Quantum of input subsidies availed by farmers for wheat and paddy crops in Punjab: An economic analysis

Input subsidies encourage farmers to use the resources judiciously for getting higher crop yields. Keeping in view the importance of subsidies in agricultural sector, the present study was undertaken to estimate the quantum of input subsidies availed by Punjab farmers especially those growing paddy and wheat. The data were collected from a representative sample of 180 farmers from all farm categories encompassing one district each selected randomly from three agro-climatic regions of Punjab. The results revealed that the quantum of direct subsidy was mainly availed by medium and large farm farmers. Crop-wise subsidy pattern showed that paddy farmers availed Rs. 8486 per hectare while for wheat farmers it was Rs. 5763 per hectare. Withdrawal of subsidies may lead to a decline of 13% and 11% in the net returns from paddy and wheat, respectively. Fertilizer, power and diesel subsidies availed by large and medium farmers were comparatively higher. Major policy option was to lay emphasis on rationalization of subsidies in favour of marginal and small farmers with partial withdrawal and giving subsidies with a rider to medium and large category farmers in order to lower economic disparity in agricultural sector.