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Some Economics of Fertiliser Subsidy

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  • Mihir Rakshit

    (Calcutta and Indian Statistical Institute)

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.

Suggested Citation

  • Mihir Rakshit, 2018. "Some Economics of Fertiliser Subsidy," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(1), pages 209-228, December.
    • Handle: RePEc:spr:jqecon:v:16:y:2018:i:1:d:10.1007_s40953-018-0146-3
    DOI: 10.1007/s40953-018-0146-3
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    Citations

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    Cited by:

    1. Mathy Sane & Miroslav Hajek & Chukwudi Nwaogu & Ratna Chrismiari Purwestri, 2021. "Subsidy as An Economic Instrument for Environmental Protection: A Case of Global Fertilizer Use," Sustainability, MDPI, vol. 13(16), pages 1-20, August.
    2. Athanasios Ragkos & Kentaro Hayashi & João Serra & Hideaki Shibata & Efstratios Michalis & Sadao Eguchi & Azusa Oita & Claudia Marques-dos-Santos Cordovil, 2021. "Contrasting Considerations among Agricultural Stakeholders in Japan on Sustainable Nitrogen Management," Sustainability, MDPI, vol. 13(9), pages 1-18, April.
    3. Oriana Gava & Zahra Ardakani & Adela Delalic & Stefano Monaco, 2024. "Environmental Impacts of Rice Intensification Using High-Yielding Varieties: Evidence from Mazandaran, Iran," Sustainability, MDPI, vol. 16(6), pages 1-32, March.

    More about this item

    Keywords

    Fertilizer subsidy; Distortions; Output subsidy on foodgrains; Agricultural policy;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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