The total government subsidy for food and fertilizers for the fiscal year 2025-26 is budgeted at It constitutes around 2% of India’s GDP and 21% of farmer’s income.
Direct subsidies –
These involve direct budgetary support or cash transfers to farmers and agricultural institutions.
Income support schemes –
PM-KISAN
Raythu bandhu Scheme of Telangana
MSP For 23 crops to ensure Income Security
Interest subvention through Kisan Credit Cards – KCC)
Crop insurance premium subsidy under PMFBY (Pradhan Mantri Fasal Bima Yojana)
Indirect subsidies to the farm sector
These reduce production costs or guarantee revenue without direct cash payment:
Fertiliser subsidy – Subsidised urea, DAP and other fertilisers under the Nutrient Based Subsidy
Subsidy on agricultural infrastructure
PM-KUSUM – Subsidy for Solar Pumps
PMFBY – Subsidy for Micro Irrigation
Agriculture Infrastructure Fund (AIF) – Credit-linked subsidy for cold storage
Gramin Bhandaran Yojana – Support for rural godowns and storage
Power & irrigation subsidy
Free or highly subsidised electricity for irrigation pumps
Subsidised canal and micro-irrigation schemes (Eg- PMKSY)
Seed and mechanisation subsidy – Eg- Sub Mission on Agriculture Mechanisation
Research & Extension services – Funding to ICAR, Krishi Vigyan Kendras (KVKs)
Issues raised by WTO regarding India’s agricultural subsidies
Subsidy Classification by WTO
Green Box – Allowed (non-trade distorting). Eg- extension, infrastructure
Blue Box – Production-limiting subsidies
Amber Box – Trade-distorting subsidies. (10% of output) Eg- MSP, input subsidies
Trade-distorting support – MSP, fertiliser, power & irrigation subsidies classified as Amber Box. May exceed 10% de-minimis limit for developing countries
WTO decision (Nairobi, 2015) prohibits export subsidies. India’s sugar export incentives were challenged & ruled WTO-inconsistent
Transparency issues – Allegations of under-reporting or delayed reporting of subsidies
Environmental concerns – overuse of fertilisers and groundwater, causing Soil degradation, Groundwater depletion and Ecological stress
The sustainable path for ensuring farmer welfare remains protected includes gradual shift towards Green-Box-compliant support such as direct income transfers, infrastructure creation, R&D, crop insurance and climate-resilient agriculture.