Topic: Issues related to direct and indirect farm subsidies and minimum support prices;
Q6. Analyse the economic and fiscal implications of rising agricultural subsidies in India. How do they affect long-term development priorities? (10 M)
Difficulty Level: Medium
Reference: IE
Why the question
Due to rising concerns regarding the growing fiscal burden of agricultural subsidies amid global commodity price volatility and debates over sustainable agricultural reforms in India.
Key Demand of the question
The question requires analysing the major economic and fiscal implications of increasing agricultural subsidies and examining how such expenditure affects India’s long-term developmental and structural priorities.
Structure of the Answer:
Introduction
Briefly mention the role of agricultural subsidies in ensuring food security and farmer welfare, while highlighting emerging concerns regarding fiscal sustainability and developmental trade-offs.
Body
- Economic and fiscal implications of rising subsidies: Mention fiscal burden, distorted resource allocation, inefficient input usage, macroeconomic stress or subsidy dependence.
- Impact on long-term development priorities: Suggest effects on infrastructure spending, agricultural reforms, environmental sustainability, innovation or productive capital formation.
Conclusion
Conclude by stating that agricultural support systems must gradually move towards targeted, efficient and sustainable models that balance farmer welfare with long-term economic resilience.
