Institute of Development Studies, Jaipur 302 004
The authors are thankful to the learned referee for providing critical comments
The genesis of input subsidies in Indian agriculture can be traced to the philosophy and objectives of agricultural development strategy launched during the mid-1960s. Input subsidies helped in balancing the conflicting interests of farmers and consumers and in achieving macro and micro food-security. Subsidies on fertilizers, electricity and canal water, which account for bulk of subsidies, have been analyzed. In 1999–00, the electricity subsidy accounted for 53 per cent; fertilizer subsidy, 28 per cent; and canal irrigation subsidy, 19 per cent. During the last twenty years, 81 per cent of the incremental subsidy has been contributed by increase in the rate of per unit subsidy. Contrary to general perception, Punjab has accounted for only 7.4 per cent of the total subsidies in Indian agriculture. Across farm size groups distribution of subsidies has been found to follow the pattern of share of operated areas. Cropwise analysis has revealed that the input subsidies are mainly going to the food crops. The paper has suggested a caution in handling the issue of subsidies in Indian agriculture because the economic conditions of farmers have not improved to a desirable level. Subsidies on farm inputs cannot be seen in isolation of the subsidies in other sectors of the economy, which are many a times more, and consequences of their withdrawal are less painful.
