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Directions: Read the following passage carefully to answer the given question.The Government of India has tried to assure a reasonable return to fertiliser industry so that indigenous production can keep pace with the projected increase in demand of fertilisers. At the same time the farmers have also been assured of a reasonable price so that fertiliser use can be encouraged. The Government efforts to meet the twin policy objectives have resulted in a substantial increase in domestic production as well as consumption of fertiliser but at the same time they have also resulted in an increase in subsidy on fertilisers. A proposal was made to increase the price of fertiliser by 40 percent, and this was subsequently reduced to 30 per cent, except in the case of small and marginal farmers where no increase has been envisaged. The impact on the over all cost of cultivation ranging between 0.1 per cent in case of paddy in Assam to highest of 5.25 in case of wheat in West Bengal, depending on the cropping pattern and level of use of fertilisers. The concern now is (i) whether the price increase will reduce the absolute level of consumption of fertilisers and/or, (ii) whether it will cut down the rate of growth of fertiliser consumption, which is necessary for achieving the food and fibre production?Regarding the issue of price elasticity of fertiliser's demand and output response to price change of fertilisers, the recent studies do not give a consistent pattern of output response to price change. The estimated elasticities of rice and wheat are not consistent when time series regression analysis and yield response functions are used. Further, the bias in the selection of elasticities renders them undependable to draw any general conclusions.Besides, relative price movements are expected to be lower in controlled markets than in free markets and hence the estimated elasticities would be upwardly biased when compared with the true demand elasticities.On the other hand, it is argued that price variable is having a limited variation while demand and supply factors determine the actual use of fertiliser by farmers. One can, however, legitimately expect that the increased prices of fertiliser would remove some of the inefficiencies in its use, but this would be limited to those high fertiliser consuming regions. It is noted that in terms of total production, the developed regions still hold the key as the levels of productivity are much higher in these regions when compared to backward regions. Therefore, high fertiliser prices may not affect the output to the extent it is feared. Thus, on the whole, the removal of subsidies may work out to be partially beneficial.An immediate cut in subsidy may (i) trigger the domestic inflation rate which is already conspicuous and (ii) make our agricultural products less competitive in the international markets. The latter may defeat our new export-oriented policies, while the former leads to social unrest. However, the protagonists of new policies perceive these problems as of short run nature. Though the final results of these policies are expected to take 2–3 years to materialise, at the moment these changes are causing ripples in the economy.Given the dominance of small and marginal farmer in the agricultural sector, the fact that the consumption of plant nutrients declined by 8.2 per cent for small farms while it has increased by 6.5 per cent on large farms, when fertiliser prices went up by 38 per cent, is a matter of concern. It shows that the small farmers are the first victims of the cut in these subsidies, at least in the short run. The main problems faced by these farmers are two–fold:Given their low marketable surpluses and lack of capacity to withhold the stocks, they are not in a position to avail the higher output prices which can compensate for higher input prices. Even if they are in a position to do so, the low level of resources availability during the crop season may force them to cut down fertiliser use. This, in turn, would result in decline in productivity and hence marketable surplus.Their subsistence nature would result in paying higher amounts for their consumption needs in the event of an increase in input prices. Therefore, the removal of subsidies may further intensify their non–viability. The pattern of growth in agricultural sector in the new technology phase has created chronic regional imbalances. Part of this can certainly be attributed to the region–specific structural characteristics, but none can deny the failure of policies in minimising the gap between regions. Among the various policy instruments, input subsidies should have been used carefully towards this purpose. If the production performance was regionally even and robust to withstand the reduction in input intensity, then there would have been a case to withdraw the input subsidies.Indian agriculture has always been a very unequal affair. Even before colonisation, there was rampant inequality arising from the feudal structures of agriculture and regional differences. Under British rule many of these inequalities were further exacerbated through heavy taxation of even the smallest farmer. Despite half a century of independence, these inequalities are still getting