Question

"Although the subsidies play a crucial role in giving incentive to farmers to adopt modern agricultural technologies, they simultaneously impose a significant fiscal strain on the resources of the Government." Justify the given statement with valid arguments.

Hint:

Remember: Subsidies can promote agricultural development, but they must be well-targeted to avoid significant fiscal pressure on government finances.

Answer 1

Step 1: The "Incentive" Argument. 
Subsidies are essential because agriculture is a high-risk profession. Small farmers are often hesitant to adopt expensive modern inputs like HYV seeds or chemical fertilizers. By lowering the cost of these inputs, subsidies act as a catalyst for technological adoption, ensuring food security and higher yields for the nation. 
Step 2: The "Fiscal Strain" Argument. 
On the flip side, subsidies account for a massive chunk of the government’s budget. This "fiscal burden" leaves less room for the government to invest in other critical areas like irrigation infrastructure, rural health, or education. Furthermore, universal subsidies often benefit the rich farmers more than the poor ones, leading to a misallocation of resources. 
Step 3: Conclusion. 
The statement is justified. While subsidies were vital during the Green Revolution to encourage risk-taking, the current challenge is to "target" them better to reduce the drain on the national exchequer without hurting the small farmer.