Model Answer
0 min readIntroduction
Public expenditure on agriculture is a crucial intervention by the government to enhance productivity, ensure food security, and improve the livelihoods of farmers. India’s agricultural sector, contributing around 18.8% to the country’s GDP (2022-23), faces numerous challenges including climate change, fragmented landholdings, and inadequate infrastructure. While India has witnessed significant agricultural growth post-independence, the pattern of public expenditure has often been criticized for being skewed towards input subsidies rather than long-term investments in crucial areas like irrigation, research & development, and market infrastructure. This necessitates a re-evaluation of the existing expenditure pattern to unlock the full potential of Indian agriculture.
Major Components of Public Expenditure on Agriculture in India
Public expenditure on agriculture can be broadly categorized into the following components:
- Irrigation: This includes investments in major, medium, and minor irrigation projects, command area development, and water management programs.
- Input Subsidies: This is the largest component, encompassing subsidies on fertilizers, electricity, seeds, and pesticides.
- Agricultural Research & Education: Funding for agricultural universities, research institutions (like ICAR), and development of new technologies.
- Price Support & Procurement: Includes Minimum Support Price (MSP) operations, procurement of food grains, and buffer stock management.
- Credit & Insurance: Provision of subsidized agricultural credit, crop insurance schemes (like PMFBY), and other risk mitigation measures.
- Rural Infrastructure: Investments in rural roads, storage facilities (warehouses), cold storage, and market yards.
- Extension Services: Funding for agricultural extension programs to disseminate information and technologies to farmers.
- Other Direct Payments: Includes schemes like PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) providing direct income support to farmers.
Current Pattern of Public Expenditure: An Analysis
Currently, a significant portion of public expenditure on agriculture is directed towards input subsidies, particularly fertilizers. According to the Economic Survey 2022-23, fertilizer subsidies accounted for over 30% of total agricultural subsidies. This is often criticized for distorting market signals, leading to inefficient use of resources, and environmental degradation. Investments in irrigation, research & development, and rural infrastructure receive comparatively lower allocations.
Trends in Public Expenditure (as % of Agriculture GDP):
| Component | 2017-18 | 2018-19 | 2019-20 | 2020-21 (P) |
|---|---|---|---|---|
| Irrigation & Flood Control | 1.8 | 1.7 | 1.9 | 2.1 |
| Agricultural Subsidies | 6.2 | 6.5 | 6.8 | 7.2 |
| Agricultural Research & Education | 0.4 | 0.4 | 0.4 | 0.5 |
| Rural Development | 2.5 | 2.4 | 2.3 | 2.6 |
(P) Provisional Source: Department of Agriculture & Farmers Welfare, Government of India (Data as of knowledge cutoff - 2023)
Recommended Changes to Stimulate Agricultural Growth
To stimulate agricultural growth, the following changes in the pattern of public expenditure are recommended:
- Shift from Input Subsidies to Investment Subsidies: Gradually reduce fertilizer subsidies and redirect funds towards investments in irrigation, water management, and soil health.
- Increased Investment in Agricultural Research & Development: Increase funding for research on climate-resilient crops, biotechnology, and precision farming techniques. Strengthen linkages between research institutions and farmers.
- Strengthening Rural Infrastructure: Invest in building and upgrading rural roads, storage facilities, cold chains, and market infrastructure to reduce post-harvest losses and improve market access.
- Promoting Farmer Producer Organizations (FPOs): Provide financial and technical support to FPOs to enhance their collective bargaining power and access to markets.
- Investing in Extension Services: Strengthen agricultural extension services by providing training to extension workers and utilizing digital technologies to disseminate information to farmers.
- Promoting Diversification: Encourage diversification towards high-value crops, horticulture, and animal husbandry through targeted investments and incentives.
- Focus on Sustainable Agriculture: Promote organic farming, natural farming, and other sustainable agricultural practices through subsidies and awareness campaigns.
Impact of Proposed Changes: These changes are expected to lead to increased agricultural productivity, improved farmer incomes, reduced environmental degradation, and enhanced food security. A shift towards investment-led growth will create a more sustainable and resilient agricultural sector.
Conclusion
In conclusion, while public expenditure on agriculture is vital for India’s economic development, the current pattern is skewed towards unsustainable input subsidies. A strategic shift towards long-term investments in irrigation, research & development, rural infrastructure, and sustainable agricultural practices is crucial to unlock the full potential of Indian agriculture and ensure food security for a growing population. This requires a concerted effort from the government, research institutions, and farmers to create a more resilient and prosperous agricultural sector.
Answer Length
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