{"id":344854,"date":"2025-08-21T10:08:53","date_gmt":"2025-08-21T04:38:53","guid":{"rendered":"https:\/\/forumias.com\/blog\/?page_id=344854"},"modified":"2025-08-21T10:08:53","modified_gmt":"2025-08-21T04:38:53","slug":"answered-to-plan-its-next-economic-leap-india-must-rationalize-subsidies-and-invest-in-agri-rd-examine-how-these-reforms-can-be-integrated-with-environmental-sustainability-for-a-resilient-and-ba","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/answered-to-plan-its-next-economic-leap-india-must-rationalize-subsidies-and-invest-in-agri-rd-examine-how-these-reforms-can-be-integrated-with-environmental-sustainability-for-a-resilient-and-ba\/","title":{"rendered":"[Answered] To plan its next economic leap, India must rationalize subsidies and invest in agri-R&D. Examine how these reforms can be integrated with environmental sustainability for a resilient and balanced growth model."},"content":{"rendered":"

Introduction<\/strong><\/h2>\n

India\u2019s growth story since independence has been remarkable, yet structural challenges in agriculture persist. Rationalizing subsidies and investing in agri-R&D, aligned with environmental sustainability, is critical to achieve resilient and inclusive growth.<\/p>\n

India\u2019s Growth and Agriculture: Context<\/strong><\/h2>\n
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  1. India is projected to become the fourth-largest economy ($4.19 trillion by 2025, IMF)<\/strong> and is already the third-largest in PPP terms ($17.6 trillion)<\/strong>.<\/li>\n
  2. Agriculture, employing nearly 42% of India\u2019s workforce (PLFS 2023)<\/strong>, has achieved foodgrain production of 353.9 MMT in 2024\u201325<\/strong>, but growth is subsidy-driven rather than innovation-led.<\/li>\n
  3. Subsidies for food and fertilizers consume \u20b93.71 lakh crore in FY26 budget<\/strong> (~1% of GDP), crowding out long-term productivity-enhancing investments.<\/li>\n<\/ol>\n

    Subsidy Rationalization: The Need and Impact<\/strong><\/h2>\n
      \n
    1. Current Issues<\/strong>: Food subsidy leakages: 20\u201325% do not reach intended beneficiaries (NITI Aayog, 2020)<\/strong>. Fertilizer subsidy: promotes overuse of urea, soil degradation, and groundwater depletion. Example: Punjab and Haryana<\/strong> face soil salinity, falling water tables, and stubble burning, linked to distorted subsidy regimes.<\/li>\n
    2. Rationalization Measures: <\/strong>\u00a0Direct Benefit Transfer (DBT)<\/strong> for fertilizer subsidies (already piloted, needs scaling). Diversifying food subsidy to include nutrient-rich millets and pulses<\/strong> (aligned with International Year of Millets 2023<\/strong>). Linking subsidies with climate-smart practices<\/strong> like micro-irrigation, organic farming, and renewable-powered cold chains.<\/li>\n<\/ol>\n

      Investing in Agri-R&D: A Growth Driver<\/strong><\/h2>\n
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      1. Current R&D Gap<\/strong>: India spends less than 0.6% of agri-GDP on R&D<\/strong>, compared to 2.8% in China<\/strong> (FAO). Public R&D dominates, but private investment is limited and risk-averse.<\/li>\n
      2. Benefits of Higher Agri-R&D<\/strong>: Productivity gains<\/strong> like each rupee in agri-R&D yields \u20b911 in long-term returns (ICAR). Nutritional outcomes by b<\/strong>iofortified crops (zinc-rich rice, iron-rich pearl millet) improve child and maternal health. Technology diffusion<\/strong> like AI-driven soil health monitoring, drones for precision agriculture, and blockchain-based supply chains.<\/li>\n
      3. Examples<\/strong>: China\u2019s hybrid rice revolution<\/strong> lifted yields and ensured food self-sufficiency. Brazil\u2019s EMBRAPA<\/strong> model shows how tropical agri-R&D, linked with global markets, transformed exports.<\/li>\n<\/ol>\n

        Integrating Environmental Sustainability<\/strong><\/h2>\n
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        1. Agriculture contributes ~20% of India\u2019s GHG emissions (MoEFCC)<\/strong>, primarily from rice cultivation, livestock, and fertilizer use.<\/li>\n
        2. Reforms must address the food-energy-water nexus<\/strong>:<\/li>\n<\/ol>\n