NITI Aayog member Ramesh Chand said the government must address multiple distortions, including subsidies given on power and fertiliser, to make agriculture climate resilient.
“Correcting distortions in input and output pricing, promoting crop cultivation in agro-climatically suitable regions, enhancing input-use efficiency, increasing crop yields, and mainstreaming sustainable agricultural practices to reduce the sector’s carbon footprint are some of the policy interventions needed to enable innovation-led, climate-resilient growth,” Chand said at a panel discussion during the CII Annual Business Summit 2025 on Thursday.
Citing the case of subsidy on power for pumping out water for irrigation, Chand said the government must pay Rs 8000 per acre to farmers in place of subsidy or free power and instead install a meter and start charging for the power which is used to withdraw the water.
“That way the producer gets more benefit, because now he will use water more economically than when he was using it when this power was totally free,” he said, adding this is easily doable but one should muster courage to do it.
Talking about the fertilizer subsidy, Chand said there is a need to bring farmers on board to pay the full urea price of Rs 1100 upfront as against the subsidized rate of Rs 260 per bag as it would fetch them higher minimum support price for their crop.
“If you are paying Rs 1100 per bag of urea, the cost of production will increase, and you will get more profit, because now the MSP formula is 50% more than cost,” he explained.
Talking about the distortion on the output side, Chand said this is done nearly as a populist measure. “I think we need to look at the larger interest of society and resist doing damage to the long term interest of future generations,” he said, adding environmental cost and natural resource cost should be factored in.
Chand also suggested the government should compensate farmers growing nitrogen-fixing crops like legume, chickpea, moong and arhar for the benefits they bring to the soil along with MSP as these crops are climate resilient crops.
“Agriculture cannot be singled out for this. We need to address distortion in every sector,” he concluded.
“Correcting distortions in input and output pricing, promoting crop cultivation in agro-climatically suitable regions, enhancing input-use efficiency, increasing crop yields, and mainstreaming sustainable agricultural practices to reduce the sector’s carbon footprint are some of the policy interventions needed to enable innovation-led, climate-resilient growth,” Chand said at a panel discussion during the CII Annual Business Summit 2025 on Thursday.
Citing the case of subsidy on power for pumping out water for irrigation, Chand said the government must pay Rs 8000 per acre to farmers in place of subsidy or free power and instead install a meter and start charging for the power which is used to withdraw the water.
“That way the producer gets more benefit, because now he will use water more economically than when he was using it when this power was totally free,” he said, adding this is easily doable but one should muster courage to do it.
Talking about the fertilizer subsidy, Chand said there is a need to bring farmers on board to pay the full urea price of Rs 1100 upfront as against the subsidized rate of Rs 260 per bag as it would fetch them higher minimum support price for their crop.
“If you are paying Rs 1100 per bag of urea, the cost of production will increase, and you will get more profit, because now the MSP formula is 50% more than cost,” he explained.
Talking about the distortion on the output side, Chand said this is done nearly as a populist measure. “I think we need to look at the larger interest of society and resist doing damage to the long term interest of future generations,” he said, adding environmental cost and natural resource cost should be factored in.
Chand also suggested the government should compensate farmers growing nitrogen-fixing crops like legume, chickpea, moong and arhar for the benefits they bring to the soil along with MSP as these crops are climate resilient crops.
“Agriculture cannot be singled out for this. We need to address distortion in every sector,” he concluded.
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