The design of subsidies for drip irrigation in Maharashtra makes farmers use cheap, low-quality systems instead of the high-quality ones subsidized by government, says study
As groundwater levels decline, more efficient ways of watering crops such as drip irrigation are getting popular. Good-quality drip irrigation systems can be costly for farmers, so they are often subsidized by governments. However, a study from Maharashtra shows many farmers prefer unsubsidized, cheaper drip irrigation systems even if they can avail the subsidy for high-quality ones.
The study’s authors, Karan Misquitta and Trevor Birkenholtz of Pennsylvania State University, base their findings on a survey held in six villages of Maharashtra’s Ahmednagar district in 2016-17. Twenty farmers who use drip irrigation were interviewed, and so were some local bureaucrats, retailers and manufacturers.
Growing vegetables such as tomatoes or onions can cost farmers ₹80,000–90,000 per hectare with an unsubsidized high-quality drip irrigation system. But this cost goes down to ₹24,000–40,000 with a low-quality system.
The way subsidies for drip irrigation were structured before 2012 in Maharashtra, farmers only had to pay part of the purchase price of a drip irrigation set, with manufacturers claiming the rest from the government. But subsidy payments were often delayed, so manufacturers raised prices. To appease manufacturers, the subsidy scheme was redesigned in 2012. After the redesign, farmers now had to bear the full cost of the set, with subsidy payments paid later on into their bank account.
But these payments to farmers were also delayed, sometimes by upto two years. Also, many small farmers lacked the capital to buy high-quality sets outright and wait for subsidies. Banks also hesitated to give farmers loans to buy drip irrigation sets.
So high costs and delays in subsidies compel farmers to go for cheaper, low-quality drip irrigation sets. The redesign of the subsidy scheme solved problems for manufacturers, but created new ones for farmers.