2026 · GS Paper 3 · Q14 · 15 marks
Discuss the different types of subsidies and supports provided by the Government of India to agricultural sector. Examine the related issues pertaining to Agreement on Agriculture of World Trade Organisation (WTO). (Answer in 250 words)
In short
India supports agriculture through input subsidies, MSP procurement, income and risk support and food stockholding, but the WTO Agreement on Agriculture caps price support. Measured against outdated 1986-88 prices, rice support crossed the 10% de minimis limit, making India the first member to invoke the Bali Peace Clause in 2020.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 288 words
India supports agriculture from inputs to prices and incomes, but every measure must fit the WTO Agreement on Agriculture (AoA, 1995), which sorts domestic support into Amber, Blue and Green boxes. Food security and these rules have clashed since the Bali Ministerial of 2013.
Types of Agricultural Subsidies and Supports
1. Input Subsidies: Fixed-price urea, the Nutrient Based Subsidy for other fertilisers, cheap power, canal water and interest subvention on Kisan Credit Card loans cut costs. 2. Price Support: MSP for 22 crops, with procurement by FCI and NAFED under PM-AASHA. 3. Income and Risk Support: PM-KISAN has transferred over ₹4.09 lakh crore (PIB, 2025), and PMFBY caps kharif premiums at 2%. 4. Food and Infrastructure: NFSA public stockholding, PMKSY irrigation and the Agriculture Infrastructure Fund.
Outdated Reference Price
Price support is measured against fixed 1986-88 prices, inflating India's figure; rice crossed the 10% de minimis limit, making India the first member to invoke the Bali Peace Clause in 2020.
Asymmetric Entitlements
Developed members hold over 95% of the USD 148.8 billion bound AMS entitlement (RIS, 2025), so they may subsidise above de minimis while India cannot.
Box Shifting
Rich members shift support into the uncapped Green Box, still depressing world prices.
No Permanent Solution
A permanent fix for public stockholding, promised at Bali, is still pending.
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This chapter in the exam
Farm Subsidies and Minimum Support Prices8 questions
Asked in 8 of 14 sittings since 2013
- 2023What are the direct and indirect subsidies provided to farm sector in India? Discuss the issues raised by the World Trade Organization (WTO) in relation to agricultural subsidies.
- 2018What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low income trap?
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Question from the official UPSC Civil Services (Main) Examination 2026 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.