Briefly describe the different forms of subsidies given to the agriculture sector.
Types of Agricultural Subsidy in India
- Fertilizer subsidy
- Power subsidy
- Agricultural Equipment subsidy
- Irrigation subsidy
- Seed subsidy
- Export subsidy
- Credit subsidy
- Agricultural infrastructure subsidy
All these subsidies are discussed below:
Fertilizer Subsidy: Disbursement of cheap chemical or non-chemical fertilisers among the farmers. It amounts to the difference between price paid to manufacturer of fertilizer (domestic or foreign) and price, received from farmers, rest of the burden is bear by the government. This subsidy ensures:
(i) Cheap inputs to farmers,
(ii) Reasonable returns to manufacturer,
(iii) Stability in fertilizer prices, and
(iv) Availability of fertilisers to farmers in adequate quantity at the requirement.
In some cases this kind of subsidies are granted through lifting the tariff on the import of fertilisers, which otherwise would have been imposed.
Power Subsidy: The electricity subsidies imply that the government charges low rates for the electricity supplied to the farmers. Power is primarily used by the farmers for irrigation objectives. It is the difference between the cost of generating and distributing electricity to farmers and price received from farmers. The State Electricity Boards (SEBs) either generate the power themselves or purchase it from other producers such as
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