What are the different types of agriculture subsidies given to farmers at the national and at state levels ? Critically analyse the agricultural subsidy regime with reference to the distortions created by it.

Distortions caused by Subsidy regime →

[A] Direct Subsidies →

1. Poor targeting of beneficiaries → only 60% covered in PM KISAN.
2. Sharecroppers do not get amount/inclusion
3. Megre amount → 6000 Rs not enough.
4. Lack of more direct subsidy options for farmers.

[B] Indirect subsidies

1. Huge expenditure on state exchequer
2. Distorts Nutrition balance → 8:4:1 of NPK instead of 4:2:1 ratio due to cheap urea.
3. Pollution, ground water leaching, soil degradation.
4. MSP → distorts markets → Cereal centric cultivation, only 6% benefited (Shanta Kumar)
5. Farmer's procurement → open ended → leads to wastage, black marketing
6. Power subsidies → DISCOM's poor health and over exploited ground water.

Reforms Needed

1. Replacing MSP regime → market distortion ↳ Price deficiency payment scheme (Niti Ayog) ↳ MP's - Bhavantar Bhugtan Yojana.

2. Solar as 3rd crop → (Ashok Gulati) to reduce power subsidies.

3. Use Nano-Urea, organic fertilizers (PM-PRANAM scheme) to reduce chemical use.

4. Micro irrigation and fertigation for proper fertilizer use.

5. More direct subsidies (India only 2$ vs USA - 105$)

6. Better targeting, JAM trinity used.

7. Private sector in Agriculture (3 Bills back)

8. Utilizing → Cooperatives, FPO's for good management practices.

9. Market mechanism for crop pricing and amending Mandi system (APMC).

10. E-NAM, integrated mandis.

11. Commodity derivatives for price market share.