UPSC Civil Services 2020 Prelims General Studies Paper I

Government can do public spending in agriculture in two ways – Investment and Subsidy (direct and indirect). The main difference between subsidies and investment is productivity, investment increases productivity, while subsidies increases production. Investment increases productivity which is seeking for new technology, increasing the cultivated area productivity, or high skilled labor etc.

● Fixing Minimum Support Price is classified as an agricultural subsidy. Hence Statement 1 is incorrect.

● Computerization of Primary Agricultural Cooperative Societies can be seen as an investment as it will facilitate easier access to agricultural credit which in turn can boost agricultural productivity. Hence statement 2 is correct.

● Social Capital development like formation of Farmer Producer Organization and supporting them can be seen as investment as it leads to higher productivity of the small and marginal farmers due to better access to inputs and economies of scale.Hence Statement 3 is correct

● Free electricity supply to farmers is a subsidy to farmers.Hence Statement 4 is incorrect.

● Waiver of agricultural loans by the banking system is again another form of subsidy to provide relief to indebted farmers. Hence Statement 5 is incorrect.

● Setting up of cold storage facilities improves the supply chain of agriculture and reduces post harvest losses thereby increasing productivity. Hence Statement 6 is correct.