Question Q.14GS3GS3

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

Main Body

The subsidy regime in India involves direct subsidy-transfers along with indirect through procurement, leading to high spending on food subsidies. Distortions due to agri subsidy regime: (1) Provide staples/cereal crops - result of monocropping and lack of diverse cropping patterns. (2) Degraded soil health due to irregular usage of pesticides and fertilizer. Example: Urea fertilizer subsidy away from nutrient-based subsidy regime. (3) Diversion of fertilizers due to medicines. Example: Urea cost 3000/bag, letting 3300 subsidy to 2700 per bag. (4) Groundwater extraction - electricity subsidy - free electricity leads to use of pumps to extract water. Example: 80% groundwater extraction in India for agriculture. (5) Lack of incentives for crop diversification due to MSP pricing. (6) Disbursement of subsidies - indirect subsidies are segregated in nature. (7) WTO compliance - issue - Agreement on Agriculture - de minimis levels - dumbox subsidies.

4Groundwater extraction - electricity subsidy - free electricity leads to use of pumps to extract water. Example: 80% groundwater extraction in India for agriculture. (5) Lack of incentives for crop diversification due to MSP pricing. (6) Disbursement of subsidies - indirect subsidies are segregated in nature. (7) WTO compliance - issue - Agreement on Agriculture - de minimis level - dumbox subsidies. To address these: (1) Rationalize subsidies to promote high value crops (AshK Dalata Committee) - horticulture - 30% AgriGVA contribution. (2) Electricity subsidy rationalization to use PM Kisan solar pump and reduce groundwater extraction. (3) Fertilizer subsidies - promote nano Urea, Nano DAP for precision farming. (4) Fertilizer subsidies - Promote nano Urea, Nano DAP for precision farming. (5) Remove indirect subsidies (Gold data) to improve leakages and use DBS. (6) More WTO compliance regime All this along with improvement of productivity and efficient SMART Farming will augur well for Indian agriculture.

— AYUSH PATHAK · AIR 215

297 words1 paragraphs

Conclusion

All this along with improvement of productivity and efficient SMART Farming will augur well for Indian agriculture.

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AYUSH PATHAK

AIR 2152025

Subject & Paper

GS3GS3

Topic

Agriculture and Food Security

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

Agricultural subsidy distortions

Writing Stats

314

Total words

Paragraphs

analytical

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