Question

“Some economists argue that once a technology proves to be profitable and becomes widely adopted, subsidies should be gradually withdrawn.”

Defend or refute the given statement with valid arguments.

Hint:

Defend the statement. Farm subsidies burden government finances, and farmers in prosperous regions gained most from them instead of the target group.

Answer 1

Step 1: Understand the statement:
The statement says that once a technology becomes profitable and is widely adopted, subsidies should be withdrawn slowly.
In the context of Indian agriculture this refers to subsidies on fertiliser, power and water given after the Green Revolution.
We are asked to defend or refute. We choose to defend, as the official answer does.

Step 2: Argument 1: subsidies are a heavy burden on the government:
Agricultural subsidies have grown very large over the years.
They take up a big share of government spending. This leaves less money for roads, irrigation, research and schools.
If the technology already pays for itself, the government need not keep paying for its use.

Step 3: Argument 2: the benefit did not reach the target group:
Subsidies were meant to help small and poor farmers adopt new seeds and methods.
In practice, farmers in the prosperous regions gained most, since they used the most inputs.
So the subsidy did not serve its target group, which is a good reason to withdraw it gradually.

Step 4: Why gradual:
The word gradually matters. A sudden stop could hurt small farmers, so the subsidy should be reduced in stages and better targeted.

Final Answer:
The statement is defended. Subsidies may be withdrawn gradually once the technology is profitable, because they burden government finances and have mostly benefited farmers in prosperous regions rather than the target group.