Food subsidy in India

A subsidy is the benefit given out to a beneficiary in the form of cash usually, or a reduction in taxes by the government or a group of individuals. It is usually in the interest of public, and given to reduce some kind of burden from them.

The government of India has subsidized many products since the country achieved its independence. Economists might not agree among themselves on the definition of subsidies, but yes, they do agree on the first order effects of subsidies. The positive point of subsidies is that the beneficiaries become entrapped in a social sense.

India has the world’s largest food subsidy program. But this has attracted significant criticisms from around the globe due to the various arguments thrown. It is said that it poses a huge burden on the country’s budget, and often leads it to deficit in place of surplus. The Food Corporation of India is always under attack from all the dimensions. The reason behind it is that if the FCI doesn’t give subsidies, it is accused of not considering the interests if the people who are below poverty line, and if it gives subsidies, everyone complains about the fact that the Indian budget is pushed into deficit.

India, which has been asserting that the nation has a right to retain higher stock holding of food grains, demanded more freedom to subsidize and stockpile food grains than is allowed by the rules of WTO. India is hence now proposing to the WTO that it should reverse position and endorse an increase in the subsidies. This has been done keeping in mind the fact that India is not a small player. It has not only a great population, but also the second largest area of agricultural land in the world. Hence steps are being taken by the Government of India to not only reduce the cost of subsidies, but also to distribute the benefits to a large crowd of  people.

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