In Uganda, Indian technology led to nearly three times more electricity to be generated, from 300 MW to 1000 MW than had been planned at Karuma project.
  • New Delhi is also planning to set up over 100 training institutes that seek to foster the rise of a middle class in Africa and provide the African youth opportunities for self-advancement.
  • India is the third largest contributor UN Peace-Keeping Operations in Africa with more than 9300 peacekeepers deployed in various UNPKO in fragile and conflict ridden states in Africa.

A comparison of China vs. India in Africa:

China’s role in Africa: before becoming the economic power, China successfully implemented the massive Tanzam rail project between Tanzania and Zambia.

Forum on China-Africa Cooperation- started in 2000 with 5 summits being held till now.

  • China’s $200bn trade with Africa is way ahead of India’s $46 bn.
  • Unlike China’s venture in Africa, that has focussed on extractive resources, oil and infrastructural projects, India chose to focus on capacity building as the defining template of its engagement with Africa.
  • Chinese companies are active across the continent with big infrastructure projects, including ports, railways and sports stadiums. By contrast, Indian initiatives are led by individual companies looking to expand in sectors such as telecom, agriculture, the automotive industry and education.
  • India’s all-round cooperation with Africa through People2people, govt2govt, & business2business, is different from China’s, largely, top-down Govt2Govt approach.
  • Like China, India organises summits to engage Africa. Deals worth millions have been discussed, but implementation is poor.
  • However, the Chinese companies go with their own people to do the work in Africa, leaving the locals in the lurch, unlike India, which employs locals.
  • China excels in large infrastructural projects while the Indians have an edge in ICT, capacity building and training, and emerging areas like floriculture.
  • The Indian ability to relate to Africans is also much greater, which is why non-Indian MNCs prefer to use Indians as managers for projects involving interactions with local officials and populations.
  • India’s democratic culture and consultative approach make it an attractive partner for African nations looking to enhance their own skills.

Form Africa’s perspective, both India and china have core competencies which may complement each other. Thus, Africa is looking forward to do business with both the countries at the same time and there seems to be enough room for the two. But India should not become complacent as African economy will start to emerge in the world set-up, competition from the world will be stiff. India should also avoid the path of exploitation which other big powers have taken. India’s participative model will slowly but steadily build a strong bond between India and African nations on the foundation of mutual trust and benefit rather than the acquisitive approach of China.

Challenges to African growth story

Africa should be treated as the “Child to be nurtured” rather than as the “orphan that should be taken care of” mentality. This shows a paradigm shift in treating it as a respectable member of the world Fora and giving it’s due space to ask and do for things.

Relying on the success stories of the East might be counter-productive, sometimes, because certain part of that came as the patronage that was offered to the Eastern countries, owing to their geographical advantage, international dynamics and political interests.

How to bring in solidarity amongst the African countries? Most of them are torn with internal serious skirmish that are only pushing their vision hundred years back from now on. A common currency like that of Europe is definitely not a good option. What could be the other ways ? Coming to projection of democracy as a viable option for development, Eastern Asia is already split. Leadership, does it need guidance from external frontiers, or how to elevate strong leaders in these countries?

The main issue that’s troubling its reconstruction is, the eventual failure if the super structure is built on the present premises. Or starting everything from the scratch for a perfect future, will deny the till date work. It is in these dangerous junctures that Africa is facing doldrums.

Africa being a land of wonders has always been on the receiving end of ideas or strategies. Somewhere, the world has failed to trap their techniques and concepts on a bigger picture. That lack of balance is another reason for the lack of deserved limelight. Ex: The crop Insurance Agricultural Insurance Initiative, Kilimo Salama, Kenya

Also, HDI indicator as per the latest Human development report also suggests that, no African country has very high human development index and an analysis is given below, Africa has following Distributions.

Category Number of Countries Growth Strategy
Very high human development 0
High human development 5 Already Heavily urbanised. Big consumer markets.
Medium human development 12 Myrdal’s growth strategy – increase the backwash and spread effects, by improving linkages
Low human development 35 Breaking Vicious Circles – low savings, small and inefficient makets, poverty trap.

Another important concern is about rapid capital inflows relative to size of some of the African countries. Recent events indicate that liberalizing capital flows can pose particularly severe risks and costs. This could lead to situation similar to East Asian economic crisis. Therefore, the key lesson for Africa illustrated by the crisis is that, the importance of developing a robust financial systems and exchange rate regimes in the light of liberalisation and opening up of economy. A stable political setup can lead to macroeconomic stability and prudent financial regulations are needed to sustain the growth rates in Africa.

Another issue is Africa’s inattention to the violence—often tinged with religious extremism—that grips many regions, is causing serious damage to its economy. Same was the case, when Ebola pandemic spread across many countries. Then, people hesitated to even step out of their house, for day to day activities. All Economic activities came to stand still, as people to people contact was avoided, at least in the core regions.

Also, there is lack of rapid Industrialization in many African countries to tap in rich natural resources. Therefore, African governments need to shift the economic growth trajectory from simply focusing on commodities to a more diversified economic base that adds value to these products. Achieving this will necessitate an efficient and robust infrastructure which is yet another challenge that African leaders must face up to and address them quickly. Countries such as China and India have been providing investment such as Pan African e-Network Project (PAENP) by Government of India which has set up a fibre-optic network to provide satellite connectivity, tele-medicine and tele-education to countries of Africa.


Many other factors will continue to influence development in Africa – not least how successfully these lessons are actually adapted and applied. Africa should not be risk-averse, inward-looking and fearful of change.

But the bottom line is that Afro-optimism, an optimism that sees sustained economic growth as the future of Africa is not merely sentimental.