India must be ‘very careful, clever’ as it bargains US trade deal: Rajan

India needs to be “very careful and clever” while negotiating trade agreements with the US, especially with regard to the agriculture sector, which is heavily subsidised by developed countries. This was stated by former RBI Governor Raghuram Rajan on Friday.

Rajan said India’s economic growth had sort of settled in the range of 6-7 per cent, and a fraction of percentage point might be affected by the global trade uncertainties. “I think where it is much more sort of difficult (trade negotiations) is in areas such as agriculture, where every country subsidises its producers and our producers may be relatively smaller, may have somewhat lower subsidies…unconstrained flow of agricultural products into the country may create problems for them,” he said.

Earlier this week, the Indian team was in Washington for the fifth round of negotiations for the proposed Bilateral Trade Agreement (BTA). “For example, can we encourage more foreign direct investments from those countries (developed countries) to enhance the value added in some of those sectors, the milk for example, sort of improving the value added in our milk products, milk powder, cheese, etc., could be beneficial to our milk producers,” the eminent economist noted.

US President Donald Trump said the proposed trade deal with India would be on the lines of what America had finalised with Indonesia. Giving access in the agriculture sector is proving to be a political issue for the government. “Are there things we can do, rather than necessarily saying we welcome sort of more milk into the country from other countries. So all this requires very careful, clever negotiation, and I hope that is what our government officials are engaged in,” Rajan, currently a professor of finance at Chicago Booth, said.

World