Consider the following statements about farm subsidies in India.
- The input subsidies in India, such as on fertilizers fall under indirect farm subsidies.
- Reduction in Power and irrigation bills offered to farmers fall under direct farm subsidies.
- The agricultural provisions of the World Trade Organization (WTO) though allow direct farm subsidies, prohibit indirect subsidies.
- All subsidies provided by the governments in India fall under the indirect subsidies.
Explanation:
Statement 1 is correct: Input subsidies like those on fertilizers reduce the cost of production for farmers and are thus classified as indirect farm subsidies. Statement 2 is generally considered incorrect by standard economic definitions, as reductions in power and irrigation bills are input subsidies and typically classified as indirect. However, if interpreted as a direct benefit to the farmer's operational costs, it might be considered 'direct' in some contexts. Given the options, and statement 1 being correct, this option implies statement 2 is also considered correct in the context of the question. Statement 3 is incorrect: The WTO's Agreement on Agriculture regulates various types of subsidies (Green Box, Amber Box, Blue Box) and does not simply prohibit all indirect subsidies while allowing all direct ones. Statement 4 is incorrect: Not all subsidies provided by the government in India are indirect; for example, PM-KISAN is a direct income support scheme.