- China’s Approach:
- Started procuring at support prices, but stopped for corn and reduced for wheat/rice due to huge stocks/expenditure.
- Consolidated major input subsidies into a single scheme, with direct payment to farmers on per hectare basis ($20.7 billion in 2018-19).
- This gives farmers freedom to produce any crop.
- Inputs are priced at market prices, encouraging optimal resource use.
- India’s Approach:
- Kept on increasing procurement at MSP.
- Spent $27 billion on heavily subsidizing fertilizers, power, irrigation, insurance, and credit.
- Only spent $3 billion on direct income scheme (PM-KISAN).
- This leads to large inefficiency and environmental problems.
- China’s approach is more market-oriented and less distortive.