Freebies: A zero-sumgame

Source: The post is based on the article “Freebies: A zero-sumgame” published in “Business standard” on 12th October 2023.

Syllabus: GS3- Economy- Issues related to direct and indirect farm subsidies

News: The article discusses the negative impacts of government subsidies and policies on farmers in India, especially in Punjab, Haryana, and Uttar Pradesh. It highlights issues like harmful stubble burning practices, pollution, and public health crises, linking them to political unwillingness to revise old, harmful subsidy policies.

What are the negative impacts of government subsidies and policies on farmers in India?

Stubble Burning Issues:

Farmers now burn stubble to prepare fields due to limited time between harvests.

This practice leads to severe pollution and respiratory health problems for local and distant populations.

Water Table Depletion:

Subsidies on water and electricity led farmers to excessively grow water-intensive paddy crops.

This has drastically reduced water tables in areas like Punjab, Haryana, and Uttar Pradesh.

Economic Strain on States:

In Punjab, the addition of more freebies, like electricity, has resulted in a significant state debt, which is 50% of the state’s domestic product.

Subsidy Dependence:

Many subsidies, originally meant to be temporary, have become perceived rights by farmers, making them hard to remove or adjust.

This reliance affects the availability and quality of other crucial services, such as education and healthcare.

Misaligned Incentives:

Subsidies encourage practices not always beneficial in the long term, like growing crops unsuitable for the region due to short-term financial gains.

What should be done?

Alter Crop Choices: Discourage water-intensive paddy cultivation in regions like Punjab by revising subsidies.

Support Sustainable Alternatives: Consider alternatives like distributing solar cookers instead of continuing cooking gas subsidies to reduce ongoing costs and utilize renewable energy.

Revisit Subsidy Structures: Restructure subsidies so they don’t become permanent and strain state finances, ensuring they are sustainable and targeted to genuine needs.

Address Timely Harvesting: Promote and financially support the development and use of short-duration hybrid crops, like those from the Pusa Institute, to allow timely sowing and harvesting without rushing processes.

Facilitate Stubble Management: Enhance state incentives for using farm equipment that can clear fields without resorting to stubble burning, protecting both the environment and public health.