Reasons against the subsidies in agriculture

♤ The biggest of all these input subsidies is the fertilizer subsidy. The subsidy policy in fertilizers has led to an imbalanced use of N, P and K in states like Punjab and

Haryana which in turn contributes to deterioration of soil conditions. Subsidies induce excess use of fertilizers and pesticides in farm production.

♤ Agriculture subsidies draw marginal agricultural land into for agriculture production that might be used for forests, wetlands or other environmental conservation purposes.

♤ Subsidies given to the farmers for electricity, has resulted in drawing of ground water in huge excess. This has resulted in lowering of water table in many areas.

♤ In areas where there is a lack of sufficient electricity for agriculture, it encourages the private investment in diesel generating sets for agriculture and other purposes which is an underlying reason of huge petroleum imports. Thus, the fiscal deficit multiplies.

♤ Subsidies are paid from the public money. Corrupted politicians, bureaucrats, middlemen make the most of subsidies to their own benefit. Agricultural economy is marked with fodder scams, fertilizer scams, and diversion of funds.

♤ Agriculture subsidies induce excess production in some particular crops eg those having higher MSP, while some other crops are not produced in enough quantity to meet the demand and hence it causes food price inflation.

♤ The way subsidies in agriculture are being administered, food inflation will continue to be a concern for a long time and for the simple reason that the supply of non- cereal, protein-rich food items is not keeping pace with their increased demand. Subsidies also cause less insufficient attention to innovative agricultural practices such as mixed cropping, animal husbandry and cost control.

♤ The excess subsidies come at a cost of public investment in agriculture research, irrigation, rural roads and power. Lesser public investment in such areas due to more emphasis on subsidies further deteriorates the quality of essential services for rural areas like uninterrupted power supply.

There are research studies which show that the marginal returns evident in terms of poverty alleviation or accelerating agricultural growth are much lower than the input subsidies for agriculture development. There is trade-off between allocating money through subsidies for agriculture or increasing investments for agriculture development such as irrigation, backward infrastructure etc. The investment option is much better than subsidies for sustaining long-term growth in agricultural production and also to reduce burden on national exchequer.