Subsidies to Farm Sector in India Need to Rationalize & its Efficient Use

Abstract

At the time of country’s Independence, hardly 10% of the cultivated area had assured irrigation and the average consumption of NPK nutrients was less than 1 kg a hectare. The average yield of wheat and rice was about 800 kg per hectare. Agricultural development programs, therefore, focused to achieve self-sufficiency in food production, make country free from food-import & ensure that food is available to poor consumers at affordable prices. The Government policy, therefore, focused on providing farmers subsidies on fertilizers, electric power, seeds & bank credit in particular. While this yielded rich dividends, provision of subsidies has created adverse impact on country’s economy. In this context, this article briefly highlights the once-upon-a-time need for subsidies, analyses the growth of subsidies on fertilizers, power, water, credit over a period of time, pinpoints its serious consequences on country’s soil health & groundwater depletion and suggests specific measures to improve the efficacy of the use of subsidy where necessary and enhance investment in specific areas to improve country’s farm sector.