What is agriculture subsidy
Agriculture subsidies refer to payments by the government to farmers of agricultural products in order to stabilize food prices, increase food production and strengthening of the agricultural segment of the national economy. these subsidies can cover various expenses of the farmers in areas like fertilizers, seeds, equipment and irrigation. These subsidies total to 2 percent of the Indian GDP and contribute to an average of 20 percent of farmers income.
There are various agriculture subsides given to farmers in India:
- Seed subsidy: This refers to a subsidy given by the government where high yielding seeds are provided to farmers at reasonable prices with future payment alternatives. The research and development of these seeds is undertaken by the government and all costs are covered by the same.
- Fertilizer subsidy: This refers to the provision of low-cost chemical fertilizers or low-cost non-chemical fertilizers to the farmers. The government bears any extra money that is to be paid to the private fertilizer manufacturers from the base price they set for the farmers. The gap is bridged by the government. This gives farmers cheaper inputs for the cultivation and reasonable returns to manufacturing. It also ensures that the fertilizers are readily available at the right quantity with a stability in the prices for farmers.
- Power subsidy: This refers to a reduction in the prices of electricity charged by the government to the farmers. The most extensive energy consumption happens in the irrigation process. The subsidy covers the difference in the cost of producing and distributing energy to the farmers locally and the price paid by the farmers to the government for the same.
- Export subsidy: This refers to a subsidy given to farmers so as to help them in competing on a global scale. Exporting agricultural products gives the government a boost in foreign exchange while giving farmers a good profit margin as well. These subsidies stimulate a growth in the national economy as long as the export process doesn’t cause a negative impact on the domestic consumption.
- Irrigation subsidy: This refers to a subsidy where the government provides irrigation services to the farmers at a low cost as compared to the market price. This is also boosted by the government by improving the construction of public goods like canals, dams, tube wells etc. that add value to the irrigation infrastructure and can easily be accessed by farmers with tools as simple as pumping sets.
- Agricultural Equipment subsidy: This refers to subsidies that are provided by state governments under various schemes such as Rashtriya Kishi Vikas Yojana (purchase of machines and equipment for agriculture), National Food Security Mission and National Mission on oil seeds and palm oil.
- Agriculture Infrastructure subsidy: This refers to a subsidy provided by the government in order to boost the agricultural production. Good roads for transportation. Storage facilities, power continuity, ports development etc. are vital to optimum production and selling. All these facilities fall under the preview of the government and the responsibility for their clean maintenance falls on the government.