worse. The arrival of the World Bank and International Monetary Fund strengthened the hand of those within the Indian government who believe that export–oriented agriculture and free trade would 'lift all ships' out of poverty despite the lack of evidence that this has worked in India.Therefore, it is clear that the inequalities in farm sector would not only continue but may tend to widen in the changing scenario. Similarly, the inequalities between developed and backward regions would also increase as the latter, besides being burdened with the price rise, also suffer from inefficient usage of fertiliser consequent to the adverse climatic conditions and lack of resources.Q. Higher fertiliser prices may not affect output becausea)developed regions influence total output much moreb)increased fertiliser prices cannot remove inefficiencies in fertiliser pricesc)price variable is having a limited variationd)price elasticity of demand does not work in an administered price situatione)removal of subsidies may work out to be partially beneficialCorrect answer is option 'A'. Can you explain this answer? for Banking Exams 2024 is part of Banking Exams preparation. The Question and answers have been prepared according to the Banking Exams exam syllabus. Information about Directions: Read the following passage carefully to answer the given question.The Government of India has tried to assure a reasonable return to fertiliser industry so that indigenous production can keep pace with the projected increase in demand of fertilisers. At the same time the farmers have also been assured of a reasonable price so that fertiliser use can be encouraged. The Government efforts to meet the twin policy objectives have resulted in a substantial increase in domestic production as well as consumption of fertiliser but at the same time they have also resulted in an increase in subsidy on fertilisers. A proposal was made to increase the price of fertiliser by 40 percent, and this was subsequently reduced to 30 per cent, except in the case of small and marginal farmers where no increase has been envisaged. The impact on the over all cost of cultivation ranging between 0.1 per cent in case of paddy in Assam to highest of 5.25 in case of wheat in West Bengal, depending on the cropping pattern and level of use of fertilisers. The concern now is (i) whether the price increase will reduce the absolute level of consumption of fertilisers and/or, (ii) whether it will cut down the rate of growth of fertiliser consumption, which is necessary for achieving the food and fibre production?Regarding the issue of price elasticity of fertiliser's demand and output response to price change of fertilisers, the recent studies do not give a consistent pattern of output response to price change. The estimated elasticities of rice and wheat are not consistent when time series regression analysis and yield response functions are used. Further, the bias in the selection of elasticities renders them undependable to draw any general conclusions.Besides, relative price movements are expected to be lower in controlled markets than in free markets and hence the estimated elasticities would be upwardly biased when compared with the true demand elasticities.On the other hand, it is argued that price variable is having a limited variation while demand and supply factors determine the actual use of fertiliser by farmers. One can, however, legitimately expect that the increased prices of fertiliser would remove some of the inefficiencies in its use, but this would be limited to those high fertiliser consuming regions. It is noted that in terms of total production, the developed regions still hold the key as the levels of productivity are much higher in these regions when compared to backward regions. Therefore, high fertiliser prices may not affect the output to the extent it is feared. Thus, on the whole, the removal of subsidies may work out to be partially beneficial.An immediate cut in subsidy may (i) trigger the domestic inflation rate which is already conspicuous and (ii) make our agricultural products less competitive in the international markets. The latter may defeat our new export-oriented policies, while the former leads to social unrest. However, the protagonists of new policies perceive these problems as of short run nature. Though the final results of these policies are expected to take 2–3 years to materialise, at the moment these changes are causing ripples in the economy.Given the dominance of small and marginal farmer in the agricultural sector, the fact that the consumption of plant nutrients declined by 8.2 per cent for small farms while it has increased by 6.5 per cent on large farms, when fertiliser prices went up by 38 per cent, is a matter of concern. It shows that the small farmers are the first victims of the cut in these subsidies, at least in the short run. The main problems faced by these farmers are two–fold:Given their low marketable surpluses and lack of capacity to withhold the stocks, they are not in a position to avail the higher output prices which can compensate for higher input prices. Even if they are in a position to do so, the low level of resources availability during the crop season may force them to cut down fertiliser use. This, in turn, would