Some Economics of Fertiliser Subsidy

Mihir Rakshit ()
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Mihir Rakshit: Calcutta and Indian Statistical Institute

Journal of Quantitative Economics, 2018, vol. 16, issue 1, No 10, 209-228

Abstract: Abstract The paper discusses the nature of distortionary and counter-productive effects of and the deadweight losses due to fertilizer subsidy with special reference to the system adopted with effect from 1st April, 2010. The Economic Survey 2015–2016 identifies some of these effects; but its recommended remedies leave the core inefficiencies and suboptimality of the system unaddressed. Both theoretical and empirical considerations suggest that, for promoting agricultural productivity and ensuring food security, instead of subsidizing fertilizers (or other inputs) it is much more cost-effective to institute a scheme of output subsidy on food grains on the basis of their nutrient values on the one hand and costs of production on the other.

Keywords: Fertilizer subsidy; Distortions; Output subsidy on foodgrains; Agricultural policy (search for similar items in EconPapers)
JEL-codes: H23 Q11 Q18 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s40953-018-0146-3

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