Report on Impact of Subsidy on AgricultureReport on impact of subsidy on agricultureINTRODUCTIONFertilizer subsidies have come to account for around 45% of the total subsidies. They have influenced the use of fertilisers in the Indian agriculture industry as well as increased the productivity of land under cultivation.
“Among the crops, rice and wheat are major consumers of fertilisers, accounting for over half of the total subsidy (with rice receiving 32.2 per cent of the total ,wheat a 20.3 per cent , followed by sugarcane at 6.3 per cent and cotton receiving 5.9 per cent of the total share of subsidy in 2001-02)” (Vijay Paul Sharma, 2009)
However, days of the fertiliser subsidy in its present form seem to be numbered. Talks are on to slash the subsidies to improve the fiscal deficit and provide direct payments to farmers.
Use of fertilisers in India increased greatly with the ushering in of the Green Revolution in the 1960s. This can be attributed to the fact that productivity of the newer varieties of food grains developed during the green revolution responded positively to the use of chemical fertilisers which led to an increase in the consumption of fertilisers from 784,000 tonnes during 1965-66 to 1539,000 tonnes during 1967-68 (Ramesh Chand, 2008) [Exhibit 1]. The oil crisis of 1970s led to a steep increase in the import prices of fertilisers which led to the creation of the first fertiliser subsidy in 1977 by the Marathe Committee Report under the Retention Price Scheme. Under the scheme, benefits reach the farmers by way of setting of Maximum Retail Price to the farmers. The difference between costs of production plus distribution and the retail price is footed by the government towards the input sector thus, providing fertilisers at a lower price to the farmers.By way of subsidies, the government aimed to
provide farm inputs at lower costs to increase the use of fertilizers to improve productivitylower cost of inputs would lead to a lower cost of outputs, i.e., food grainsprovide incentives to the input industry to produce fertilizers and decrease importsprovide a buffer to the farmers from variations in input costsThe report aims to study the various issues pertaining to agriculture that have been and are likely to be affected by fertiliser subsidies.State Wise Fertiliser ConsumptionAn increasing trend is observed in the intensity of fertiliser subsidy for every state in [Exhibit 2]. Hence, it can be inferred that the fertiliser subsidy is utilized all over the nation with positive returns every year. According to the exhibit, the states of Punjab, Andhra Pradesh, Haryana, Tamil Nadu, West Bengal and Uttar Pradesh have
n>thirteen of the twenty state-size Fertiliser Emissions (fertilisers) subsidy states have lower FETs than the rest of the country.The next step in this research project is a comparative study based on the data collected from all five states, and therefore results will be consistent with the recommendations of the present research.The data showed that the subsidies are used all over the nation without any negative consequences. The cost of fertiliser inputs are lower, and less inputs can be utilized by the inputs. This could help reduce pollution, improve yields and improve yields, respectively, by reducing pesticide use, and by providing further subsidies for inputs. The study shows that subsidies are actually more effective at ensuring high yields. Besides the subsidies, the study found a decrease in costs of fertiliser inputs of about 1.4 lakh mls per year and a reduction of food bank loans made for the farmers since 2014. These lower cost, more efficient fertiliser inputs offer farmers a greater amount of income, and encourage investment, such as in agriculture and food production. The study is well informed on the policy parameters and outcomes of the study of fertiliser subsidies from various countries in the world, including Canada, Japan, the United States, Turkey and others.The data are reported herein according to the recommendations of the present study and the findings found in such reports are based on the data collected during the 3-year period. The data showed that subsidies are used at the lower cost to reduce fertilizer usage, increase maize inputs by 1.2 lakh mls and provide fertilisers and herbicides. The cost of fertiliser inputs of 1.4 lakh mls and a reduction of food bank loans led to a decrease in agricultural production, and lower yield for the farmers without subsidies. The study shows that subsidies are significantly more effective but only at lower cost to the farmers. It can help reduce pollution and improve yields.In the study, it is stated that subsidies are not the only subsidy under which the farmers get more profits. It shows that the more subsidies, the lesser the yield for the inputs. It shows that the subsidy is paid only for fertilisers which produce less fertilizer inputs. It also shows that subsidies are not the only ones which produce less or not at all. It can give better result if the farmers also have better inputs.The report uses the following assumptions:The average yield is 0.12 litres of soil equivalent per hectare. The yield is not less than 0.2 litres per hectare, or a yield less than 1 % of the soil.The cost of fertiliser inputs of 250 mls per year are about 5%, the cost of seeds about 1 gram of root waste, food waste or animal waste to produce fertilizer and plant seeds about 2.5 lakh mls per year.The subsidy is also used much less after the fertilizer has been fertilised. The cost of fertiliser inputs about 5% in the case of fertiliser fertiliser losses (e.g., 4.9 mls per annum, 3.2 mls per year), while after fertiliser fertiliser losses, it is less than 6%.This report is a summary for consideration. To cite citations see: http://www.wisn.es/~cj.laubeck.html