In the previous chapter, you might have studied about subsidies in various sectors, including agriculture. Some scholars argue that subsidy in agriculture should be removed to make the sector internationally competitive. Do you agree? If so, how can it be done? Discuss in class.
I do not agree that agricultural subsidies should be removed completely. The context indicates that the partial removal of fertiliser subsidy has already led to an increase in the cost of production, which has severely affected small and marginal farmers.
Moreover, policy changes like reduction in import duties and lifting quantitative restrictions were meant to increase competition but have adversely affected Indian farmers. Developing countries also feel cheated as they are forced to open markets while developed countries continue to provide agricultural subsidies. Thus, removing subsidies without addressing these disparities harms the sector.
Explanation
The answer is derived from the section 'Reforms in Agriculture', which explicitly states that the partial removal of fertilizer subsidies increased production costs for small and marginal farmers. It also incorporates the criticism regarding the WTO and developed nations, noting that while developing nations are asked to remove subsidies and trade barriers, developed nations continue to protect their own agriculture, putting Indian farmers at a disadvantage.