result in decline in productivity and hence marketable surplus.Their subsistence nature would result in paying higher amounts for their consumption needs in the event of an increase in input prices. Therefore, the removal of subsidies may further intensify their non–viability. The pattern of growth in agricultural sector in the new technology phase has created chronic regional imbalances. Part of this can certainly be attributed to the region–specific structural characteristics, but none can deny the failure of policies in minimising the gap between regions. Among the various policy instruments, input subsidies should have been used carefully towards this purpose. If the production performance was regionally even and robust to withstand the reduction in input intensity, then there would have been a case to withdraw the input subsidies.Indian agriculture has always been a very unequal affair. Even before colonisation, there was rampant inequality arising from the feudal structures of agriculture and regional differences. Under British rule many of these inequalities were further exacerbated through heavy taxation of even the smallest farmer. Despite half a century of independence, these inequalities are still getting worse. The arrival of the World Bank and International Monetary Fund strengthened the hand of those within the Indian government who believe that export–oriented agriculture and free trade would 'lift all ships' out of poverty despite the lack of evidence that this has worked in India.Therefore, it is clear that the inequalities in farm sector would not only continue but may tend to widen in the changing scenario. Similarly, the inequalities between developed and backward regions would also increase as the latter, besides being burdened with the price rise, also suffer from inefficient usage of fertiliser consequent to the adverse climatic conditions and lack of resources.Q. Higher fertiliser prices may not affect output becausea)developed regions influence total output much moreb)increased fertiliser prices cannot remove inefficiencies in fertiliser pricesc)price variable is having a limited variationd)price elasticity of demand does not work in an administered price situatione)removal of subsidies may work out to be partially beneficialCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Banking Exams 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: Read the following passage carefully to answer the given question.The Government of India has tried to assure a reasonable return to fertiliser industry so that indigenous production can keep pace with the projected increase in demand of fertilisers. At the same time the farmers have also been assured of a reasonable price so that fertiliser use can be encouraged. The Government efforts to meet the twin policy objectives have resulted in a substantial increase in domestic production as well as consumption of fertiliser but at the same time they have also resulted in an increase in subsidy on fertilisers. A proposal was made to increase the price of fertiliser by 40 percent, and this was subsequently reduced to 30 per cent, except in the case of small and marginal farmers where no increase has been envisaged. The impact on the over all cost of cultivation ranging between 0.1 per cent in case of paddy in Assam to highest of 5.25 in case of wheat in West Bengal, depending on the cropping pattern and level of use of fertilisers. The concern now is (i) whether the price increase will reduce the absolute level of consumption of fertilisers and/or, (ii) whether it will cut down the rate of growth of fertiliser consumption, which is necessary for achieving the food and fibre production?Regarding the issue of price elasticity of fertiliser's demand and output response to price change of fertilisers, the recent studies do not give a consistent pattern of output response to price change. The estimated elasticities of rice and wheat are not consistent when time series regression analysis and yield response functions are used. Further, the bias in the selection of elasticities renders them undependable to draw any general conclusions.Besides, relative price movements are expected to be lower in controlled markets than in free markets and hence the estimated elasticities would be upwardly biased when compared with the true demand elasticities.On the other hand, it is argued that price variable is having a limited variation while demand and supply factors determine the actual use of fertiliser by farmers. One can, however, legitimately expect that the increased prices of fertiliser would remove some of the inefficiencies in its use, but this would be limited to those high fertiliser consuming regions. It is noted that in terms of total production, the developed regions still hold the key as the levels of productivity are much higher in these regions when compared to backward regions. Therefore, high fertiliser prices may not affect the output to the extent it is feared. Thus, on the whole, the removal of subsidies may work out to be partially beneficial.An immediate cut in subsidy may (i) trigger the domestic inflation rate which is already conspicuous and (ii) make our agricultural products less competitive in the international markets. The latter may defeat our new export-oriented