Case for subsidy

Though 76 per cent of Nepalis are engaged in agriculture, this vital sector has fallen prey to the indifference of successive governments. Lack of clear vision is the case. Agriculture has been accorded high priority, but the net result has been that Nepal has degenerated from a net agricultural exporting country to an importing one. Though the government has adopted the policy of phasing out agriculture subsidy under the sway of so-called liberalisation, the Agriculture Business Promotion Policy 2006 is providing a 25 per cent power subsidy to business houses promoting agricultural products for 10 years. Under the purview of this facility will come a variety of businesses dealing in farm products.

A contributor of 39.4 per cent to the GDP, agriculture does have a decisive impact on the nation’s economic growth. But, unfortunately, it still depends on the unpredictable monsoons. The production cost of crops like paddy has gone so high that Nepali produce just cannot compete with imports. One way of making Nepali produce competitive is to give agricultural subsidy even though wasteful subsidy is a drain on public purse. But the beneficiaries should be the real farmers, the smaller ones in particular. Agriculture cannot become lucrative unless cost-cutting measures are introduced, besides the resolution of other pressing problems like increasing fragmentation of land, inefficient and inadequate irrigation system, obsolete technology, shrinking arable land, environmental degradation, overdue land reforms, lack of proper incentives, and poor marketing.