Review of Agricultural Subsidy Schemes in India

In recent years, the agricultural subsidy schemes in India have undergone scrutiny. The aim is to ensure they align with social equity and economic growth. The Public Distribution System (PDS) plays important role in distributing food grains at subsidised rates to the underprivileged. However, the percentage of GDP allocated to agricultural and fertiliser subsidies has decreased. This decline is influenced by various factors, including the aftermath of the Covid-19 pandemic and the ongoing global economic challenges, such as the Russia-Ukraine conflict.

Public Distribution System (PDS)

The PDS is designed to provide food grains at subsidised prices to the economically weaker sections of society. It operates through a network of fair-priced shops. This system aims to ensure food security and equitable distribution among the poor. The effectiveness of PDS is critical for maintaining social stability.

Impact of Global Events

The Covid-19 pandemic affected subsidy allocations. The government had to increase subsidies to support the population during the crisis. Additionally, the Russia-Ukraine war has led to rising global prices, impacting food security in countries like India. As a result, the government may need to recalibrate subsidy values in the near future.

Key Subsidy Schemes

Several schemes are in place to support farmers. The Sub-Mission on Seeds and Planting Materials promotes quality seed production. Financial assistance is offered for certified seeds, enhancing agricultural productivity. The Sub-Mission on Agricultural Mechanization focuses on providing equipment to small and marginal farmers. This initiative aims to boost efficiency and reduce costs.

Irrigation and Water Management

The Pradhan Mantri Krishi Sinchai Yojana (PMKSY) includes components to enhance irrigation efficiency. The “Per Drop More Crop” initiative promotes micro irrigation techniques. This approach aims to optimise water use and improve crop yields, crucial for sustainable agriculture.

Fertiliser Subsidies

Fertilisers play a vital role in enhancing crop yields. Urea is provided at a government-regulated price, ensuring affordability for farmers. The Nutrient Based Subsidy Policy regulates subsidies for Phosphatic and Potassic fertilisers based on their nutrient content. This policy helps maintain reasonable prices while supporting farmers.

Agricultural Marketing Infrastructure

The Agricultural Marketing Infrastructure scheme aims to reduce post-harvest losses. It promotes scientific storage facilities and market access for farmers. This initiative is critical for enhancing farmers’ income and ensuring food security.

Periodic Review of Schemes

The government conducts regular reviews of subsidy schemes. These reviews ensure that the schemes remain relevant and effective. Adjustments are made based on changing economic conditions and farmers’ needs, ensuring continuous support for the agricultural sector.

Questions for UPSC:

1. Critically discuss the role of the Public Distribution System in ensuring food security in India.
2. Examine the impact of global economic events on India’s agricultural subsidy policies.
3. Analyse the effectiveness of the Pradhan Mantri Krishi Sinchai Yojana in promoting sustainable agriculture.
4. Estimate the potential consequences of reducing fertiliser subsidies on small and marginal farmers in India.

Answer Hints:

1. Critically discuss the role of the Public Distribution System in ensuring food security in India.

1. The PDS provides food grains at subsidized rates to economically weaker sections, enhancing food security.
2. It operates through a network of fair-priced shops, ensuring equitable distribution among the poor.
3. PDS plays important role in stabilizing food prices and preventing hunger during crises.
4. Effectiveness is measured by its reach and the adequacy of food supplies to beneficiaries.
5. Challenges include leakage, inefficiency, and corruption, which undermine its effectiveness.

2. Examine the impact of global economic events on India’s agricultural subsidy policies.

1. The Covid-19 pandemic led to increased subsidies to support vulnerable populations during lockdowns.
2. Global price hikes due to the Russia-Ukraine war have pressured the government to adjust subsidy levels.
3. Economic instability has necessitated a reevaluation of subsidy allocations to maintain food security.
4. Declining GDP percentage for subsidies reflects a shift in fiscal priorities amid rising costs.
5. Future recalibrations of subsidies will depend on global economic conditions and domestic needs.

3. Analyse the effectiveness of the Pradhan Mantri Krishi Sinchai Yojana in promoting sustainable agriculture.

1. PMKSY focuses on enhancing irrigation efficiency, crucial for sustainable farming practices.
2. The “Per Drop More Crop” initiative promotes micro-irrigation, optimizing water use for higher yields.
3. Increased access to irrigation helps mitigate drought risks and improves crop resilience.
4. Regular assessments of scheme implementation indicate progress in water conservation and productivity.
5. Challenges include ensuring farmer awareness and access to modern irrigation technologies.

4. Estimate the potential consequences of reducing fertiliser subsidies on small and marginal farmers in India.

1. Reduction in subsidies could lead to higher input costs, straining farmers’ financial viability.
2. Small and marginal farmers, already vulnerable, may face increased risk of crop failure.
3. Higher fertiliser prices could discourage optimal usage, impacting overall agricultural productivity.
4. Potential rise in food prices may affect food security and exacerbate rural poverty.
5. Long-term consequences could include increased migration from rural areas due to financial distress.