Any new technology will be looked upon as being risky by farmers. Subsidies were, therefore needed to encourage farmers to test the new technology Some economists believe that once the technology is found profitable and is widely adopted, subsidies should be hased out since their purpose has been served. Further, subsidies are meant to benefit the farmers but a substantial amount of fertilizer subsidy also benefits the fertilizer industry and among farmers, the subsidy largely benefits the farmers in the more prosperous regions.
Therefore, it is argued that there is no case for continuing with fertilizer subsidies, it does not benefit the target group and it is a huge burden on the Government’s finances. On the other hand, some believe that the Government should continue with agriculture subsidies because farming in Indian continues to be a risky business. Most farmers are very poor and they will not be able to afford the required inputs without subsidies.
Eliminating subsidies will increase the inequality between rich and poor farmer and violate the goal of equity. These experts argue that if subsidies are largely benefiting the fertilizer industry and big formers the correct policy is not to abolish subsidies but to take steps to ensure that only the poor farmers enjoy the benefits.
