1. Definition:
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- Direct farm subsidies include support or financial assistance transferred directly into the hands of farmers.
- Examples include the Farm Loan Waiver Scheme and the PM Kisan Scheme.
2. Merits of Direct Subsidies:
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- Targeted Assistance: Direct subsidies directly benefit farmers, providing them with supplemental income.
- Immediate Impact: These subsidies offer immediate relief and support during financial distress.
3. Issues of Direct Subsidies:
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- Budgetary Burden: Direct subsidies can strain government budgets.
- Equity Concerns: Ensuring equitable distribution of subsidies remains a challenge.
- Distortion of Market Prices: Direct subsidies can distort market prices and affect competitiveness.
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1. Definition:
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- Indirect farm subsidies are inherent in the pricing of inputs such as subsidized seeds, power subsidy, and other forms of support.
- These subsidies are not provided in the form of cash but indirectly support farmers.
2. Positive Aspects of Indirect Subsidies:
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- Input Affordability: Subsidized inputs (seeds, fertilizers, etc.) reduce production costs for farmers.
- Enhanced Productivity: Access to quality inputs improves agricultural productivity.
3. Issues of Indirect Subsidies:
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- Environmental Impact: Some indirect subsidies (such as overuse of fertilizers) can harm the environment.
- Market Distortion: Overproduction due to subsidized inputs can depress prices and hinder global competitiveness.
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