Sustainability Concerns in Indian Agriculture: An Analysis of Subsidies and Investment

21 Pages Posted: 16 Nov 2010

See all articles by Surender Kumar

Surender Kumar

University of Delhi - Department of Business Economics

Nandini Chandra

India Habitat Centre - The Energy and Resources Institute (TERI)

Date Written: November 16, 2010

Abstract

The present scale of subsidy in the agricultural sector poses a high fiscal burden on the central and state governments. High agricultural input subsidies results in inefficient resource allocation; crowding out of public sector investment; degrades the environment and affects the agricultural productivity. However, phasing out of input subsidy will not help in securing sustainability in agriculture. The input subsidy phase-out programme should be coupled with the increased public sector investment. This will involve creating irrigation, storage and marketing infrastructure development in rural rainfed regions; developing right incentives for the farmers to adopt technology appropriate at the local level, perhaps, at the level of agro climatic zones; introducing policy measures to promote PPPs (Public Private Partnerships) in agricultural R&D efforts. However, mere investing resources without developing appropriate institutions would not yield the desired results; therefore, institutional reforms to ensure people’s participation for better utilization of resources are required.

Keywords: Climate Change, Sustainability, Indian Agriculture, Subsidy, Public Investment

JEL Classification: N5

Suggested Citation

Kumar, Surender and Chandra, Nandini, Sustainability Concerns in Indian Agriculture: An Analysis of Subsidies and Investment (November 16, 2010). Available at SSRN: https://ssrn.com/abstract=1709898 or http://dx.doi.org/10.2139/ssrn.1709898

Surender Kumar (Contact Author)

University of Delhi - Department of Business Economics ( email )

New Dehli
India

Nandini Chandra

India Habitat Centre - The Energy and Resources Institute (TERI) ( email )

Darbari Seth Block, IHC Complex
Lodhi Road
New Delhi, 110 003
India

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