policies, while the former leads to social unrest. However, the protagonists of new policies perceive these problems as of short run nature. Though the final results of these policies are expected to take 2–3 years to materialise, at the moment these changes are causing ripples in the economy.Given the dominance of small and marginal farmer in the agricultural sector, the fact that the consumption of plant nutrients declined by 8.2 per cent for small farms while it has increased by 6.5 per cent on large farms, when fertiliser prices went up by 38 per cent, is a matter of concern. It shows that the small farmers are the first victims of the cut in these subsidies, at least in the short run. The main problems faced by these farmers are two–fold:Given their low marketable surpluses and lack of capacity to withhold the stocks, they are not in a position to avail the higher output prices which can compensate for higher input prices. Even if they are in a position to do so, the low level of resources availability during the crop season may force them to cut down fertiliser use. This, in turn, would result in decline in productivity and hence marketable surplus.Their subsistence nature would result in paying higher amounts for their consumption needs in the event of an increase in input prices. Therefore, the removal of subsidies may further intensify their non–viability. The pattern of growth in agricultural sector in the new technology phase has created chronic regional imbalances. Part of this can certainly be attributed to the region–specific structural characteristics, but none can deny the failure of policies in minimising the gap between regions. Among the various policy instruments, input subsidies should have been used carefully towards this purpose. If the production performance was regionally even and robust to withstand the reduction in input intensity, then there would have been a case to withdraw the input subsidies.Indian agriculture has always been a very unequal affair. Even before colonisation, there was rampant inequality arising from the feudal structures of agriculture and regional differences. Under British rule many of these inequalities were further exacerbated through heavy taxation of even the smallest farmer. Despite half a century of independence, these inequalities are still getting worse. The arrival of the World Bank and International Monetary Fund strengthened the hand of those within the Indian government who believe that export–oriented agriculture and free trade would 'lift all ships' out of poverty despite the lack of evidence that this has worked in India.Therefore, it is clear that the inequalities in farm sector would not only continue but may tend to widen in the changing scenario. Similarly, the inequalities between developed and backward regions would also increase as the latter, besides being burdened with the price rise, also suffer from inefficient usage of fertiliser consequent to the adverse climatic conditions and lack of resources.Q. Higher fertiliser prices may not affect output becausea)developed regions influence total output much moreb)increased fertiliser prices cannot remove inefficiencies in fertiliser pricesc)price variable is having a limited variationd)price elasticity of demand does not work in an administered price situatione)removal of subsidies may work out to be partially beneficialCorrect answer is option 'A'. Can you explain this answer?.

Solutions for Directions: Read the following passage carefully to answer the given question.The Government of India has tried to assure a reasonable return to fertiliser industry so that indigenous production can keep pace with the projected increase in demand of fertilisers. At the same time the farmers have also been assured of a reasonable price so that fertiliser use can be encouraged. The Government efforts to meet the twin policy objectives have resulted in a substantial increase in domestic production as well as consumption of fertiliser but at the same time they have also resulted in an increase in subsidy on fertilisers. A proposal was made to increase the price of fertiliser by 40 percent, and this was subsequently reduced to 30 per cent, except in the case of small and marginal farmers where no increase has been envisaged. The impact on the over all cost of cultivation ranging between 0.1 per cent in case of paddy in Assam to highest of 5.25 in case of wheat in West Bengal, depending on the cropping pattern and level of use of fertilisers. The concern now is (i) whether the price increase will reduce the absolute level of consumption of fertilisers and/or, (ii) whether it will cut down the rate of growth of fertiliser consumption, which is necessary for achieving the food and fibre production?Regarding the issue of price elasticity of fertiliser's demand and output response to price change of fertilisers, the recent studies do not give a consistent pattern of output response to price change. The estimated elasticities of rice and wheat are not consistent when time series regression analysis and yield response functions are used. Further, the bias in the selection of elasticities renders them undependable to draw any general conclusions.Besides, relative price movements are expected to be lower in controlled markets than in