Indian Economy · Topic 18 of 20

Agriculture: Subsidies, MSP, PDS, Food Security, Land Reforms, Food Processing

Farm subsidies, price support, food security system, land reforms and food processing

Agricultural Subsidies: Types and Debate

The Basics

An agricultural subsidy is government help that cuts a farmer's costs, or raises the price a farmer gets. For example, the government may pay part of a farmer's fertiliser bill. Or it may guarantee a higher price for a farmer's crop.

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Public Investment in Agriculture

The Basics

Public investment in agriculture means government spending on a lasting farm asset. An irrigation canal is one example. A rural road is another. A cold storage unit is another. These assets keep raising farm output for years.

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Minimum Support Price Policy and Procurement

The Basics

Minimum Support Price (MSP) is a price the government announces for certain crops. It is announced before the sowing season. It is a promise to farmers. If the market price falls below this level, the government buys the crop at this price. Minimum Support Price works like a floor under the price. A floor stops a price falling below it. It does not stop the price rising higher.

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Public Distribution System

The Basics

The PDS is a government scheme. It sells food grains, sugar and kerosene cheaply. It sells through shops called Fair Price Shops. For example, a family buys cheap rice from its local Fair Price Shop.

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National Food Security Act

The Basics

The National Food Security Act, 2013 gives a legal right to subsidised foodgrain. It covers priority households, chosen by states as eligible. Before this Act, cheap grain was only a scheme benefit. A citizen could not claim it in court. The Act changed this. It fixed, by law, who gets grain, how much, and at what price.

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Food Subsidy and the Role of Food Corporation of India

The Basics

The Food Corporation of India (FCI) buys foodgrains from farmers, stores them, and sends them for distribution to the poor. It was set up to give farmers fair prices while keeping food affordable for consumers.

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Economics of Animal Rearing

The Basics

Animal rearing means keeping animals for milk, meat, eggs, wool, and work. Common animals include cows, buffaloes, goats, pigs and sheep. In India, farming is mostly a mixed crop-livestock system. Most farmers do not only grow crops. They also keep animals alongside their fields.

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Agricultural Export Policy and Trade

The Basics

An Agricultural Export Policy is a government plan to raise farm exports. India launched its first such policy in 2018. It aimed for sixty billion US dollars in agricultural exports by 2022. This was part of an overall one hundred billion US dollar export goal. The policy also aimed to raise farmers' income through trade.

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Cooperative and Contract Farming Models

The Basics

Small landholdings make modern farming hard. A farmer with one acre cannot afford a tractor. The farmer also cannot negotiate a good price alone. The farmer cannot easily use costly technology. Group and contract farming models try to solve this problem. They do this without changing who owns the land.

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Food Processing: Location, Upstream and Downstream Linkages

The Basics

A food processing unit does not work alone. It sits between two ends of a chain. One end is the farm, which supplies raw material like fruit, milk, or grain. The other end is the consumer, who buys the final product. Where the unit is placed decides if it succeeds. How well it links to both ends also decides this.

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Food Processing: Supply Chain Management and FDI

The Basics

Supply chain management covers every step from farm to buyer. This includes storage, grading, packing and transport. A cold chain is unbroken refrigerated storage and transport. It keeps food fresh from farm to shop. For example, milk needs a cold chain to stay fresh. Without a cold chain, fruits and vegetables spoil fast.

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