Question

1. Identify the main government policies which affect agricultural development in the country, and critically discuss the impact of at least one important policy.

Answer 1

There are few important government policies that affect agricultural development in a country like subsidies, MSP (minimum port price), and loans at low-interest rates. There are various subsidies that the farmers get like fertilizer subsidy, export subsidies, seeds subsidy, credit subsidy, power subsidy, etc.

The most important policy is subsidies that affect the development of the agricultural sector to a great extent.

1. Fertilizer subsidy: It is the subsidy that farmers get on the purchase of fertilizers. Farmers get fertilizers at a lower price than the actual cost and the difference in price is settled by the government. Thus farmers get cheap and affordable fertilizers through this subsidy.

2. Export subsidy: Through these, the government encourages the producers of food and food products to engage in exports of their goods by providing low-interest loans and tax relief to them.

3. Power subsidy: Through these, the farmers get electricity supply at low costs and the difference between the actual cost of electricity and the price paid by the farmers is borne by the government

4. Seeds subsidy: Farmers get seeds at cheaper rates than the market price.

5. Credit subsidy: These are the difference between the interest charged by the farmers and the actual cost of providing credit which is borne by the government.

Subsidies are considered as the most important government policy that affects agricultural development as the farmers get much relief financially by the government to carry out their agricultural activities and that leads to a boost in their income and growth.