Challenges and Problems Associated with Subsidies

  • Subsidy is a compensation: The state’s dole out is a price that the country pays for the failure of the policy makersto comprehensively address the problems of the farm sector.
  • Idea of subsidy: Instead of a comprehensive set of policies, successive governments have chosen to dole out subsidiesin order to ensure domestic food security and protecting rural livelihoods.
  • Distorted production: At the same time, wanton distribution of subsidieswithout a proper policy framework has distorted the structure of production and, consequently, undesirable outcomes in terms of excessive food stockpiling.
  • Survival kit: When subsidies have virtually been made the survival kit for Indian farmers, there is possibly a need to understand the magnitude of the government dole out, also by comparing it with those granted by other countries.