Overview of Agricultural Subsidies in India and Its Impact on Environment

Agriculture is vital to India's economic development, providing food security to over 1.4 billion people and employing 58% of the population, while contributing 19-20% to GDP. The government's spending on the agricultural sector has been increasing annually, reaching Rs. 1,25,036 crores in 2023, up from Rs. 1,22,836 crores in 2022. The government provides various forms of agricultural subsidies, both direct and indirect, aimed at spurring growth in the sector. However, the efficacy of these subsidies in achieving intended outcomes remains questionable. This paper provides an overview of agricultural subsidies in India by examining the allocation of funds under different schemes. It also analyzes the different types of subsidies and impact on the environment. The study utilizes secondary data from government and research publications. The findings suggest that while agricultural subsidies help the sector, mismanagement hampers their reach and effectiveness for farmers and the environment. Subsidies have both positive and negative environmental externalities. The paper argues that improved targeting of subsidies is critical to maximize benefits for farmers and minimize unintended consequences. More focused allocation can enhance the efficiency of public expenditure on agricultural subsidies and make them more ecologically sustainable. The study provides insights into reforming India's agricultural subsidy regime to balance productivity, equity, and sustainability concerns.