Agricultural subsidies: Curse or boon? -A review

Abstract

In the literature, analysis of agricultural policy instruments captures economic or political interests indicating agricultural subsidies serve farmers by making unaffordable inputs inexpensive. However, there are positive and negative sides of the agricultural subsidy. The novelty of this paper is to review the existing literature and provide a conceptual framework on agricultural subsidies with a particular focus on livestock subsidies. The review summarises the evidence of past literature by first classifying the components on which subsidies were given, followed by establishing the relation between investment and subsidies, afterwards, its effect on farm households, and lastly on the long-term impact of subsidies. In India, subsidies safeguard agricultural food security and national security; aide farmers, yet a substantial portion of it supports the business and farmers in wealthier regions, causing variation in interstate agricultural growth through inequitable distribution. In the long run, subsidies will hurt sustainable development unless targeted appropriately. Ironically, the direct effect of subsidies on agriculture was positive which brought food sufficiency and indirectly it decelerated the investment in agriculture. In nutshell, the positive effect of subsidies cannot sustain; therefore, reinvestment in agriculture is encouraged.