To Subsidise Or Not To Subsidise

Economists invariably frown at agricultural subsidies. Subsidies are said to be fiscally unsustainable and technologically undesirable, as they are tantamount to rewarding inefficiency. Therefore, it has become fashionable to speak about reducing subsidies without realising the impact it would have on the countrys agro-based economy.

The latest onslaught on farm subsidies has come from the Rajiv Gandhi Institute for Contemporary Studies (RGICS) publication, Subsidies and investments in Indian agriculture: issues and perspectives released last week. The paper has been written by RGICS resident fellow, S Mahendra Dev.

Like other dissertations of this ilk, it concludes that withdrawal of subsidies will be in the larger interest of the nation. A determined and rational commitment to national good warrants a gradual, steady and judicious phasing out of subsidies and render the subsequent focus on productive and creative investment, realistic and feasible, the paper maintains.

 

However, the study on which the paper is based clearly indicates that any cut in subsidies, leading to rise in input prices, would adversely affect farm production at least in the short run. The hike in fertiliser prices in the wake of the decontrol move of 1992 is a case in point. As a result, the growth of fertiliser consumption decelerated and agricultural production fell in the 1990s.

Significantly, the study also concludes that the subsidies provided by the government do not go entirely to the farmers. In the case of fertiliser subsidy, for instance, the study reckons that only 52 per cent go to the cultivators. The rest goes to the fertiliser industry or its feed stock suppliers. Similarly, the food subsidy is meant essentially for consumers rather than for growers.

The subsidy on power supplied to rural areas is also generally over-estimated as there are no meters in many states to estimate precise consumption by farmers. The unmetered supply of electricity to the agricultural sector is being misused to cover very high transmission and distribution losses and pilferage.

The paper also refers to various studies to show that if irrigation water is not subsidised, farmers will not be able to afford to grow wheat, rice and other crops on irrigated land. The cost of the water input alone would absorb the total gross value of the crop output.

Therefore, there is a clear cut case for caution while tinkering with farm subsidies. Even developed countries have not done away with them completely. They resort to subsidising even non-production by paying farmers for cutting down acreage under a particular crop. India and other developing countries, on the other hand, need to boost their agricultural output which cannot be done without promoting the use of cash inputs by offering subsidy as an incentive.

The bulk of our farmers are resource-starved small and marginal land operators who lack the financial as well as risk-bearing capacity to use cash inputs. Even medium farmers do not possess ready cash for buying non-subsidised inputs. Though big farmers, who constitute a minuscule minority, are generally rich enough not to deserve any subsidy, even they would restrict the use of inputs to a bare minimum if subsidy were not involved. This is because agriculture, being an entirely out-door activity, is highly hazardous and no farmer, even if he is rich, can afford to take too much risk by spending on inputs.

It is true that a major portion of subsidies tend to be cornered by bigger farmers in the agriculturally progressive regions, but they are the ones who produce marketable surpluses for consumption in deficit areas. The country is still far from a stage where it can do without the contribution of these segments of the farm society.

Gardening tips

Prepare a new lawn now, if you have not done it already. This will allow the grass roots to establish firmly before the onset of pre-monsoon showers. Spray urea (0.2 per cent solution) after the grass sprouts as this will facilitate quicker growth.

Gardens will require regular and frequent watering till the rains start. Potted plants, especially roses and foliage plants, should be watered daily.

While weeding, dig out the roots so that unwanted vegetation does not spring up again.

If a white powdery dust is observed on leaves, flower stalks and buds of roses and other plants, it could be due to powdery mildew disease. Spray Benlate or Bavistin (0.2 per cent solution) or Karathane (0.05 per cent solution) every fortnight to tackle this menace.

Bougainvillaea plants can be pruned now. Add farm yard manure (about 8 to 10 kg per bush) after pruning to promote vigorous growth during the ensuing rainy season. New cuttings can also be planted now.

Kharif (rainy season) vegetables can be planted now. These include amaranthus (chaulai), bhindi, bittergourd, bottlegourd, brinjal, cauliflower (for early harvest), chilli, cowpeas, cucumber, guar, ridge and sponge gourds, tomato, etc.

In mango gardens, veneer grafting can still be done to change the variety.

June is the best time for ring-budding in ber.

For fresh planting of fruit trees like mango, guava and citrus with the onset of rains, pits of one metre diameter and similar depth should be dug right now and kept open to expose the subsoil to hot sun and air. For papaya, pits half this size would be sufficient. These pits should be filled in the last week of June with a mixture of soil and farm yard manure (both in equal quantities). Add 200 gms of BHC (5 per cent dust) in each pit to ward off termites.