free markets and hence the estimated elasticities would be upwardly biased when compared with the true demand elasticities.On the other hand, it is argued that price variable is having a limited variation while demand and supply factors determine the actual use of fertiliser by farmers. One can, however, legitimately expect that the increased prices of fertiliser would remove some of the inefficiencies in its use, but this would be limited to those high fertiliser consuming regions. It is noted that in terms of total production, the developed regions still hold the key as the levels of productivity are much higher in these regions when compared to backward regions. Therefore, high fertiliser prices may not affect the output to the extent it is feared. Thus, on the whole, the removal of subsidies may work out to be partially beneficial.An immediate cut in subsidy may (i) trigger the domestic inflation rate which is already conspicuous and (ii) make our agricultural products less competitive in the international markets. The latter may defeat our new export-oriented policies, while the former leads to social unrest. However, the protagonists of new policies perceive these problems as of short run nature. Though the final results of these policies are expected to take 2–3 years to materialise, at the moment these changes are causing ripples in the economy.Given the dominance of small and marginal farmer in the agricultural sector, the fact that the consumption of plant nutrients declined by 8.2 per cent for small farms while it has increased by 6.5 per cent on large farms, when fertiliser prices went up by 38 per cent, is a matter of concern. It shows that the small farmers are the first victims of the cut in these subsidies, at least in the short run. The main problems faced by these farmers are two–fold:Given their low marketable surpluses and lack of capacity to withhold the stocks, they are not in a position to avail the higher output prices which can compensate for higher input prices. Even if they are in a position to do so, the low level of resources availability during the crop season may force them to cut down fertiliser use. This, in turn, would result in decline in productivity and hence marketable surplus.Their subsistence nature would result in paying higher amounts for their consumption needs in the event of an increase in input prices. Therefore, the removal of subsidies may further intensify their non–viability. The pattern of growth in agricultural sector in the new technology phase has created chronic regional imbalances. Part of this can certainly be attributed to the region–specific structural characteristics, but none can deny the failure of policies in minimising the gap between regions. Among the various policy instruments, input subsidies should have been used carefully towards this purpose. If the production performance was regionally even and robust to withstand the reduction in input intensity, then there would have been a case to withdraw the input subsidies.Indian agriculture has always been a very unequal affair. Even before colonisation, there was rampant inequality arising from the feudal structures of agriculture and regional differences. Under British rule many of these inequalities were further exacerbated through heavy taxation of even the smallest farmer. Despite half a century of independence, these inequalities are still getting worse. The arrival of the World Bank and International Monetary Fund strengthened the hand of those within the Indian government who believe that export–oriented agriculture and free trade would 'lift all ships' out of poverty despite the lack of evidence that this has worked in India.Therefore, it is clear that the inequalities in farm sector would not only continue but may tend to widen in the changing scenario. Similarly, the inequalities between developed and backward regions would also increase as the latter, besides being burdened with the price rise, also suffer from inefficient usage of fertiliser consequent to the adverse climatic conditions and lack of resources.Q. Higher fertiliser prices may not affect output becausea)developed regions influence total output much moreb)increased fertiliser prices cannot remove inefficiencies in fertiliser pricesc)price variable is having a limited variationd)price elasticity of demand does not work in an administered price situatione)removal of subsidies may work out to be partially beneficialCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Banking Exams. Download more important topics, notes, lectures and mock test series for Banking Exams Exam by signing up for free.

