Roman Saini is teaching live on Unacademy Plus
Issues related to direct and indirect farm subsidies and minimum support prices Lesson1
In this Lesson What are Agricultural subsidies? Need for Farm subsidies
A subsidy is a benefit given to a party (individual or institution) by the government It is in the form of a cash payment, rebate or a tax benefit It is given to remove some type of burden A subsidy is an instrument of fiscal policy An agricultural subsidy is a governmental subsidy paid to farms to supplement their income and enhance their productivity * * e .
Agriculture subsidies can be categorized into direct and indirect farm subsidies Direct Farm subsidies means giving cash to the farmers . . In India it is in the form of MSP, Procurement for food security, buffer stock, cash transfers etc Indirect farm subsidies supporting farmers in an indirect manner In India it is in the form of cheap credit facilities, interests subventions, agriculture loan waivers, rebate in electricity bills Other indirect farm subsidies include farmer training and investments in agricultural research . . *
The various types of Agricultural subsidies include Input subsidy -Fertilisers, Irrigation, Power, Seed, Credit subsidy * Price subsidy- MSP . . Infrastructure subsidv Export subsidy
Subsidies are among the most powerful instruments for manipulation of growth rate of agriculture sector It ensures equitable distribution of income for the protection of weaker sections of society During the last decade agricultural subsidies provided by government of India have grown at a very rapid rate. Agricultural subsidies and food subsidies constituted above 10% of the total subsidies in country . * . .
Need for Agricultural subsidies- . 60% of Indian economy is from agricultural based industries . 85% of farmers are small and medium farmers and mainly practice subsistence agriculture Enhance yields Subsidies for inputs like seeds, pesticides, water, electricity makes inputs cheaper to farmers, doubling farmers income by 2022 Promotion of technology- subsidised farm machinery like harvester, tractor etc will help in scientific agriculture as envisaged in DPSP . .
The price of food products will be in control and regulated Can encourage a specific cropping pattern Eg- price subsidies and wheat Infrastructure development- cheap transport facilities, establishment of storage facilities Internal practices- United States and Europe countries have subsidies for agriculture Reduces Risk of importing under-priced food from other countries Over 50% employment comes from the Agriculture, and hence urgent need to reduce distress migration . * . . . .
Through agricultural subsidies, more numbers of fields will be utilized There are so many cases of suicide of farmers because of lack of support from government Stagnant growth rate in Agriculture Export promotion- help farmers be more competitive in the global market Food security- maintain buffer stock, implementation of NFSA 2013 Achievement of social policy objective of redistribution of income . . * . . e