| Introduction: Give a brief context to the question Body: Impact of eliminating subsidies on farmers Conclusion: Way forward |
Eliminating market-distorting subsidies, particularly those on farm inputs and outputs, and redirecting funds towards schemes like PM-Kisan, can have significant implications for both smallholders and large-scale farmers.
Impact on Smallholders
- Initial Difficulties: Smallholders may face challenges initially as they often heavily rely on subsidies for essential inputs like fertilizers, seeds, and irrigation. The sudden removal of these subsidies could lead to increased production costs, reducing their competitiveness.
- Transition Period: Depending on how well the income support program works, switching from input/output subsidies to direct income assistance (like PM-Kisan) will not be successful. Smallholders may receive direct financial aid through PM-Kisan or comparable programs, enhancing their financial security.
- Empowerment: By giving smallholders the freedom to make decisions based on their unique needs, direct income support can empower them. This could promote crop rotation, diversification, or investments in more environmentally friendly farming methods.
- Risk Mitigation: Income support schemes can act as a safety net during periods of low agricultural productivity or adverse weather conditions. This can help smallholders manage risks more effectively.
Impact on large-scale farmers
- Decreased Reliance on Subsidies: Government assistance to large-scale farmers, who frequently get a sizable portion of subsidies, may decline. On the other hand, if they are profitable, they may be in a better position to adjust to conditions dictated by the market.
- Market Orientation: Farmers may become more responsive to price signals and consumer needs in an agricultural sector that is more market-oriented as a result of the removal of subsidies. Large-scale farmers might be better able to adjust to these changes since they have better access to resources and market knowledge.
- Enhanced Efficiency: By focusing on maximizing their profits without depending on government assistance, large-scale farmers may be more inclined to implement sustainable and efficient farming methods as a result of the elimination of subsidies.
- Income Support vs. Subsidies: The redirection of funds towards income support schemes like PM-Kisan may not have a significant impact on large-scale farmers, especially if they are not heavily dependent on input subsidies. However, the overall fiscal policy and how funds are allocated will determine the extent of its impact.
Conclusion
The intention of the government to take the total number of farmer-beneficiaries under the PM-Kisan to about 8.75 crores, from the current 8.12 crore is well thought which will require certain refinements in policy like direct income support on a per acre basis & adding money to the scheme by eliminating market-distorting & environmentally-disastrous subsidies.
