Farm subsidies have a role in promoting technology absorption and also result in infrastructural development. Elaborate

Approach

Introduction Write how subsidies are way to transfer resources from government to economy.

Body

Choose each type of subsidies and connect it with Technology absorption.

Conclusion Choose subsidies and connect it with infra growth.

Introduction

• Through taxes the government collects money from people. Through subsidies it transfers money to people focusing on those who need them most. The people who pay taxes are thus not necessarily the persons who benefit from subsidies. Subsidies, therefore, transfers money among people in a way that the concerns of equity are addressed. In addition, through taxation, the government generates income for financing its various

Body

• Infrastructural Development: In order to promote the production of certain crops, price and other subsidies can be extended by the government.

• This can be in the form of: cheap transportation facilities for marketing the harvest, establishment of storage facilities, higher procurement prices offered, etc.

• Such subsidies, besides promoting the specific crops, have the indirect effect of improving the returns to the farmers by minimising losses and increasing profits.

• Fertilizer Subsidy: It is also given as relief to manufacturers to off-set some of their costs and keep the prices lower. This type of subsidy, therefore, ensures:

(a) cheap inputs to farmers;

(b) reasonable returns to manufacturer;

(c) stability in fertilizer prices; and

(d) regular supply (i.e. availability) of fertilizers.

Conclusion

• Seed Subsidy: It also includes investment in R & D (Research and Development) to produce such seeds.

• Power Subsidy: Such subsidies act as an incentive to farmers to invest in pump-sets, bore-wells, etc.

• Irrigation Subsidy: The government bears this type of subsidy by constructing canals and dams and charging low prices for the irrigation facilities provided to the farmers.