Are Subsidies for Farmers Really Needed?

The economic justification of subsidies in agriculture is at present a hotly debated question.It is generally agreed that subsidies are necessary to provide an incentive for adoption of the new technology by farmers.Any new technology will be looked upon as being risky by farmers.
A farmer throwing fertilizer in the paddy field Sarus crane from Gondia district, Maharashtra
By PJeganathan (Own work) [CC BY-SA 4.0 h],via Wikimedia Commons

Past debates 
Subsidies were needed to encourage farmers to test the new technology.As the technology is found profitable and is widely adopted,subsidies should bee phased out since their purpose has been served.
Subsidies are meant to benefit the farmers but a substantial amount of fertilizer subsidy only benefit the fertilizer industry and farmers in more prosperous regions.Therefore,it is argued that there should be no case for continuing with the fertilizer subsidy as it does not benefit the targeted group and it is a huge burden on the government's finances.

Government's view
In 2009,Union Finance Minister Pranab Mukherjee announced the introduction of fertilizer subsidy reform and New subsidy scheme(NBS) with a promise that the subsidy amount would be disbursed directly to farmers.In 2010,this policy was made effective,but there was no transfer of money to the farmers.One year later,the NBS proved to be a complete failure.The data and media reports reveled that urea usage has gone up leading to further degradation of soil.Now,with the government increasing the fertilizer subsidy,it is also clear that the NBS has also failed to reduce the burden on the government expenses.It is neither helping the farmer nor the government. 

Environment degradation
When electricity and water are provided at a subsidised rate or free,they will be used wastefully without any concern for their scarcity.Farmers will cultivate water intensive crops if water is supplied free or subsidised rate,although the water resources in that region may be scarce and such crops will further deplete the already scarce resources.But if water is priced to reflect scarcity,farmers will cultivate crops suitable to the region.Fertilizers and pesticide subsidies result in overuse of resources which can be harmful to the environment.Subsidies provide an incentive for wasteful use of resources.
Plowing the field the traditional way - Manthralaya, AP, India
By Ananth BS [CC BY 2.0 ], via Wikimedia Commons

Farming in India still risky
Economist think that the government should continue  with agricultural subsidies because farming in India is still a risky business.Most farmers are very poor and they will mot be able to afford the required inputs without subsidies.Eliminating subsidies will increase the inequality between rich and poor farmers and violate the goal of equity.

Need of the hour
If subsidies are largely benefiting the fertilizer industry and big farmers, the correct policy is not to abolish subsidies but to take steps to ensure that only the poor enjoy the benefits.Now is the time for the government to start building an alternative support system which is both farmer and farm friendly. This can open up a lot of rural employment opportunities and contribute to the livelihood security of a farmer. This will also bring prosperity to rural India. 
Are Subsidies for Farmers Really Needed? Are Subsidies for Farmers Really Needed? Reviewed by Roman Empire on October 10, 2017 Rating: 5
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