Distributional Impacts of Farm Subsidies and Government Measures for Equitable Access

Introduction

Farm subsidies play a crucial role in supporting agricultural production and stabilizing incomes for farmers. However, the distributional impacts of these subsidies can vary significantly, affecting different segments of the farming community in diverse ways. This analysis explores how farm subsidies impact various groups, particularly small and marginal farmers and landless agricultural workers, and examines the measures taken by the Indian government to ensure equitable access to these benefits.

Distributional Impacts of Farm Subsidies

1. Large vs. Small Farmers:
   • Large Farmers: Large landholders often benefit disproportionately from subsidies due to their higher input requirements. For instance, subsidies on fertilizers and irrigation are often utilized more intensively by larger farms, which can lead to unequal benefits. Recent studies have shown that large farmers receive a larger share of subsidies such as those under the Direct Benefit Transfer (DBT) scheme for fertilizers.
   • Small and Marginal Farmers: Small and marginal farmers, who constitute the majority of the agricultural workforce, may not always benefit equitably from subsidy programs. Limited landholdings and resources mean they often struggle to fully capitalize on subsidies. For example, the Minimum Support Price (MSP) system, while providing price support, may not reach small farmers effectively due to logistical and infrastructural challenges.
2. Landless Agricultural Workers:
   • Limited Access to Subsidies: Landless agricultural workers generally do not directly benefit from farm subsidies, as these are primarily targeted at landholders. Consequently, they often face challenges in accessing benefits that could help improve their economic situation.

Government Measures for Equitable Access and Distribution

1. Targeted Subsidy Programs:
   • Pradhan Mantri Kisan Samman Nidhi (PM-KISAN): This scheme provides direct income support of ₹6,000 per year to small and marginal farmers. This initiative aims to provide financial assistance directly to eligible farmers, reducing reliance on intermediaries and improving access for those with smaller landholdings.
   • Subsidies for Small and Marginal Farmers: Various state-specific initiatives, such as the Rythu Bandhu Scheme in Telangana, offer financial support for input costs, including seeds and fertilizers, specifically targeting small and marginal farmers.
2. Inclusive Support Systems:
   • Rural Employment Schemes: Programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provide employment opportunities for landless agricultural workers, indirectly supporting their livelihoods by ensuring a minimum wage.
   • Promotion of Farmer Producer Organizations (FPOs): The government supports the formation of FPOs to help small farmers collectively access subsidies, negotiate better prices, and reduce costs through economies of scale. For instance, the National Rural Employment Guarantee Scheme has been integrated with FPOs to enhance market access for small farmers.
3. Infrastructure and Capacity Building:
   • Investment in Agricultural Infrastructure: Initiatives like the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) focus on improving irrigation infrastructure, which can help small and marginal farmers access water more efficiently. This reduces the disparities in access to water resources between large and small farms.
   • Training and Support Programs: Programs such as the Rural Self-Employment Training Institutes (RSETIs) provide training and support to farmers and agricultural workers, helping them to better utilize subsidies and improve productivity.
4. Enhanced Outreach and Monitoring:
   • Digital Platforms and Direct Benefit Transfer (DBT): The use of digital platforms and DBT systems aims to streamline subsidy distribution and ensure transparency. For example, the Pradhan Mantri Awas Yojana (PMAY) for rural areas uses digital tools to ensure that benefits reach eligible beneficiaries, including marginalized farmers.
   • Monitoring and Evaluation: Regular monitoring and evaluation of subsidy programs are conducted to assess their impact and make necessary adjustments. This includes feedback mechanisms to address grievances and improve the effectiveness of subsidy schemes.

Conclusion

Farm subsidies have a significant impact on various segments of the farming community, with large farmers often benefiting more than their smaller counterparts. To address these disparities and ensure equitable distribution of benefits, the Indian government has implemented a range of targeted programs, infrastructure investments, and support systems. By focusing on direct income support, inclusive support mechanisms, and improved outreach and monitoring, these measures aim to better serve small and marginal farmers and landless agricultural workers, promoting a more equitable agricultural sector.