Analyse the economic rationale behind fertiliser subsidies in India. Analyse how the present subsidy architecture influences farmer input behaviour and cropping choices. Propose reforms to improve efficiency without compromising affordability.
Kartavya Desk Staff
Topic: Issues related to direct and indirect farm subsidies
Topic: Issues related to direct and indirect farm subsidies
Q6. Analyse the economic rationale behind fertiliser subsidies in India. Analyse how the present subsidy architecture influences farmer input behaviour and cropping choices. Propose reforms to improve efficiency without compromising affordability. (15 M)
Difficulty Level: Medium
Reference: IE
Why the question Fertiliser subsidies are among India’s largest and most politically sensitive input supports, affecting food security, farm incomes and inflation management. Key Demand of the question The question requires explaining the economic logic behind fertiliser subsidies, and then analysing how the current subsidy design shapes farmer fertiliser use and cropping patterns. Finally, it demands reforms that improve efficiency and nutrient balance while ensuring affordability for small and marginal farmers. Structure of the Answer: Introduction Start with the role of fertiliser subsidies in enabling Green Revolution-style productivity, stabilising food output and protecting farmers from global price shocks. Body Briefly explain the economic rationale: food security, inflation control, small farmer protection and market failure correction. Discuss how present architecture affects behaviour: urea bias, NPK imbalance, soil health stress, cropping concentration and diversion incentives. Suggest reforms: rationalisation with protection, nutrient-neutral subsidy, stronger DBT, soil-test linked usage, and promoting speciality nutrients for high-value crops. Conclusion End with a forward-looking line on shifting from volume-based subsidy to efficiency-based nutrient management while keeping farmers insulated from sudden price shocks.
Why the question Fertiliser subsidies are among India’s largest and most politically sensitive input supports, affecting food security, farm incomes and inflation management.
Key Demand of the question The question requires explaining the economic logic behind fertiliser subsidies, and then analysing how the current subsidy design shapes farmer fertiliser use and cropping patterns. Finally, it demands reforms that improve efficiency and nutrient balance while ensuring affordability for small and marginal farmers.
Structure of the Answer:
Introduction Start with the role of fertiliser subsidies in enabling Green Revolution-style productivity, stabilising food output and protecting farmers from global price shocks.
• Briefly explain the economic rationale: food security, inflation control, small farmer protection and market failure correction.
• Discuss how present architecture affects behaviour: urea bias, NPK imbalance, soil health stress, cropping concentration and diversion incentives.
• Suggest reforms: rationalisation with protection, nutrient-neutral subsidy, stronger DBT, soil-test linked usage, and promoting speciality nutrients for high-value crops.
Conclusion End with a forward-looking line on shifting from volume-based subsidy to efficiency-based nutrient management while keeping farmers insulated from sudden price shocks.