As we all know, India is an agricultural country and most of the population is dependent on agriculture and its related activities. But people are diverting from this because of poor financial and technological support.
To support the farmers, the government has started taking the necessary steps in terms of finance and technology. The government knows the importance of agriculture in India. So it is encouraging the farmers by providing them financial aid in terms of subsidy of INR 3,500 crores.
Export of Sugar during the marketing year 2020-21
This amount of subsidy is going to help sugar farmers in the export of 60 lakh tonnes of sugar during the marketing year 2020-21. Actually, the annual demand for sugar is about 260 lakh tonnes but due to high production of about 310 lakh tonnes, sugar mills are having surplus sugar stock.
So Cabinet Committee on Economic Affairs (CCEA) has approved a subsidy amount on the export of 60 lakh tonnes of sugar.
A credit of subsidy into farmers' account
Every year, farmers produce sugarcanes as per the annual demand and sell them to the sugar mills. But due to surplus stock of sugar, sugar mill owners are not clearing the dues of farmers.
Cabinet Committee on Economic Affairs (CCEA) has said in a statement that the government will incur an amount of about INR 3,500 crores to clear the dues of the farmers.
This amount would be directly credited into farmers' accounts on behalf of sugar mills against the dues of sugarcane price. And if any balance is left then it would be credited into the mills' account.
Actually, governments launch many schemes and provide different types of subsidies in different ways. But most of the time, farmers do not get optimum use of those schemes and subsidies due to various reasons.
This time, the government thought differently and decided to benefit the farmers directly in an optimum way.
Subsidies in India are lower than in many other countries
Many rich countries like Europe, America, New Zealand, Canada, etc. provide a much higher subsidy to their farmers than India which is very low.
According to a report, an American farmer gets the support of about INR 5,33,191 in a year and a European farmer gets about INR 78,512 while an Indian farmer gets the only support of about INR 3,602 in a year.
This is very low and that's why the conditions of farmers in India are not good. Here is a question arises that why India which is a developing country provides lower subsidies than most of the developed countries?
The reason for this is the rules of the World Trade Organization (WTO) which provides a kind of liberty to the developed countries which the developing countries do not get.
Different types of Agricultural Subsidy in India
Farmers in India are given agricultural subsidies in many different ways and on many different things. These include:
- Power subsidy: It is a subsidy given to the electricity bills of farmers. Low rates are charged for them so that they could use that money to have pumping sets, tube wells, etc.
- Irrigation subsidy: It is a subsidy on charges of irrigation facilities like dams, canals, etc. Government charges very low rates and sometimes no rates for irrigation facilities given to farmers.
- Fertilizer subsidy: It is a subsidy given to the farmers to get cheap chemical and non-chemical fertilizers for their farming.
- Seed subsidy: It is a subsidy provided by the government to farmers directly by letting them have good quality seeds at very low rates and indirectly by making expenditures on research and development of new productive seeds.
- Credit subsidy: It is a subsidy provided by the government by charging low-interest rates on loans taken by farmers.
There are many other subsidies provided by the government to encourage farmers for farming in India.
Indirect aid to sugarcane farmers
Before providing the direct help of INR 3,500 crores of subsidy, the government of India also raised the Fair & Remunerative Price (FRP) of sugarcane by INR 10 per quintal which takes the price of sugarcane to INR 285 per quintal for the marketing year 2020-21.
This created a chance for farmers to earn more income by selling their sugarcane to sugar mills at an increased price.
Minimum Support Price (MSP)
Minimum Support Price is defined as the price at which the government purchases the crops from the farmers irrespective of the actual price of the crops. In simple words, farmers will get at least a minimum price for their crops which is called by the government as Minimum Support Price.
On the recommendations of the Commission for Agricultural Costs and Prices (CACP), Minimum Support Price (MSP) for 24 crops under 5 groups i.e. Sugarcane, Raw Jute, Ragi Crops, Kharif Crops, and Copra is declared by the government of India.
The purpose of MSP was to provide a guarantee to the farmers that the government will buy all the unsold crops left in the market. It provides safety to the farmers.
MSP also supports farmers from getting troubled due to fluctuation in the prices caused by the variation in the supply, and other reasons.
So MSP ensures a minimum amount, farmers would get in return of their crops whether the conditions are favourable or unfavourable. This encourages farmers to produce more crops and sustain a sufficient amount of land.
Conclusion
Governments are trying to support farmers in many possible ways like by providing different types of subsidies on Power, Irrigation, Seeds, Agricultural Equipment, Fertilizers and Credit and by using ensuring minimum support price for 24 crops under 5 groups.
Sometimes farmers also get help indirectly by the government as it increases the price of many crops so that farmers could get a chance to earn more money.
But still, subsidies in India are lower than many other countries like Europe, America, New Zealand, Canada, etc. and this needs to be changed as soon as possible to improve the farmers' conditions.
Although, recently announced a subsidy of INR 3,500 crores by the government of India will definitely provide help sugarcane farmers and encourage them to grow more fearlessly.
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