Question

(i) “Every coin has two sides — debate over farm subsidies is one such classic example of the same.” Justify the given statement with two arguments…

Accepted Answer

(a) (i) The introduction of farm subsidies had been an opinionated step taken by the Government of India. Arguments in favour of continuing farm subsidies: - Eliminating subsidies may increase inequalities of income between rich and poor farmers. - Most farmers (small and marginal) may not be able to afford expensive agricultural inputs without subsidies. Arguments against farm subsidies: - It is often argued that farm subsidies have helped the fertilizer industry much more than helping the needy farmers. - Economists argue that subsidies are a huge burden on government’s finances. (ii) Opening of the Suez Canal provided a direct and shorter trade route for ships operating between Britain and India and avoided the need to sail around Africa. It intensified British control over India’s foreign trade as it reduced the cost of transportation and made access to the Indian market easier. Hence, the Suez Canal was used by the colonial government as a highway to transport goods between India and Britain. OR (b) (i) Yes. India's inward looking trade policy focused on promoting domestic production and reducing reliance on imports. This was achieved through the imposition of tariffs on imported goods, making imports expensive and thereby reducing their demand in the domestic market. Furthermore, non-tariff barriers were levied to restrict the quantity of imported goods, with an aim to shield the domestic firms from foreign competition. (ii) In the post-reform period, Government of India devised Navratna Policy for Public Sector Undertakings (PSUs) with an objective to improve efficiency, infuse professionalism and enable them to compete more effectively in the liberalised global environment. Under this policy, the government partly disinvested some PSUs. However, some PSUs were granted greater managerial and operational autonomy and allowed PSUs to raise resources by themselves from financial markets.

Marking-scheme solution

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