Here you can find the meaning of Directions: Read the following passage carefully to answer the given question.The Government of India has tried to assure a reasonable return to fertiliser industry so that indigenous production can keep pace with the projected increase in demand of fertilisers. At the same time the farmers have also been assured of a reasonable price so that fertiliser use can be encouraged. The Government efforts to meet the twin policy objectives have resulted in a substantial increase in domestic production as well as consumption of fertiliser but at the same time they have also resulted in an increase in subsidy on fertilisers. A proposal was made to increase the price of fertiliser by 40 percent, and this was subsequently reduced to 30 per cent, except in the case of small and marginal farmers where no increase has been envisaged. The impact on the over all cost of cultivation ranging between 0.1 per cent in case of paddy in Assam to highest of 5.25 in case of wheat in West Bengal, depending on the cropping pattern and level of use of fertilisers. The concern now is (i) whether the price increase will reduce the absolute level of consumption of fertilisers and/or, (ii) whether it will cut down the rate of growth of fertiliser consumption, which is necessary for achieving the food and fibre production?Regarding the issue of price elasticity of fertiliser's demand and output response to price change of fertilisers, the recent studies do not give a consistent pattern of output response to price change. The estimated elasticities of rice and wheat are not consistent when time series regression analysis and yield response functions are used. Further, the bias in the selection of elasticities renders them undependable to draw any general conclusions.Besides, relative price movements are expected to be lower in controlled markets than in free markets and hence the estimated elasticities would be upwardly biased when compared with the true demand elasticities.On the other hand, it is argued that price variable is having a limited variation while demand and supply factors determine the actual use of fertiliser by farmers. One can, however, legitimately expect that the increased prices of fertiliser would remove some of the inefficiencies in its use, but this would be limited to those high fertiliser consuming regions. It is noted that in terms of total production, the developed regions still hold the key as the levels of productivity are much higher in these regions when compared to backward regions. Therefore, high fertiliser prices may not affect the output to the extent it is feared. Thus, on the whole, the removal of subsidies may work out to be partially beneficial.An immediate cut in subsidy may (i) trigger the domestic inflation rate which is already conspicuous and (ii) make our agricultural products less competitive in the international markets. The latter may defeat our new export-oriented policies, while the former leads to social unrest. However, the protagonists of new policies perceive these problems as of short run nature. Though the final results of these policies are expected to take 2–3 years to materialise, at the moment these changes are causing ripples in the economy.Given the dominance of small and marginal farmer in the agricultural sector, the fact that the consumption of plant nutrients declined by 8.2 per cent for small farms while it has increased by 6.5 per cent on large farms, when fertiliser prices went up by 38 per cent, is a matter of concern. It shows that the small farmers are the first victims of the cut in these subsidies, at least in the short run. The main problems faced by these farmers are two–fold:Given their low marketable surpluses and lack of capacity to withhold the stocks, they are not in a position to avail the higher output prices which can compensate for higher input prices. Even if they are in a position to do so, the low level of resources availability during the crop season may force them to cut down fertiliser use. This, in turn, would result in decline in productivity and hence marketable surplus.Their subsistence nature would result in paying higher amounts for their consumption needs in the event of an increase in input prices. Therefore, the removal of subsidies may further intensify their non–viability. The pattern of growth in agricultural sector in the new technology phase has created chronic regional imbalances. Part of this can certainly be attributed to the region–specific structural characteristics, but none can deny the failure of policies in minimising the gap between regions. Among the various policy instruments, input subsidies should have been used carefully towards this purpose. If the production performance was regionally even and robust to withstand the reduction in input intensity, then there would have been a case to withdraw the input subsidies.Indian agriculture has always been a very unequal affair. Even before colonisation, there was rampant inequality arising from the feudal structures of agriculture and regional differences. Under British rule many of these inequalities were further exacerbated through heavy taxation of even the smallest farmer. Despite half a century of independence, these inequalities are still getting worse. The arrival of the World Bank and International Monetary Fund strengthened the hand of those within the Indian government who believe that export–oriented agriculture and free trade would 'lift all ships' out of poverty despite the lack of evidence that this has worked in India.Therefore, it is clear that the inequalities in farm sector would not only continue but may tend to widen in the changing scenario. Similarly, the inequalities between developed and backward regions would also increase as the latter, besides being burdened with the price rise, also suffer from inefficient usage of fertiliser consequent to the adverse climatic conditions and lack of