Answer: Model Answer approach
The three primary parts of the question are the distinction between direct and indirect farm subsidies, and actions to strengthen the agricultural subsidy system.
Introduction: Explain what a subsidy is and stress the value of agricultural subsidies in India.
- A subsidy is a type of financial help given to an economic sector (company, organization, or individual) in order to accomplish specific policy goals. The welfare of farmers and the growth of the agriculture industry are supported by a number of subsidies offered by the federal and state governments.
Body: Provide an explanation of the distinction between direct and indirect agriculture subsidies using examples or a tabular format. Problems with the agricultural subsidies system, Provide arguments supported by pertinent data and examples. Steps to strengthen the farm subsidies system.
Actions to strengthen the agriculture subsidies system
- The necessity of a specific subsidy must be periodically reassessed. Subsidies can be progressively scaled back. NITI Aayog stressed the need to cut food subsidy bills by decreasing the coverage under PDS.
- Input subsidies can be gradually reduced by the government and replaced with Direct Benefit Transfers (DBT). In essence, it is a digital coupon that the recipient receives via SMS or QR code on his phone. He or she can go and use the pre-paid voucher at any location that takes it.
- The money saved by rationalizing subsidies should be used by the government to boost public investment in the agriculture industry. For instance, building irrigation infrastructure would increase productivity over time in areas that receive rainfall.
Emphasize the advantages of an effective subsidy system for Indian agriculture in your conclusion. Emphasize other improvements that the Dalwai panel has recommended to quadruple farmers’ income.
- The government ought to reconsider its subsidy program in the future. The proportion of direct assistance ought to be progressively raised. Furthermore, the Dalwai Panel emphasized that subsidies do not address the fundamental issues facing Indian agriculture, such as fragmented landholding and market accessibility. Therefore, additional reforms should be implemented by the government.
Practice Question
Question: Subsidies in agriculture often lead to inequitable distribution, unsustainable practices, and lower public investment. In this context, discuss the need for rationalisation of subsidies in India. (Answer in 250 words)
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