'Farmers should be given production-linked incentives instead of fertilizer subsidy', Montek suggests to the government
PLI Scheme for Farmers: Former Planning Commission Deputy Chairman Montek Singh Ahluwalia has said that instead of supporting specific inputs like fertilizers, it is necessary to directly deliver the benefits of subsidy to the farmers. He said that fertilizer subsidy is not only benefiting the fertilizer industry but also harming the health of the soil due to excessive use. Let's know what Ahluwalia said next.
Instead of giving fertilizer subsidy, the government should bring a production-linked incentive (PLI) scheme for farmers because, instead of benefiting farmers from this, the fertilizer subsidy has been suggested by Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission during the tenure of former Prime Minister Manmohan Singh.
In an exclusive conversation, Ahluwalia told ANI that instead of supporting certain inputs like fertilizers, it is time to directly deliver the benefits of subsidy to the farmers. He also pointed out that fertilizer subsidies are not only benefiting the fertilizer industry but also harming soil health due to excessive use.
"Many agricultural economists believe that instead of spending large sums on fertilizer subsidies, we can give farmers production-linked incentives. At the very least, we should stop subsidizing only one input, as this creates distortions," he said.
Ahluwalia suggested consulting farmers, economists, and industry experts to determine the best way forward.
He also discussed the broader implications of the government's PLI schemes, which are aimed at boosting manufacturing. Ahluwalia said that while PLI may be successful for new industries like mobile manufacturing and semiconductors, it should not be used in traditional sectors like apparel.
Ahluwalia said, "PLI should focus on industries where we lack experience, such as chips, fab, and battery manufacturing. Apparel is a sector we already know well, so PLI does not make sense in it. Problems in such sectors are often linked to logistics, labor laws or ease of doing business, not lack of subsidies."
He praised the government for successfully attracting major manufacturers such as Apple through Foxconn to set up production in India. He recommended identifying five or six key new industries and providing incentives to bring in global manufacturers. On the point of focus on manufacturing versus services, Ahluwalia agreed with former RBI governor Raghuram Rajan. He said India should leverage its strength in services but manufacturing cannot be left behind.
"This is not the time to choose between manufacturing and services. India should use its strength in both sectors," he said. Ahluwalia in his remarks stressed the need for a more nuanced approach to policymaking.
