Customised Subsidy Mechanisms for Crops

Agricultural support policies in most developing countries were introduced during the early years of the green revolution in the 1960s. The significant difference between the government’s procurement cost under the support price programme (plus the cost incurred in transportation and storage), and the relatively small revenue generated through the subsidised sale of food­grains is now a routine part of the government’s annual “food subsidy” aimed at meeting these three goals.

To a large extent, India’s price support policies have achieved their goal of increased foodgrain production. The distribution of foodgrains under various welfare schemes, such as the public distribution system (PDS) for poor households, the midday meal and anganwadi schemes for children and pregnant women, and the offering of highly subsidised foodgrains to student hostels of the economically weak, has helped in protecting the vulnerable population.