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Day 32 – Q 3.Do you agree with the assertion that subsidies ultimately hurt the farmers? Substantiate.

3. Do you agree with the assertion that subsidies ultimately hurt the farmers? Substantiate. 

क्या आप इस बात से सहमत हैं कि सब्सिडी से अंततः किसानों को ही नुकसान होता है? पुष्टी करें।


An agricultural subsidy is a government incentive paid to agribusiness, agricultural organizations and farms to supplement their income manage the supply of agricultural commodities and influence the cost and supply of such commodities.

Farm subsidies could be – 

  • Direct farm subsidies rendering cash to the recipient farmers like food subsidy, MSP-based procurement, providing cash directly to the farmers to buy fertilizers etc.
  • Indirect farm subsidies are not provided in the form of cash but supporting farmers in an indirect manner. For example- subsidizing fertilizer companies to provide cheap urea to farmers.


Subsidies ultimately hurt the farmers 

  • Fertilizers subsidy, especially urea when made available cheaply has resulted in overuse, which degraded soil quality, and in return affected the output productivity. Low productivity of Punjab in wheat can be attributed to above cause.
  • Most benefits of subsidies are allotted to big farmers while in India, 2/3rd farmers are marginal farmers which can’t utilize the benefit of subsidy properly. Thus the value of produce of such farmer’s decrease.
  • It leads to overproduction of one crop over other like fruit, pulses. Thus sometimes grains are piled up for rotting in warehouse. 

However, agriculture is becoming unsustainable enterprise

  • 76% of the farmers would like to quit farming if given a chance (‘State of Indian Farmers’ report)
  • Only 23% of rural income comes from agriculture (NABARD survey).
  • 86% of the land holding is small and marginal (Agriculture census 2015-16)
  • 10 farmers suicide daily (2016, NCRB)
  • Non-remunerative price – recently farmers in Shahganj, MP were forced to throw their tomatoes.

In this regard subsidies can be respite for farmers 

  • “Subsidies are not the cure for the farm crisis but just a prescription for a short term relief” – P. Sainath
  • Interest subsidies reduce the debt burden of farmers. 


Alternate of subsidies

  • Price deficiency payment
  • Crop insurance through PMFBY
  • Income support through PM-KISAN
  • Old age pension scheme for farmers through Kisan Maan-Dhan Yojana

Subsidies must be rationalized and coupled with above support mechanism will help the agrarian distress and make farming remunerative. 

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