Friday, 4 August 2017

GATT opened the Gate - Could be why you lose your ration card

What started as a clash finally ended in peace. In the recent times, people of Tamil Nadu are witnessing some of the never seen before double standards taken up by the State government, especially in the case of various projects and reforms of the central government. UDAY, NEET and GST are some of the hotly contested issues in the State with the latest addition to the list, regulations on PDS joining the bandwagon.

Yes, the latest State government order on PDS, implementing all the regulations of the Centre’s Food Security Act 2013, is likely to deprive a major section of people access to subsidised food commodities from ration shops. But, when I interacted with some experts who have been following the developments, it seemed that they are not surprised. They point to the fountainhead of all these measures: the GATT agreement.

Source: indiatimes.com

To start with, just a year ago when late Chief Minister J Jayalalithaa, Tamil Nadu was totally against all the above reforms of the government. But after she became bed-ridden, the State had signed in all these reforms leading to protests cropping up every now and then. Keeping these things aside, one might wonder why the Centre is longing to take these measures even as a section of people continue to oppose. Apart from UDAY, the other issues including, NEET, New Education Policy, GST, FDI and now the PDS reforms, have a strong conspiracy behind them. From the interactions with several economists and economics professors, I have come up with this article which, I believe, would help the readers understand the political vendetta.

The present reforms of the government are not new as people think. Their history can be traced back to the 1950s when General Agreement on Tariffs and Trade (GATT) was formed internationally. It is the preceder to the present World Trade Organisation (WTO). India being one of the first 23 members had to follow three main provisions. The most important requirement was that each member must confer most favoured nation status to every other member. That means all members must be treated equally when it comes to trade tariffs though it permitted removal if such a move would cause serious injury to domestic producers.

To give a more clearer perspective to this let me narrate a hypothetical scenario. After signing into the GATT, if a mobile phone is produced by an Indian manufacturer, his subsidy should be reduced or completely removed so that the manufacturing cost is not lower than what a foreign manufacturer manages after paying all the duties and tariffs to the government. All this time, India made use of the second provision of the agreement and made sure subsidy was given to the citizens but as the present government is more inclined towards international trade, they are strictly implementing the actual core provisions.


But later when I followed this up, it was found that the GATT was extended even to services like education. Eariler a year ago, explaining about the New Education Policy (NEP), a renowned educationist, Prince Gajendra Babu, told me, "General Agreement on Trade in Services (GATS) was signed by the member countries of GATT in the later part of 20th century. According to the new agreement, even service sectors could be brought into the provisions. So, in that row, several services were brought under GATS by its member countries. The latest addition was education, for which most of the countries have signed. This includes India!"

According to Prince, this would infer a serious effect on the country's education system in terms of subsidy, reservation, and fee structure. "NEP has been drafted based on the conditions of GATS. Education will soon turn out to be a commodity if it is put into action. The proof for this allegation is available in the website of the Ministry of Commerce. The education related policy decisions would be usually be published in the website of HRD Ministry. But, this agreement related draft was published in the Commerce Ministry's website".

Source: Internet

When asked, how will it affect the reservation system in education, he said, "When education is added into GATS, none of the member countries should provide subsidies or any kind of special provisions to any student. Similarly, the education institutions too should levy the same scale of fee structure. There would not be any subsidy to the institutions too. Even NEET is one of the steps to satisfy the criterial needs of the GATS. That is why the entrance test tries to propose a common admission system across the country."

He also said that there is nothing to get a pride when I asked wouldn't this take the education system to international standards. He chuckled and said, 'If you think that it would the State universities like the Harvard or the Oxford that would branch out here in India, then I feel sorry for you. Because, this complete agreement is to promote investment of private firms and investors. It means, only sub-standard and money minded private education institutions would camp here. Harvard or Oxford are not just brand names. They are the documentation of a culture and medium that triggered the evolution of knowledge in those countries, so they will never step here'.

From my perception, these GATT or GATS are as simple as a mere business competition. A foreign manufacturer or a service provider will have world-wide exposure with a very strong treasury. But this isn't the case for a local competitor. So, when such foreign manufacturers offer very luring deals, the local ones will surely bite dust. Eventually, they will have full control over the market making the Indian subcontinent a financial slave. Then, we can never ever imagine about the concept of self sustained economy as WTO's next big target is the food sector of the developing countries which is the only sector which can make a country economically self sustained.

The next NEET?

Recently, Food Minister Kamaraj said, “The new GO on PDS was a mere regulation on paper and it won’t be implemented in Tamilnadu.” But experts say, when there is enough pressure from the Centre and so the State has no other go but to implement it in full swing. So, it will not be surprising if the present government implements new PDS rules just like NEET, they say.

When to go local?

  • Member-countries of GATT can give upper hand to local manufacturers when
  • Government has surplus of agricultural products.
  • Government needs to protect its balance of payments because its foreign exchange reserves were low.
  • Government needs to protect fledgling industries.
  • Government faces difficulties in maintaining national security.


- Santhosh Mathevan with inputs from S Ben Raja,
Chennai, August 4, 2017.

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