FARM SUBSIDY IS MISDIRECTED.LARGE FARMERS EXTRACT MOST

THE AGRI-SYSTEM continues to be vulnerable, equally fragile. Our policymakers and most other experts glorify the Rs 5 lakh crore agricultural subsidies and tariffs

- Vikas Singh

It’s misplaced. Ninety per cent of all farm holdings reside in the books of the richest five per cent. They usurp over two thirds of the subsidies. A tenth is frittered away. The small ones are left with the crumbs.

Subsidy & Waivers Keep Marginal Farmers Alive: And yet it’s unlikely that a marginal farmer can survive without subsidies and support. The government’s subsidy programmes fund survival. Not growth. The large farmers neither need an incentive, nor do they deserve the subsidy. Agriculture is a gamble on the monsoons and the market. The small always lose.

Misdirected and non-merit subsidies and handout to agri intermediaries has been on for decades and has progressively come to dominate the government’s agri expenditures. Power, fertilisers, and irrigation subsidies now ‘crowd’ other priorities and are five times the agri-investment, research, and long-term asset creation. It has proved to be a social and financial failure. Non-merit subsidies have other costs too. Some visible, but most go under the radar. When the state apparatus ‘intervenes’ to “pay” the ‘minimum’ support price (MSP), it manipulates and distorts the markets, imbalances the price. It burdens consumers, with higher food prices, particularly the middle income (the lower income avail of subsided grains). It bleeds marginal farmers (who are net buyers of food grains). A Crux study highlights that only 25 per cent of the farmers are aware of, and less than six per cent ‘market’ at MSP, predominantly paddy and wheat. The MSP benefits only endowed farmers. They lobby hard.