Agricultural subsidies provided by the government are targeted to influence the cost and supply of agricultural commodities, induce higher consumption and production, and achieve social policy objectives including income redistribution, and promoting general welfare in India.

Agricultural subsidies have supported farmers’ income in the following ways:

• Reduced input cost: Agricultural subsidies under various schemes in the form of inputs such as seeds, fertilizers, farm machinery, etc. reduce the overall input cost for farmers.
• Higher productivity: The above-mentioned subsidies have led to the adoption of HVYs, modern technologies, precision agriculture, smart agriculture, etc., ultimately resulting in higher productivity.
• Mitigating against natural calamities: Schemes such as PM Fasal Bima Yojana and other crop insurance schemes have mitigated the losses suffered due to natural calamities.
• Reducing post-harvest losses: The government’s emphasis on creating subsidized storage infrastructure through schemes like Gramin Bhandaran Yojana has reduced post-harvest losses and improved the incomes of farmers.
• Export earnings: Agricultural subsidies make Indian agricultural products competitive in the international markets and thus lead to higher income for farmers.
• Diversification of high-income potential sectors: Schemes like PM Matsya Sampada Yojana have greatly increased farmers’ adoption of the fisheries sectors, which has ultimately led to an increase in their incomes.

However, while being a force of positive change, these subsidies have also had a deleterious impact on the environment and biodiversity and have threatened the sustainability of the agriculture sector. This can be discerned from the following:

• Decreased crop diversity: Adoption of HYVs has come at the cost of traditional local varieties resulting in reduced species and genetic diversity. This also makes the crops highly susceptible to pest and disease attacks.
• Soil degradation: Fertilizer subsidies have led to their indiscriminate use in an unscientific manner leading to soil degradation and decreased fertility.
• Groundwater issues: Power and irrigation subsidies have led to unsustainable extraction of the groundwater reducing their levels to dangerous levels. This has also led to the leaching of minerals resulting in soil degradation.
• Threat to pollinators: Increased use of pesticides and herbicides is linked to a decreased population of pollinators like bees and butterflies, which threatens global food security.
• Spread of monoculture: While traditional farming systems favor multi-cropping and intercropping, modern input-based agriculture is practiced in monoculture leading to decreased biodiversity and reduced ability to absorb environmental shocks.
• Greenhouse gas (GHG) emissions: Agricultural practices such as high mechanization, livestock farming, and conversion of forest land to agricultural farms have led to a net rise in GHG emissions.
• Eutrophication: Farm run-off has led to increased instances of eutrophication of water bodies resulting in the loss of aquatic biological diversity and its productivity.

Agricultural subsidies need to achieve a balance between increasing farmers’ income and food security on the one hand and environmental conservation on the other hand. It can be done through the adoption of sustainable cropping patterns, the use of technology for optimal fertilizer usage, promotion of environmentally resistant seed varieties, among others.