GS3 · 15 marks · 250 words

Discuss the impact of direct and indirect farm subsidies on the agriculture sector in India. How have Minimum Support Prices (MSP) affected the agricultural economy?

Answered by 4 toppers · CSE 2023

Subsidies and MSP Inclusive Growth Crops and Cropping Patterns

Syllabus: Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security; Technology missions; economics of animal-rearing.

How toppers approached it

From all 4 answers · about 180 words · 75% drew a diagram.

Opening

No separate opening2 of 4
A figure1 of 4
A definition1 of 4

Body

Points and prose3 of 4
Points1 of 4

No separate close1 of 4
A source1 of 4
A summary1 of 4
A way forward1 of 4

The toppers’ answers

NausheenAIR 9 · CSE 2023 · 125 wordsTheir whole copy

Opening · a definition

Direct and indirect farm subsidies are the support that governments provide to various sectors. (Eg) Minimum Support Price to agri-sector.

Body · points and prose

Impacts of direct and indirect farm subsidies:-

Support to farmers for diversifying their income sources. (Eg) PM-KISAN - ₹ 6000 support.

Diagram

Positive impact → Protective cover against the market fluctuations → (Eg) MSPs during fall in prices of product → Supportive infrastructure of the agri sector → (Eg) Agriculture Infrastructure Development fund (AIDF)

Diagram

- other +'ve impact - 1 Balancing crop mixture in the country. (Eg) increasing MSP of crops. - 2 Save farmers from the "cob-web" phenomena. (ES'21) - Negative impacts - 1 WTO claims it to be trade distortionary and imposes obligations on India to phase-out. - 2 Negative environmental impacts like depletion of ground water; excessive methane emissions; stubble burning (due to rice-wheat system). - 3 Supportive subsidies in India is skewed towards some crops like rice, wheat; leading to displacement of millets, hardy crops. - 4 Inflationary in nature.

Effects of MSPs on agri-economy

+ve → (1) saving from market fluctuations. → (2) Protection from corporate house exploitation. → (3) Assured incomes to the farmers.

-ve → (1) with ₹ 1 increase in MSP - leading to ₹ 100/quintal increase in storage cost. → (2) Increasing subsidy burden (₹ 5 billion subsidy burden during 2020-21). → (3) Overflowing buffer storage capacity (currently, 3.5 times wheat storage than capacity).

Close · a source

Shanta Kumar Committee recommended to rationalise subsidy burden in agri-sector and minimising losses.

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