Indian Council for Research on International Economic Relations

Completed Details

Supporting Indian Farms the Smart Way: Rationalising Subsidies and Investments for Faster, Inclusive and Sustainable Growth

Project Leader: Ashok Gulati
Research Team: Anwarul Hoda, N. Chandrasekhara Rao, Pritha Banerjee and Prerna Terway
Commencement: August 2014
Completion: April 2016
Funded by: Syngenta Foundation

The project attempts to determine how subsidies in Indian agriculture can be made more efficient and cost effective, which in turn will ensure food security and sustainable development. Most of the OECD countries and emerging economies support agriculture either to ensure food security and/or to enhance the income level of farmers. India is no exception. It subsidizes inputs like fertilizer, power, irrigation and credit etc. while Minimum Support Price (MSP) policy is prevalent on output front. However, there are large inefficiencies in the manner in which current support is being provided to farmers through input and output prices. Here, we focus on ways to rationalize input subsidy levels and make them more efficient and farmer-friendly.

There are two main objectives in this project. The first objective is to estimate the magnitude of public resources going towards agriculture. These include agricultural input subsidies like fertilizer, power, irrigation, credit and insurance and investment ‘in and for’ agriculture, like expenditures on canals, roads, education and agriculture R&D. The second objective is to estimate the marginal returns from subsidies and investments on rural poverty and agricultural growth.



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