Agriculture

KEY POINTS

·        The agriculture sector in India seems to be more dependent on input subsidies.

·        But, subsidy-driven agriculture systems are not sustainable says the Dalwai Committee on doubling farmers’ income.

·        Excessive input subsidies have also caused large-scale inefficiencies in the agriculture system.

·        For example, fertilizer 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 subsidized 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.

·        But, expenditure incurred on Agri- Research and Education, roads or education is five to 10 times more powerful in alleviating poverty or increasing Agri-GDP than a similar expenditure made on input subsidies.

·        For example, according to ICRIER study, for every million rupees spent on agricultural research, 328 people are pulled out of poverty.

·        In contrast, the same amount spent on power subsidies brings only 23 people out of poverty.

·        Capital investments for basic infrastructure like irrigation, power, roads, communication, post-harvest Agri-logistics, markets will make farm sector self-sufficient on ground.

·        With much lesser subsidies a self-sufficient farmer may be able to serve the cause of Indian agriculture much better.

·        Benefits from populist policies are short-lived and subsidies alone can’t sustain a sector for long, unless ‘blended’ with investments.

·        Hence, it is time for the best blend of subsidies and investments with more weightage being given to the latter.

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