Aggregate Measure of Support (AMS) includes
(a) sum total of subsidies on inputs like fertiliser, water, credit, power etc and
(b) market price support measured by calculating the difference between domestic administered market price and external reference price (world price) multiplied by quantity of production eligible to get applied administered price.
If domestic prices are lower than the world reference price, then (b) is negative, and if this negative component is higher than input subsidies then AMS turns out to be negative.
WTO agreement envisages two kinds of support to agriculture, viz. domestic support and export subsidies (Box 1).
The domestic support is further classified into five categories:
(a) aggregate measure of support (AMS) which includes product specific and non-product specific support
(b) green box support
(c) blue box support
(d) de minimus support and
(e) special and differential (S&D) treatment box.
Out of all the above, WTO agreement requires reduction only in AMS and export subsidies, whereas, support under all other heads is exempted.
Some members of the WTO, especially developed nations that are big commodity exporters, have raised concerns that [India’s] large stocks of wheat and rice could lead India to dump those on global markets. Also, according to them, the food law [India Food Security Act] that guarantees grains to nearly 70% of the country’s more than 1.2 billion people at nearly throwaway prices would artificially lower local prices and damp demand for their [i.e. developed nations] products in one of world’s largest markets.