Input Subsidies In Agriculture Viable? Some Macro Economic Concerns

Abstract

Input subsidies in Agriculture accounts a major share in total GDP of Agriculture. In the era of declining Public Sector Expenditure in Agriculture and growing fiscal deficit, there is need to review the subsidy policy of the Government of India. The paper is an attempt in this regard. The present paper is divided into two sections viz., Section A and Section B. The former section critically explores the structure of input subsidies in India. At larger level of generality, input subsidy like fertilizer comes under the purview of Central Government and subsidy on water is disbursed through state governments. A brief overview of the two covers the major part of the section. Section B questions the feasibility of input subsidies from various angles with major thrust on subsidy v/s investment debate. The present author opines that Public Investment in Agriculture is a better alternative than subsidy.