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What are Agriculture Subsidies

Agricultural Subsidy is an Incentive given to farmers to increase the production.

It is in form of

Free Facility (Example Free Electricity)

Subsidized Facility (Example - Fertilizers at Reduced Prices)


This Subsidy is both good and bad

Are Agricutural Subsidies good or bad?

Benefits of Subsidy

It helps to boost agricultural production

It boost farmers income and hence their standard of living

It made India self sufficent in good


Drawbacks of Subsidy

It leads to over use of resources and waste (Example-Electricity provided free at farms can be misused for personal


It can be damaging to the environment (Example-Too much use of Fertilizers or Pesticides causes water pollution and soil pollution)


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Agricultural Subsidy Agricultural Production Incentive or Discount It is Incentive given to farmers to increase Production Different Types of Subsidy Free Facility Electricity/Water given to Farmer free of cost Electricity Price 5 Rupees/unit Price to Farmer Free Discounted Facility Fertilizers given to Farmers at Cheaper Rate Actual Price Rs 1000/Packet Price to Farmer 800/Packet Agricultural Subsidy Benefits Boost Agricultural Production (Use of fertilizers ,Pesticides increase Production) Increase Income of Farmers (Providing Discounts/Subsidy to farmers reduces their costs and increase their profit) Drawbacks Misuse of Resources (People misuse free electricity/water for personal purposes) Harmful to Environment Overuse of Fertilizers/Pesticides damages crops as well as soil

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CA Maninder Singh is a Chartered Accountant for the past 12 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.