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6) Excessive input subsidies have caused large-scale inefficiencies in the agriculture system. Critically analyze.(250 words) 

Topic -Issues related to direct and indirect farm subsidies and minimum support prices.

6) Excessive input subsidies have caused large-scale inefficiencies in the agriculture system. Critically analyze.(250 words) 

Indian express

Why this question

India is largely an agricultural country in that 48% of the population is still dependent on agriculture, although the contribution of agriculture to GDP is around 16% only. In this sense it is important to analyze how input subsidies in agriculture impact the agriculture system in the country.

Directive word

Critically analyze-  here we have to examine methodically the structure or nature of the topic by separating it into component parts, and present them as a whole in a summary. based on our discussion we have to form a concluding opinion on the issue.

Structure of the answer

Introduction- write a few introductory lines about India’s agriculture. E.g its contribution to GDP, population still dependent on agriculture etc.

Body-

  1. Mention that  public capital formation in agriculture has been declining from 3.9 percent of agri-GDP in 1980-81 to 2.2 per cent in 2014-15 — it recovered to 2.6 per cent in 2016-17 — while input subsidies on fertilisers, water, power, crop insurance and agri-credit have risen from 2.8 percent to 8 percent of the agricultural GDP during the same period.
  2. Discuss how input subsidies in agriculture have impacted the overall agriculture system. E.g the rapid increase in input subsidies has squeezed public investments in agriculture; excessive input subsidies have caused large-scale inefficiencies in the agriculture system. For example, fertiliser subsidies, especially on urea, have led to the imbalanced use of soil nutrients. The subsidy on irrigation water has resulted in an inefficient use of scarce water. Highly subsidised power has led to over-exploitation of groundwater. Subsidy on the interest rates on crop loans has diverted substantial amounts of agri-credit to non-agricultural use. Although the new crop insurance scheme, PMFBY, has dramatically reduced the burden of premium paid by farmers, its effective implementation and the quick settlement of claims into farmers’ accounts remains a challenge etc

Conclusion– based on your discussion, form a fair and a balanced conclusion on the given issue. E.g investment in public irrigation is very expensive, as it involves long lags, and the gap between the potential created and potential utilised has increased over time. To give higher returns, this leaky system must be fixed, it should be made more transparent and the gap between potential created and utilised bridge; Second, the present system of delivering subsidies through the pricing policy needs to be shifted to an income policy, which could be well-targeted, and leakages minimised— on the lines of JAM trinity; Third, investments need to be prioritised towards agricultural research and development, roads and education etc.

CategoriesINSIGHTS