Which of the following alternative(s) explain the debate regarding the provision of subsidies during 1960’s and 70’s?a)Substituting fertiliser subsidies with seed subsidies as the former was benefitting big farmers than small farmers.b)Substituting fertiliser subsidies with agricultural subsidies as the former was benefitting fertiliser industryand notthe target group.c)Shifting agricultural subsidies from production to consumption and thus benefit the prospective consumersd)All of the above are trueCorrect answer is option 'B'. Can you explain this answer?

Question

Which of the following alternative(s) explain the debate regarding the provision of subsidies during 1960&rsquo;s and 70&rsquo;s?a)Substituting fertiliser subsidies with seed subsidies as the former was benefitting big farmers than small farmers.b)Substituting fertiliser subsidies with agricultural subsidies as the former was benefitting fertiliser industryand notthe target group.c)Shifting agricultural subsidies from production to consumption and thus benefit the prospective consumersd)All of the above are trueCorrect answer is option 'B'. Can you explain this answer?

Answer

1. Economic development: One alternative explanation for the debate on subsidies during the 1960s is the focus on economic development. Supporters of subsidies argued that providing financial support to certain industries or regions would help stimulate economic growth and create jobs. They believed that subsidies could attract investments, promote innovation, and drive industrialization.

2. Market distortions: Another alternative explanation is the concern over market distortions caused by subsidies. Critics argued that subsidies could create artificial advantages for certain industries or companies, leading to unfair competition and inefficiencies in the market. They believed that subsidies could discourage competition, hinder the growth of more efficient industries, and result in the misallocation of resources.

3. Political considerations: Political considerations also played a role in the debate over subsidies during the 1960s. Some politicians may have supported subsidies as a way to gain electoral support or appease influential interest groups. Others may have opposed subsidies due to ideological reasons, such as a belief in free-market principles or concerns about government intervention in the economy.

4. Regional disparities: The debate on subsidies during the 1960s also involved concerns about regional disparities. Some argued that subsidies were necessary to support underdeveloped regions or industries that were struggling to compete with more prosperous areas. They believed that subsidies could help reduce regional inequalities and promote balanced economic growth.

5. Budget constraints: Budget constraints were another factor influencing the debate. Critics of subsidies may have argued that the government could not afford to continue providing financial support to certain industries or regions. They may have raised concerns about the impact of subsidies on public finances, including the potential for increased public debt or the diversion of resources from other important government programs.

6. International competition: The debate on subsidies during the 1960s may have also been influenced by concerns about international competition. Supporters of subsidies may have argued that other countries were providing subsidies to their industries, putting domestic industries at a disadvantage. They may have advocated for subsidies as a way to protect domestic industries and maintain competitiveness in the global market.

Answer

It was argued that eliminating subsidies would increase the inequality between the small and large farmers, thus fertiliser subsidies which benefitted fertiliser industry and big farmers should be substituted with agricultural subsidies.

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