Agriculture Subsidies required or not? if yes then why?

Whether the government should be using the taxpayers’ money to provide subsidies to the farming community in this country.

1. why have successive governments used the exchequer to provide farm subsidies.

2. How large is India’s spending on farm subsidies as compared to those of other countries having substantial interests in agriculture?

In 1950 -51                   Seven decades later
agriculture’s share in GDP                    45% below 16%
the share of dependent workforce nearly 70%almost 50%

  • Farmers consistly faced adverse terms of trade vis-a-vis non farmers.
  • There is a lack of meaningful investment in agriculture which would not only ensures efficient use of resources but could be a crucial step to boost farm incomes.
  • Total investment undertaken in country fell from 18% in 1950s to around 11% by 1980s.
More recent data from 2014-15 to 2018 -2019 shows the average share of agriculture investment was 7.6%  i.e. Very Low.
  • Dismal in yield as compared to other nations.
 Wheat and Paddy yield in 2019  for India stood at 45th and 59th rank.
  • Need for coherent Legislations. 
US with 2% workforce in agriculture, have been enacting farm legislations every 4 year since enacting Agriculture Adjustment Act 1933.

Members of  the World Trade Organization (WTO) are expected to notify their agricultural subsidies as a part of their commitment under the Agreement on Agriculture (AoA); 

for 2018-19, shows that the subsidies provided were slightly more than $56 bn. In most of the recent years, the largest component of India’s subsidies ($24.2 billion, or 43% of the total) are provided to "low income or resource poor farmers”

India has notified 99.43% of its farmers are low income or resource poor. According to the agricultural census conducted in 2015-16, these are the farmers whose holdings are 10 hectares or less.

Absolute numbers do not provide a good yardstick to compare the farm subsidies of countries; the ratios of subsidies to agricultural value addition for the three countries give a much better picture. the U.S. and the members of the European Union (EU) gave much larger magnitudes of support than India did.

For 2017, India’s farm subsidies :: 12.4% of agricultural value addition, while for the U.S.it is 90.8% and for  EU is 45.3%.


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