Farm subsidies and Minimum Support Prices (MSP) are critical components of agricultural policy in India, designed to support farmers, stabilize agricultural markets, and ensure food security.

Definition and Overview

Farm Subsidies: Farm subsidies are financial aids provided by the government to farmers to reduce their production costs and make farming more viable. These subsidies can take various forms, including direct cash transfers, price support, input subsidies (like fertilizers, seeds, and irrigation), and subsidies on credit and insurance.

Types of Subsidies

a:Input Subsidies: These include subsidies on fertilizers, seeds, electricity, and irrigation. For example, the government heavily subsidizes fertilizers like urea, making them affordable for farmers.

b:Price Support Subsidies: These involve the government setting a minimum price for certain crops (MSP) to ensure that farmers receive a fair price for their produce.

c:Credit Subsidies: The government provides subsidized loans to farmers through schemes like the Kisan Credit Card (KCC) to ensure they have access to affordable credit.

d:Insurance Subsidies: Crop insurance schemes like the Pradhan Mantri Fasal Bima Yojana (PMFBY) are partially subsidized by the government to protect farmers against crop losses due to natural calamities.