[General Studies III : Economy ] [250 words, 15 marks]  

Answer Structure:

• Introduction: Subsidies and fiscal sustainability
• Body: Subsidies and adverse effects on the environment 
• Conclusion:  Subsidies and overall agricultural growth of India.

Answer

Introduction

The question of subsidies in agriculture has emerged as an important issue in recent policy debates. Agricultural subsidies are fiscally unsustainable and encourage the misuse of resources, leading to environmentally malignant developments.  

Body

Input subsidies are having adverse effect on the environment in agriculture. These policies are leading to the degradation of land and water.  

They have led to highly wasteful use of canal water, ecological degradation of water logging, salinity, pollution, excessive consumption of electricity and overdrawal of groundwater, resulting in a shortage of drinking water in several parts of the country. 

Similarly, the prevailing heavy subsidy on nitrogenous fertilisers perpetuates inefficiencies in the domestic fertiliser industry.

Irrigation and use of power seems to be high under small farm as compared to large farm.

 However, these are concerned by the farmers in irrigated areas and those in unirrigated areas do not get these subsidies. Most of the fertiliser subsidy also goes to the farmers under irrigated area.

 So, the benefit flowing to the farmers and consumers of food is illusionary as it is leading to degradation of soil on account of excessive chemicalization and adverse NPK ratio.

A fixed quantity of fertiliser sufficient for 1 or 2 hectares may be subsidised for all the farmers, if necessary, through a system of input coupons requiring them to purchase the remaining quantities in the market at the growing rates.

Conclusion

Subsidies result in crowding out public investment resources and adversely affect the overall agricultural growth of India.

Subsidies are effective in pushing agricultural growth to a certain extent, but it is important to make sure that they do not become a permanent feature of the Indian economy.

 (The model answer provided above strictly follows the word limit, the above answer is compiled in 277 words.)

Practising answers sticking to the word limit will aid the aspirants to write answers precisely and to the point by avoiding unnecessary things. 

(Titles introduction, body and conclusion are just for reference, aspirants should not write these titles in the answer sheet.)