Subsidies for food grains, predominantly meant for the benefit of the masses. To ensure fair and equitable distribution the Public Distribution System (‘PDS’) system is deployed so that food grains are distributed to the poor at heavily discounted prices through the mechanism of fair-priced shops.
"The subsidies provided for the agriculture and fertilizer industries has been waning for the past few years as a percentage of the Gross Domestic Product (‘GDP’). One of the factors being that normalcy is restored after the maelstrom caused by the Covid-19 pandemic, which due to which the subsides being provided to beneficiaries via PDS under the Pradhan Mantri Garib Kalyan Anna Yojana and other schemes, have taken a substantial haircut," said Manmeet Kaur, Partner at Karanjawala & Co."Apart from the impact of Covid-19, the Russia Ukraine war led to higher global prices across the globe with its impact being severely felt in Southeast Asian countries, including India. As a counterbalance, subsidies for the past few years had to be accordingly increased. Reports accordingly suggest a correction in the value of subsidies in the coming future," Manmeet Kaur further added
" The flipside is that any change in subsidy amounts for food grains and fertilizers in the agriculture industry, which is often seen as the backbone of the Indian economy, would have a substantial impact on the pockets of the taxpayers," said Kaur.
"It would depend on the side of the spectrum where one stands to appreciate whether any fluctuation in subsides would be considered beneficial for the not so privileged section of the society, or whether it is seen as something which continues to burn a deeper hole in the pocket of the taxpayers," Kaur further said.
"It would depend on the side of the spectrum where one stands to appreciate whether any fluctuation in subsides would be considered beneficial for the not so privileged section of the society, or whether it is seen as something which continues to burn a deeper hole in the pocket of the taxpayers," Kaur said. "Periodic review of prevalent subsidy schemes is desirable to align them with the target of social equity and economic growth," Kaur added.
Some of the component/schemes through which the Government provides subsidies to farmers are as follows:
Seeds
The Department is implementing Sub-Mission on Seeds & Planting Materials (SMSP) from the year 2014-15 to promote production and multiplication of quality seeds of agricultural crops, so that the required quantities of seeds could be made available to farmers in the country. To upgrade the quality of farmers’ saved seeds, financial assistance for distribution of foundation/certified seeds at 50% cost of the seeds for cereal crops and 60% for pulses, oilseeds, fodder and green manure crops for production of quality seeds is available /provided for one acre per farmer under the component Seed Village Programme of SMSP. The objective of this scheme is to make available improved /high yielding varieties of seeds to farmers in time and to achieve self-sufficiency in respect of seeds at village level itself. The above scheme/ component is demand driven and implemented by the concerned State/implementing agencies for welfare of all the categories of farmers which help in enhancing productivity/production of various crops and also improving profitability of the agriculture sector (farmers’ income) in the country.
(ii) Mechanization & Technology
(A) A Sub Mission on Agricultural Mechanization (SMAM) is being implemented w.e.f. 2014-15. The SMAM provides a suitable platform for converging all activities for inclusive growth of agricultural mechanization by providing a ‘single window’ approach for implementation with a special focus on small & marginal farmers with the following objectives: -
(1) Increasing the reach of farm mechanization to small and marginal farmers and to regions where availability of farm power is low;
(2) Promoting ‘Custom Hiring Centres ’to offset the adverse economies of scale arising due to small landholding and high cost of individual ownership;
(3) Creating hubs for hi-tech & high value farm equipments;
(4) Creating awareness among stakeholders through demonstration and capacity building activities;
(B) A special Scheme to support the efforts of the Governments of Haryana, Punjab, Uttar Pradesh and the NCT of Delhi to address air pollution due to stubble burning and to subsidize machinery for farmers for in-situ management of crop residue, a new Central Sector Scheme on ‘Promotion of Agricultural Mechanization for In-Situ Management of Crop Residue’ in the States of Punjab, Haryana, Uttar Pradesh and NCT of Delhi for the period from 2018-19 to 2019-20 has been launched.
(iii) Irrigation
There are three components of the Pradhan Mantri Krishi Sinchai Yojana (PMKSY)
i. PMKSY(Har Khet Ko Pani)
ii. PMKSY (Watershed) and
iii. PMKSY (Per Drop More Crop)
Subsidy component is only admissible for PMKSY (Per Drop More Crop). PMKSY (Per Drop More Crop): DAC&FW is implementing Per Drop More Crop component of PMKSY. The PMKSY- Per Drop More Crop mainly focuses on enhancing water use efficiency at farm level through precision/micro irrigation (Drip and Sprinkler Irrigation). Besides promoting precision irrigation and better on-farm water management practices to optimize the use of available water resources, this component also supports micro level water storage or water conservation/management activities to supplement Micro Irrigation.
(iv) Godowns
To promote creation of scientific storage capacity for storing farm produce, processed farm produce and agricultural inputs etc., to reduce post-harvest & handling losses, promote pledge financing and market access including marketing infrastructure (other than storage), the DAC&FW is implementing a capital subsidy sub-scheme “Agricultural Marketing Infrastructure (AMI)” of Integrated Scheme for Agricultural Marketing (ISAM) across the country.
AMI is a demand driven, credit linked, back ended subsidy scheme and no State/beneficiary-wise allocation has been made under the scheme. Beneficiaries viz, farmers, Agri-preneurs, FPOs, Individuals, Cooperatives, and state agencies etc. are eligible for assistance. Under the scheme, the subsidy @ 25% for plain areas and 33.33% for NER, hilly area, Women/SC/ST promoters & FPOs etc is available.
(v) Fertiliser
Urea is being provided to farmers at a statutory notified Maximum Retail Price (MRP). The MRP of a 45 kg bag of Urea is Rs.242 per bag (exclusive of charges towards neem-coating and taxes as applicable) and the MRP of a 50 kg bag of Urea is Rs.268 per bag (exclusive of charges towards neem coating and taxes as applicable). The difference between the delivered cost of Fertilizers at farm gate and net market realization by the urea units is given as subsidy to the Urea manufacture/importer by the Govt. of India. Accordingly, all farmers are getting Urea at affordable subsidized price. With respect to Phosphatic and Potassic (P&K) Fertilizers, the D/o Fertilizers is providing subsidy on P&K Fertilizers. Further, as far as P&K is concerned, the Government has implemented Nutrient Based Subsidy Policy w.e.f. 1.4.2010 for Phosphatic and Potassic (P&K) Fertilizers. Under the policy, a fixed amount of subsidy, decided on an annual basis, is provided on subsidised P&K fertilizers depending on their nutrient content. Under this policy, MRP is fixed by fertilizer companies as per market dynamics at reasonable level which is monitored by the Government. Accordingly, any farmer including a poor and marginal farmer who is buying these fertilizers is getting benefits of subsidy.
Subsidies to the farmers are also given as part of various other schemes such as National Food Security Mission (NFSM), Mission for Integrated Development of Horticulture (MIDH), Rashtriya Krishi Vikas Yojana (RKVY) and Paramparagat Krishi Vikas Yojana (PKVY) etc for the benefits of the farmers.
Most of the schemes are targeted to benefit the small and marginal farmers, the classification of which is based on the size of their land holding. Keeping in view of the objectives of various schemes, which offer subsidies to farmers, periodic review of the same is an ongoing activity and whenever any change/modification is required in the scheme(s) for the overall benefit of the farmers, the same is carried out.
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