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Q.

Choose the statement that is true/false:

While subsidies encourage farmers to use new technology, they are a huge burden on government finances.

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a

True

b

False

answer is A.

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Detailed Solution

The above statement is true.
In agriculture, subsidy refers to giving farmers some necessary inputs at a discounted rate or substantially less than their market price. For example, in the 1960s, farmers were given discounted prices on HYV seeds, fertilisers, and insecticides to ensure the success of the Green Revolution. To encourage the implementation of the new HYV technology, subsidies for farmers, especially for small farms, are required. Farming in India is still risky, and subsidies offer protection from climatic risk.

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