068 - Issues Related to Direct and Indirect Farm Subsidies and Minimum Support Prices

India’s policy of price intervention in the agricultural sector has done more harm than benefit. It has created a skewed agricultural market and complicated matters related to international trade rules. Critically discuss.

The agricultural sector provides employment to nearly 45% population and is crucial to India’s food security. Thus, numerous price interventions exist to support the sector: Direct Benefit Transfer to farmers, e.g. PM-Kisan. Guaranteed crop procurement at pre-decided prices, e.g. MSP, PM-Aasha. Material support, e.g. Subsidised electricity, water supply, fertilizers, seeds, etc. Impact of price interventions: ..

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Discuss the challenges faced by jute industry in India. What are the steps taken by the government to address these challenges?

Jute is a biodegradable natural fibre that is used for variety of purpose like making ropes, gunny bags for packaging, etc. Challenges faced by Jute industry: The small size of Jute making firms. The use of obsolete machinery and technology. Inadequate connection with the high value markets of the world like the USA, European Union, ..

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There are several issues that are plaguing the crop procurement process in India. Discuss the measures to strengthen crop procurement in India.

Under provisions of the National Food Security Act and Public Distribution System, the government of India procures most of the agricultural produce in the country at various support prices like MSP. Issues plaguing crop procurement: Support price-related issues – The government of India announces MSP for 23 crops (rabi, Kharif, cash crops). However, MSP for ..

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How a multi-prolonged strategy can aid in addressing farm distress?

The one fits all approach like farm loan waiver, increasing MSPs and Direct Benefit Transfer (DBT) doesn’t recognize the heterogeneity of farming community. A multi-pronged strategy of income support, government investment, and institutional innovations, and not a one-size-fits-all approach is the need of the hour to address farm distress. Immediate Measures To overcome immediate distress, ..

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Why the often adopted go to measure like loan waiver, increasing MSPs and DBT have failed to provide a holistic measure to address farm distress.

The two main policy interventions repeatedly discussed to tackle farmer distress are loan waivers and minimum support prices (MSP). These policy interventions don’t recognize the fact that farmers are a heterogenous community and there is a difference between farmer dissatisfaction and distress. Loan Waiver Even though most economists agree that loan waivers are a bad ..

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What are the reasons for viability crisis in agriculture? Explain with special reference to Minimum Support Price Scheme.

There are several reasons that make Indian agriculture less viable including Small and fragmented land-holdings; quality seeds and low seed replacement ratio; fertilizers and irrigation policy; lack of mechanization; issues in marketing, inadequate storage facilties etc. However, MSP scheme is peculiar because its intention is to provide direct support to cultivators. Though government carries out ..

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