Directorate of Economics and Statistics, Department of Agriculture and Cooperation, Ministry of Agriculture and Farmers Welfare, Government of India, New Delhi
Punjab Agricultural University, Ludhiana,India
 Sponsored by
Directorate of Economics and Statistics, Department of Agriculture and Cooperation, Ministry of Agriculture and Farmers Welfare, Government of India, New Delhi
Research Content
Agricultural Input subsidies to Scheduled Caste Farmers in Punjab

           Subsidy, often viewed as the converse of a tax, is a potent welfare/augmenting instrument of fiscal policy. Subsidies alter relative prices and budget constraints and thereby affect decisions concerning production, consumption and allocation of resources. Sometimes a misleading impression is created that all the subsidies go to the benefits of agriculturists. Against the backdrop of growing budgetary allocation of providing subsidies to agriculture, an analysis of their implications on different classes of farmers is of crucial importance in order to assess the extent to which they are consistent with the attainment of set objectives of attaining equity and stimulating growth. The study was conducted to examine the utilization pattern of subsidies by different categories of farmers, to assess the share of SC farmers in total amount of subsidies used and to analyze the overall effect of differences in the levels of input subsidy used by various categories of farmers on crop pattern, cropping intensity, adoption of improved technology, input use, crop productivity and returns. There was evidence of clear dominance of urea and DAP in the fertilizer use in the area. The increasing proportion of paddy and wheat in total subsidy with an increase in farm size indicated that the dominance of these crops was even higher on larger farms. When the farm households were pooled together there was a clear trend of increasing proportion of paddy and wheat in total fertilizer subsidy (per ha) with an increase in farm size. The proportion of paddy in total power subsidy was 63.87 per cent on both non-SC operated and pooled farms, with the share of wheat being 26.45 per cent and 27.29 per cent respectively. As large farmers had relatively better access to power facilities, higher concentration of paddy and wheat in their cropping pattern and the number of electric motors, more benefits of power subsidies accrue to them than their small counterparts. The share of small and marginal farmers in the total subsidy amount belonging to SC category was just about 13 per cent and that of non-SC category in the total subsidy was around 15 per cent against the share of 70 per cent and 64 per cent of large farmers, belonging to the respective caste categories. The argument that, mainly the larger farmers were apportioning the benefits of subsidies was further strengthened by the study. There was no direct relationship between the intensity of farm subsidies and the concentration of paddy and wheat crops in the cropping pattern of various farm categories. At the zero level of subsidies on inputs such as fertilizers and power, there was a significant increase in the cost of paddy and wheat resulting into marked decline in the profitability of these crops. Since the magnitude of subsidies did not vary significantly on SC and non-SC operated holdings, these subsides, if advanced should be based on the economic criteria rather the caste classes. As the quantum of input subsidies enjoyed by the farmers, irrespective to the caste classes had been found directly proportionate to the operational area as well as the quantity of these inputs used the major part of these subsidies were being swallowed by the large farmers. Therefore, the policy with regard to the input subsidies needs to be evolved in such a way so that the targeted group (poor/economically backward farmers) may be benefited more than their counterparts i.e. rich/economically strong farmers. The policy also needs to be redressed to extend the subsidy benefits may be in the flow of crop specific subsidies to crops other than paddy/wheat encouraging the farmers to adopt diversification. The quantum of subsidy on power must be reduced/rationalized to the extent at least to meet the operational cost of producing the power by State Electricity Board. That may help in making rational/efficient use of underground water, which is a great challenge to Punjab agriculture these days. The complete withdrawal of these input subsidies will enhance the cost of production of paddy and wheat by about 20 and 14 per cent resulting into a decline in the profitability of the farmers irrespective of size group. Keeping in view the deteriorating economic conditions of Punjab farmers especially small and marginal farmers, it is recommended that the subsidies should continue on such farms. If possible, these subsidies should be diverted from large/economically strong farmers towards relatively resource poor farmers to improve their economic conditions to some extent.