Investment over subsidies

Investment over subsidies

News: The article analyses agrarian crisis and the proposed solution of universal basic income (UBI).

Facts:

• A removal of all agricultural subsidies, ranging from fertilizer to those on interest, water and power, and distributing the savings among most of the rural population through UBI is being proposed as a solution to rural distress.
• At its core the agrarian crisis is a case of agricultural activity not yielding enough returns for a section of the farming population and one reason being declining farm sizes.
• As the population grows the process of fragmentation of the family farm will continue further.
• The impact of public investment on both the yield of land and rural poverty is far greater than that of fertilizer, electricity, irrigation and interest rate subsidy.
• In a study, the investments were found most valuable in “educational” sector and on rural roads.
• But, today agricultural subsidies are five times larger than the investment in agriculture.

What is needed?

• Today the need is to eliminate agricultural subsidies and channelize the resources towards increasing public investment.
• Eliminating subsidies merely to implement a universal basic income would be unwise, for above mentioned reasons.