Agricultural Subsidies in India

The paper examines India's agricultural subsidy regime, focusing on the Minimum Support Price (MSP) and input subsidies for fertilizer, power, and irrigation. It highlights their role in achieving self-sufficiency in rice and wheat and protecting 650 million beneficiaries through the Public Distribution System. While acknowledging criticisms regarding inequity, budget pressure, and environmental degradation, the author argues that these subsidies are critical for small farmers and rural poverty alleviation, especially given global market volatility and trade pressures from developed-country subsidies.

• India utilizes a Minimum Support Price (MSP) for 25 crops to maintain buffer stocks and support the Public Distribution System, which provides subsidized food to 50% of urban and 75% of rural dwellers.
• The MSP procurement policy has been most effective for paddy and wheat, with 37% and 17% of production procured at MSP in 2021/22 respectively, though it has been less successful for oilseeds and pulses.
• Input subsidies for fertilizer, irrigation, and electricity rose from USD 25 billion in 2011 to USD 48 billion in 2022–2023, with fertilizer and power accounting for 45.6% and 30% of these subsidies respectively.
• Critics argue that Indian agricultural subsidies lead to mono-cropping of rice and wheat, negatively impact biodiversity, and create budget pressures that divert capital from research and development.
• India's agricultural subsidies are defended as comparable to those in developed nations; Article 6 subsidies represented 8.11% of agricultural production in 2018, compared to 9.7% in Japan, 12.85% in Switzerland, and 7.05% in the United States.
• External trade factors, including U.S. cotton subsidies and import competition from Free Trade Agreements (FTAs) with Southeast Asian countries, make the withdrawal of domestic subsidies an economic and political challenge.
• Direct income transfers are proposed as an alternative to current subsidies, but face implementation hurdles including weak banking infrastructure, corruption, and difficulty identifying beneficiaries like women farmers and sharecroppers.

APA

Sengupta, R. (2024). Agricultural Subsidies in India. International Institute for Sustainable Development. https://www.iisd.org/articles/policy-analysis/agricultural-subsidies-india

Chicago

Sengupta, Ranja. Agricultural Subsidies in India. International Institute for Sustainable Development, 2024. https://www.iisd.org/articles/policy-analysis/agricultural-subsidies-india.

Wikipedia

{{cite report |last1=Sengupta |first1=Ranja |title=Agricultural Subsidies in India |publisher=International Institute for Sustainable Development |date=2 December 2024 |url=https://www.iisd.org/articles/policy-analysis/agricultural-subsidies-india |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sengupta2024agricultural, author = {Sengupta, Ranja}, title = {{Agricultural Subsidies in India}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = dec, url = {https://www.iisd.org/articles/policy-analysis/agricultural-subsidies-india}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }