Home

Schemes

Services

Community

About Us

What are the Various Agricultral Subsidies in India?

Komal Bajpai

Author

Updated: 16-04-2025 at 12:53 PM

India relies heavily on farming since it employs almost 58 per cent of its people and accounts for 19-20 per cent of its GDP. The government promotes food safety and farming results by giving farmers several forms of aid. The farming support measures created positive results for output but resulted in unintended harm to groundwater supplies farmlands and natural habitats.

This article studies India's agricultural subsidy schemes by analysing its outcomes and problems plus the environmental effects and updates in agricultural support from the government.

Understanding Agricultural Subsidies In India

Through agricultural subsidies, the Indian government offers farmers financial help to limit their buying expenses and make their revenues easier to manage. There are two distinct types of agricultural subsidies.

1. Input Subsidies

The government programmes lower the expense of important farming materials to help farmers conduct their operations at less cost while achieving better results.

Type of Input Subsidy	Description
Fertiliser Subsidy	The government provides fertilisers at lower prices to farmers, increasing yield but leading to excessive use of chemical inputs.
Electricity Subsidy	Farmers receive free or highly subsidised electricity, encouraging excessive groundwater extraction.
Irrigation Subsidy	Funding for canals, dams, and micro-irrigation projects to support efficient water use.
Seed Subsidy	Distribution of high-yield variety (HYV) seeds at subsidised rates to improve crop productivity.
Credit Subsidy	Loans at lower interest rates through schemes like Kisan Credit Card (KCC) to help farmers manage costs.

2. Output Subsidies

The government provides farming subsidies that give financial support to farmers after they harvest their crops.
A minimum support price system protects farmers from market ups and downs because it sets fixed prices for chosen agricultural products.
Public Distribution System PDS ensures food security through its distribution of low-price grains to needy groups of society.

Also Read: Digital Agriculture Mission: Accelerating Farmer IDs For India’s Agriculture Growth

The Economic Impact Of Agricultural Subsidies

India has maintained its food production numbers and rural revenue because of farming subsidies. The key economic benefits include:

1. Increased Agricultural Productivity

During the Green Revolution period from 1960 to 1970, the government grants for farming materials helped produce more rice and wheat.

During the 1960 to 2023 period, India produced over 330 million tonnes of food grains while starting at 82 million tonnes in 1960.
The nation achieved food exports that built its agrarian sector even stronger.

2. Improved Farmer Incomes and Rural Development

MSP benefits around 30% of farmers, particularly in states like Punjab and Haryana.
The government's assistance programmes help small farmers lower their financial problems.
The government support system keeps food expenses steady for all consumers.

Although subsidies create positive results. Excessive public support and farm usage create economic waste and harm the land's helpfulness.

Also Read: Krishi Yantra Subsidy Scheme: Agriculture With Innovative Farming Tools

Environmental Challenges Linked To Agricultural Subsidies

1. Groundwater Depletion

Farmers use their irrigation pumps more than necessary because subsidised electricity drains the water supply.
Punjab and Haryana exceed their annual groundwater refill capacity which creates severe water shortage problems.
The Central Ground Water Board reports water levels in 21 major states keep falling rapidly.

2. Soil Degradation Due to Overuse of Fertilisers

The use of fertiliser imbalance creates problems for soil quality and productivity.
Most fertiliser urea consumption ruins soil health and makes land production less effective.
The government spends over ₹1.5 lakh crore each year to support fertiliser use which leads to unnecessary overuse.

3. Loss of Biodiversity

The Monetary Incentive Scheme makes farmers grow only wheat and rice which leads to farming that uses only one crop.
People now grow less water-efficient and chemical-resistant pulse and millet crops together.
Reducing the number of farm crops harms soil quality while decreasing pest populations and weakening our ability to handle climate change.

4. Pollution and Greenhouse Gas Emissions

The widespread practice of burning crops in Punjab and Haryana from excessive wheat-paddy planting creates major air pollution problems.
High amounts of fertilisers discharge chemical elements into water systems which damage both water-based wildlife and drinking supplies.

Also Read: Farm Machinery Bank Scheme - Modern Agricultural Equipment

Recent Government Reforms And Sustainable Alternatives

Indian officials have started multiple programmes to fix agricultural support issues and create a more eco-friendly sector.

1. Direct Benefit Transfer (DBT) for Fertiliser Subsidy

DBT gives farmers direct payment instead of providing subsidisation to fertiliser costs.
This system helps avoid misuse of fixed amounts of fertilisers to reach a better balance in use.

2. Promotion of Organic and Natural Farming

The Paramparagat Krishi Vikas Yojana (PKVY) supports farmers by giving them fiscal incentives to switch to organic farming methods.
ZBNF became popular in Andhra Pradesh and Karnataka by helping farmers avoid using chemical farming materials.

3. Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)

The Pradhan Mantri Krishi Sinchayee Yojana plan helps farmers use better irrigation systems such as drip and sprinkler water systems.
The programme helps farmers save water and develop better water usage habits.

4. Crop Diversification Initiatives

A policy system of incentives supports pulses, millet, and oilseeds farming because it aims to decrease wheat and rice dependency.
The International Year of Millets 2023 made both agricultural and climate goals one of its priority objectives as it worked towards returning millet cultivation to widespread practice while reducing the need for water and fertilisers.

5. Solar-Powered Irrigation And Renewable Energy Support

Through its PM-KUSUM (Kisan Urja Suraksha Evam Utthaan Mahabhiyan) programme the government encourages farmers to use solar energy for water irrigation services and enables them to disconnect from subsidised power supplies.

Challenges In Implementing Sustainable Reforms

The implementation of new reforms meets resistance because various difficulties continue to affect progress.

Sustainable practice adoption demands farmers to change their habits and education about green concepts.
The MSP initiatives provide substantial financial aid to selected states but many other states remain without significant support from the scheme.
National budget expenditures on subsidies dominate budget funding.
Subsidy distribution becomes less effective when there are implementation flaws which lead to distribution leaks.

Conclusion

Agricultural support is essential to India's food production system that benefits farmers. India must employ exact farming technology to handle resources better and take care of the environment because regular agricultural support practices harm nature permanently.

To achieve success in its policy efforts the government needs to combine education help for farmers with technology implementation and equal subsidy allocation. India will need subsidies that strike a balance between winning more crops and protecting its farmland to make sure agriculture remains viable in the long term.

Get the latest updates on government schemes and policies with Jaagruk Bharat. Join India's biggest Jaagruk Bharat community. Share your thoughts, questions, and favourite topics for us.