GS Paper III 2017 · Q15
15 marks · 250 words Farm subsidies, MSP, PDS & food security X-Ray · Core #8How do subsidies affect the cropping pattern, crop diversity and economy of farmers ? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers ?
Approach · directive: “how do subsidies affect / what is the significance”
What it asks · Show how farm subsidies shape what and how farmers grow and their finances, and explain what crop insurance, MSP and food processing offer to small and marginal farmers.
It asks 2 things — answer each
- Explain how subsidies affect the cropping pattern, crop diversity and the economy of farmers
- Explain the significance of crop insurance, minimum support price and food processing for small and marginal farmers
Open with · Small and marginal farmers are about 86 per cent of India's operational holders (Agriculture Census 2015-16), yet only about 6 per cent of farmers gained from selling wheat and paddy to procurement agencies (Shanta Kumar Committee, 2015); that gap runs through every subsidy.
Cover
- Cropping pattern: cheap fertiliser, free power and assured MSP pull farmers towards rice and wheat and away from pulses, oilseeds and coarse cereals.
- Crop diversity: heavily subsidised urea leads to overuse and nutrient imbalance; cheap power speeds groundwater depletion and reduces cropping diversity.
- Farm economy: subsidies cut input costs and stabilise incomes, but benefits often go to larger and better-connected farmers, and they strain the budget.
- Crop insurance: schemes such as the Pradhan Mantri Fasal Bima Yojana (2016) with low farmer premiums cover yield loss and reduce distress from weather shocks.
- MSP: a floor price and procurement give price certainty, but small farmers often sell to traders at lower prices for lack of market access.
- Food processing: value addition, less spoilage and nearby markets raise the share of price the farmer gets and provide off-farm jobs.
- Reform: direct benefit transfers, balanced fertiliser use, micro-irrigation, price support beyond cereals, and farmer organisations for small holders.
Close with · Support should protect the small farmer without dictating the crop; moving from open-ended input subsidies to income support, insurance and processing-led markets is how India reaches SDG Target 2.3, doubling the productivity and incomes of small-scale producers by 2030.
Add value (verified)
- Cabinet approval of PMFBY (13 January 2016): farmer premium 2% for kharif, 1.5% for rabi and 5% for annual commercial and horticultural crops; the balance paid by government.Cabinet approves Pradhan Mantri Fasal Bima Yojana — PIB, 13 January 2016 ↗“There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%.”
- Agriculture Census 2015-16: small and marginal operational holders constituted about 86 per cent of the total operational holders in the country.PIB: Ministry of Agriculture and Farmers Welfare, Parliament reply (2023) citing Agriculture Census 2015-16 ↗“As per Agriculture Census 2015-16, small and marginal operational holders constituted about 86 per cent of the total operational holders in the country.”
- Shanta Kumar Committee (January 2015), citing NSSO 70th round (2012-13): only about 6 per cent of total farmers gained from selling wheat and paddy directly to any procurement agency.PIB: Recommendations of High Level Committee on restructuring of FCI (January 2015) ↗“Together, they account for only 6 percent of total farmers in the country, who have gained from selling wheat and paddy directly to any procurement agency.”
- PM Kisan SAMPADA Yojana: allocation of Rs 6,000 crore for 2016-20, expected to benefit 20 lakh farmers.PIB: Pradhan Mantri Kisan SAMPADA Yojana expected to benefit 20 lakh farmers (Ministry of Food Processing Industries) ↗“PRADHAN MANTRI KISAN SAMPADA YOJANA (PMKSY)with an allocation of Rs. 6,000 crores for the period 2016-20 coterminous with the 14 th Finance Commission Cycle. The scheme is expected to benefit 20 lakh farme”
- PM-KISAN, launched 24 February 2019: Rs 6,000 per year in three equal instalments transferred to farmers' families' bank accounts.PIB: PM Kisan Samman Nidhi Yojana (Ministry of Agriculture and Farmers Welfare, 2022) ↗“launched on 24 th February, 2019 to supplement financial needs of land holding farmers. Financial benefit of Rs 6000/- per year in three equal installments, every four month is transferred into the bank accounts of farmers’ families”
- SDG Target 2.3: by 2030, double the agricultural productivity and incomes of small-scale food producers.United Nations, Sustainable Development Goal 2 — targets and indicators ↗“Target 2.3 By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers”
Question: UPSC's CS (Main) 2017, GS Paper III — paper ↗. Approach: Minimalist IAS, checked 3 Oct 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer· 371words · Minimalist IAS
Small and marginal farmers are about 86 per cent of India's operational holders (Agriculture Census 2015-16), yet only about 6 per cent of farmers gained from selling wheat and paddy to procurement agencies (Shanta Kumar Committee, 2015). That gap runs through every subsidy.
How subsidies affect cropping pattern, crop diversity and the farm economy
- Cropping pattern: cheap urea, free power, subsidised canal water and assured procurement pull farmers towards rice, wheat and sugarcane even where water is scarce: paddy in Punjab, sugarcane in Maharashtra.
- Crop diversity: pulses, oilseeds and millets lose area; monocropping narrows the base; the urea price bias distorts the nitrogen-phosphorus-potash balance and degrades soil.
- Farm economy: subsidies cut costs and steady incomes, but larger irrigated farms capture most; overuse raises costs later through deeper pumping; the fiscal burden crowds out investment in irrigation and research.
Significance of crop insurance, MSP and food processing for small and marginal farmers
- Crop insurance: the Pradhan Mantri Fasal Bima Yojana (2016) fixes the farmer's premium at 2 per cent for kharif, 1.5 per cent for rabi and 5 per cent for commercial and horticultural crops; it checks distress borrowing after weather shocks, though delayed claims and low awareness limit its reach.
- Minimum support price: a floor against post-harvest crashes and income certainty where procurement exists; yet small farmers with little surplus and distant mandis often sell below MSP, and procurement stays concentrated in a few States and crops.
- Food processing: cuts post-harvest losses, adds value and gives assured buyers through contract farming and producer organisations; the PM Kisan SAMPADA Yojana (2017), Rs 6,000 crore for 2016-20, was expected to benefit 20 lakh farmers.
| Instrument | Gives the small farmer | Design gap |
|---|---|---|
| PMFBY | Low premium, yield cover | Claim delays |
| MSP | Price floor | Reaches few; cereal bias |
| Processing | Value, buyers, jobs | Cold chain, aggregation |
Reform direction
- Income over inputs: PM-KISAN (2019) pays Rs 6,000 a year directly to farm families; extend nutrient-based pricing to urea; procure pulses and oilseeds; link farmer producer organisations to processors.
Support should protect the small farmer without dictating the crop. Moving from open-ended input subsidies to income support, insurance and processing-led markets is how India reaches SDG Target 2.3: doubling the productivity and incomes of small-scale food producers by 2030.
Prepared by Minimalist IAS to the answer standard of Shivam Singh (mentor, 7 years) · facts checked against official sources (how we verify) · updated 3 Oct 2026. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.
