Question Q.14GS3GS3

The agricultural subsidy regime in the country needs reforms to address the distortions it causes. Comment.

Main Body

As per the Economic Survey, GoI spent about 1.5 lakh crores on various agricultural subsidies - fertilizer subsidies, Power subsidies, subsidies for agri-ITPs Distortions: - high subsidy on Urea → inoptimal fertiliser mix - 8:2:1 instead of 4:2:1 → degradation of soil, water pollution, air pollution - high subsidy on Power → Production of highly water intensive crops in dry areas Punjab, Haryana [↑ in cost → ↑ in MSP → ↑ in govt burden

↓ fall in ground water table - 75% water units in Punjab below safe level CGWB - Distorted agri-feed systems [↑ large production of wheat & rice, ↑ low production of millets/pulses/edible oils → high import dependence - Benefits of subsidies - highly concentrated among large farmers - Unequal regional development - areas in East India are falling behind areas in NW India. Reforms: - Targeted agri-subsidies - mostly to small & marginal farmers

Include Urea in Nutrient Based Subsidy Scheme NBS - Promote use of organic fertilisers - Ex via PM-PRANAM - Give push to PM-KUSUM - to ↓ Power subsidies - Allocate more money from agri-sector's share to specs fixed capital formation GFCF in agri - Reform the PDS system - to reduce procusement of wheat/rice - Separation of agri-electricity, feeders (Minis shah Committee) The current agri-subsidy regime needs immediate reform to reduce burden on the govt, make agri dynamic & improve farmers' incomes

— ADITYA PATHAK · AIR 189

232 words1 paragraphs1 bullet points

Conclusion

The current agri-subsidy regime needs immediate reform to reduce burden on the govt, make agri dynamic & improve farmers' incomes

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ADITYA PATHAK

AIR 1892025

Subject & Paper

GS3GS3

Topic

Agriculture and Food Security

Issues Related to Direct & Indirect Farm Subsidies & Minimum Support Prices

Agricultural subsidies and distortions

Writing Stats

252

Total words

Paragraphs

Bullets

analytical

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