ANNOUNCEMENTS
India’s status as a leading exporter of several agricultural products comes at a hidden cost in the form of virtual water trade. Being a country with limited water resources, cautious and optimised use of water resources should be the aim of all water management policies for the next few decades. This study aims to analyse the impact of economic policies such as subsidies (fertiliser, electricity, and fossil fuel subsidies), and import tariffs, as well as water productivity on virtual water trade through primary crops in the agricultural sector. CGE modelling employing the GTAP database will be used to determine the impact of changes in virtual water flows on water availability by simulating relevant policy scenarios and analysing the resulting outcomes using a comparative statics approach.
Virtual water trade has been found to drop with a reduction in tariffs, electricity subsidies, and fertiliser subsidies. However, the margin by which virtual water trade falls is the highest when tariffs are removed - India turns into a net importer of virtual water. This study concludes by highlighting several policy recommendations for the agricultural sector to manage its virtual water flow.
Key Words: Virtual Water Trade, CGE Modelling, tariffs, subsidies, primary crops, agriculture.
