India, Jan. 23 -- India's agricultural subsidy system was created during the period after Independence, when the overriding fear was hunger. Memories of famine were fresh, foreign exchange was scarce, and domestic food production was highly variable. In response, the government formulated a subsidy programme where farmers would be protected from risk through guaranteed prices, cheap inputs, and assured markets, while the nation would secure stable supplies of staple foods. This subsidy architecture which rests on minimum support prices, public procurement, fertilizer subsidies, and subsidized grain distribution continues today and helped India achieve food self-sufficiency and avert mass starvation.

These goals were appropriate when Indi...