Farm Subsidies, MSP, Public Distribution, Food Security, Technology Missions and Animal Rearing

What the official syllabus says

Main Examination, Paper IV: General Studies III.

• Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security; Technology missions; economics of animal-rearing.

Topics in detail

Farm subsidies

• Direct subsidies: income support paid into farmers' bank accounts, direct benefit transfer
• Indirect subsidies: fertiliser (urea and nutrient-based subsidy), power, irrigation water, seeds, credit (interest subvention), crop insurance
• Crop insurance: premium subsidy, claim settlement issues
• Effects of subsidies: imbalanced fertiliser use, groundwater overuse, fiscal burden, benefit to large farmers
• Subsidies and the World Trade Organization: the Agreement on Agriculture, Amber, Blue and Green Box support, de minimis limits, the peace clause and public stockholding
• Rationalisation of subsidies: targeting, direct transfers in place of price subsidies

Minimum support prices

• Objectives of MSP: price assurance, investment incentive, food security
• Commission for Agricultural Costs and Prices: its role and the cost concepts (A2, A2+FL, C2) used in pricing
• Crops covered by MSP and the Fair and Remunerative Price for sugarcane
• Procurement: the Food Corporation of India, state agencies, decentralised procurement
• Issues: limited reach of procurement to a few crops and states, distortion of cropping patterns, demand for a legal guarantee
• Alternatives and supplements: price deficiency payments, market intervention schemes

Public Distribution System

• Objectives: food security, price stabilisation, supporting the poor
• Evolution: universal PDS, the Revamped PDS (1992), the Targeted PDS (1997), the Antyodaya Anna Yojana (2000)
• National Food Security Act, 2013: coverage of up to 75% of the rural and 50% of the urban population, entitlements of priority households and Antyodaya households, the role of women as heads of household for ration cards
• Functioning: Centre-state roles, fair price shops, identification of beneficiaries
• Limitations: inclusion and exclusion errors, leakages, diversion, quality of grain, a narrow food basket
• Revamping: end-to-end computerisation, Aadhaar-seeded ration cards, point-of-sale devices, portability of ration cards across states, fortified rice, inclusion of millets and pulses

Buffer stocks and food security

• Buffer stock norms and the purpose of strategic reserves
• Excess stocks: storage costs, losses, the Open Market Sale Scheme
• Dimensions of food security: availability, access, absorption (nutrition) and stability
• Nutrition security: malnutrition, hidden hunger, mid-day meals and supplementary nutrition

Technology missions

• The idea of a mission: a time-bound, target-oriented programme that brings research, inputs and markets together
• Technology Mission on Oilseeds (1986), later extended to pulses, oil palm and maize
• National Food Security Mission and the Mission for Integrated Development of Horticulture
• Missions on sustainable agriculture, micro-irrigation and agricultural mechanisation

Economics of animal rearing

• Livestock in the rural economy: income, employment, insurance against crop failure
• Dairy: Operation Flood (from 1970), dairy cooperatives on the Anand pattern, India as a leading milk producer
• Indigenous cattle breeds, breed improvement, the Livestock Census
• Poultry, goat, sheep and pig rearing; fisheries and aquaculture (Blue Revolution)
• Constraints: feed and fodder shortage, animal health and veterinary services, marketing, disease (such as foot-and-mouth disease)
• Credit and insurance for animal husbandry; Kisan Credit Cards for livestock and fisheries

Overlaps

Welfare schemes, hunger and the performance of mechanisms for vulnerable sections are in General Studies II. Subsidies as a fiscal item are covered under Government Budgeting.