Question

The removal of subsidies in agriculture led to which of the following consequences?

Options

• Increased cost of production for farmers

• Decreased cost of production for farmers

• Expansion of small-scale industries

• Higher public investment in irrigation

Answer 1

Subsidy removal led to an increased cost of production for farmers, raising their input expenses. This formed a major criticism of the reform package as it squeezed farm incomes while public investment in agriculture was also declining.