Previous year MCQs

Economy UPPSC 2022 GS-I
Question

Consider the following statements about farm subsidies in India.

1. The input subsidies in India, such as on fertilizers fall under indirect farm subsidies.
2. Reduction in power and irrigation bills offered to farmers fall under direct farm subsidies.
3. The agricultural provisions of the World Trade Organization (WTO) though allow direct farm subsidies, prohibit indirect subsidies.
4. All subsidies provided by the governments in India fall under the indirect subsidies.

Select the correct statements using the code given below.
Code :

Answer & Solution

Answer: (Detailed Solution Below)

Option D: 1 and 2

Detailed Solution:

The correct answer is “1 and 2”.
1) True: Input subsidies in India, such as those on fertilizers, are considered indirect farm subsidies because they reduce the cost of inputs rather than providing cash payments directly to farmers.

2) True: Reductions in power and irrigation bills offered to farmers are classified as direct farm subsidies since they involve direct financial assistance to farmers, lowering their overall expenses.

3) False: The agricultural provisions of the WTO do allow for both direct and indirect subsidies. While there are rules and limits on how these subsidies can be applied, the WTO does not prohibit indirect subsidies outright.

4) False: Not all subsidies provided by the government in India fall under the category of indirect subsidies; there are direct subsidies as well.

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