Question

“Although the subsidies play a crucial role in giving incentive to farmers to adopt modern agricultural technologies, they simultaneously impose a significant fiscal strain on the resources of the Government.”

Justify the given statement with valid argument.

Answer 1

1. Incentive argument: Subsidies are essential because agriculture is a high-risk profession. Small farmers are often hesitant to adopt expensive modern inputs like HYV seeds or chemical fertilisers. By lowering the cost of these inputs, subsidies catalyse technological adoption, ensuring food security and higher yields for the nation.
2. Fiscal strain argument: On the flip side, subsidies account for a massive chunk of the government’s budget. This ”fiscal burden” leaves less room for the government to invest in other critical areas like irrigation infrastructure, rural health, or education. Furthermore, universal subsidies often benefit rich farmers more than poor farmers, leading to a misallocation of resources.

While subsidies were vital during the Green Revolution to encourage risk-taking, the current challenge is to target them better to reduce the drain on the national exchequer without hurting the small farmer.