The correct option is 1 only
Explanation
The debate over agricultural subsidies in India revolves around the trade-off between equity (supporting resource-poor farmers) and efficiency (fiscal prudence and resource allocation). While subsidies aim to make farming profitable for smallholders, critics point to their fiscal impact and distributive inefficiencies.
Statement-wise Analysis:
- Statement 1 is Correct: Critics of agricultural subsidies argue that they place a huge burden on government finances (fiscal deficit). Furthermore, it is often argued that the benefits of subsidies (e.g., fertilizer subsidies) are disproportionately captured by the fertilizer industry or prosperous farmers in well-irrigated regions, rather than reaching the intended target group of small and marginal farmers.
- Statement 2 is Incorrect: Proponents of subsidies argue that farming in India is a risky business and that the majority of farmers are poor. They contend that subsidies should be provided to small and marginal farmers to enable them to afford modern inputs and reduce income inequality, not specifically to rich farmers.
- Statement 3 is Incorrect: It is widely accepted among economists and policymakers that subsidies were necessary during the initial adoption of Green Revolution technology. The new high-yielding variety (HYV) technology was risky and capital-intensive; therefore, incentives were required to encourage farmers to adopt these new methods.
Key Takeaway:
Agricultural subsidies are justified as a tool for inclusive growth to protect small farmers from market risks, but they face criticism for causing fiscal strain and often failing to reach the poorest beneficiaries effectively.