resources.Q. Higher fertiliser prices may not affect output becausea)developed regions influence total output much moreb)increased fertiliser prices cannot remove inefficiencies in fertiliser pricesc)price variable is having a limited variationd)price elasticity of demand does not work in an administered price situatione)removal of subsidies may work out to be partially beneficialCorrect answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Directions: Read the following passage carefully to answer the given question.The Government of India has tried to assure a reasonable return to fertiliser industry so that indigenous production can keep pace with the projected increase in demand of fertilisers. At the same time the farmers have also been assured of a reasonable price so that fertiliser use can be encouraged. The Government efforts to meet the twin policy objectives have resulted in a substantial increase in domestic production as well as consumption of fertiliser but at the same time they have also resulted in an increase in subsidy on fertilisers. A proposal was made to increase the price of fertiliser by 40 percent, and this was subsequently reduced to 30 per cent, except in the case of small and marginal farmers where no increase has been envisaged. The impact on the over all cost of cultivation ranging between 0.1 per cent in case of paddy in Assam to highest of 5.25 in case of wheat in West Bengal, depending on the cropping pattern and level of use of fertilisers. The concern now is (i) whether the price increase will reduce the absolute level of consumption of fertilisers and/or, (ii) whether it will cut down the rate of growth of fertiliser consumption, which is necessary for achieving the food and fibre production?Regarding the issue of price elasticity of fertiliser's demand and output response to price change of fertilisers, the recent studies do not give a consistent pattern of output response to price change. The estimated elasticities of rice and wheat are not consistent when time series regression analysis and yield response functions are used. Further, the bias in the selection of elasticities renders them undependable to draw any general conclusions.Besides, relative price movements are expected to be lower in controlled markets than in free markets and hence the estimated elasticities would be upwardly biased when compared with the true demand elasticities.On the other hand, it is argued that price variable is having a limited variation while demand and supply factors determine the actual use of fertiliser by farmers. One can, however, legitimately expect that the increased prices of fertiliser would remove some of the inefficiencies in its use, but this would be limited to those high fertiliser consuming regions. It is noted that in terms of total production, the developed regions still hold the key as the levels of productivity are much higher in these regions when compared to backward regions. Therefore, high fertiliser prices may not affect the output to the extent it is feared. Thus, on the whole, the removal of subsidies may work out to be partially beneficial.An immediate cut in subsidy may (i) trigger the domestic inflation rate which is already conspicuous and (ii) make our agricultural products less competitive in the international markets. The latter may defeat our new export-oriented policies, while the former leads to social unrest. However, the protagonists of new policies perceive these problems as of short run nature. Though the final results of these policies are expected to take 2–3 years to materialise, at the moment these changes are causing ripples in the economy.Given the dominance of small and marginal farmer in the agricultural sector, the fact that the consumption of plant nutrients declined by 8.2 per cent for small farms while it has increased by 6.5 per cent on large farms, when fertiliser prices went up by 38 per cent, is a matter of concern. It shows that the small farmers are the first victims of the cut in these subsidies, at least in the short run. The main problems faced by these farmers are two–fold:Given their low marketable surpluses and lack of capacity to withhold the stocks, they are not in a position to avail the higher output prices which can compensate for higher input prices. Even if they are in a position to do so, the low level of resources availability during the crop season may force them to cut down fertiliser use. This, in turn, would result in decline in productivity and hence marketable surplus.Their subsistence nature would result in paying higher amounts for their consumption needs in the event of an increase in input prices. Therefore, the removal of subsidies may further intensify their non–viability. The pattern of growth in agricultural sector in the new technology phase has created chronic regional imbalances. Part of this can certainly be attributed to the region–specific structural characteristics, but none can deny the failure of policies in minimising the gap between regions. Among the various policy instruments, input subsidies should have been used carefully towards this purpose. If the production performance was regionally even and robust to withstand the reduction in input intensity, then there would have been a case to withdraw the input subsidies.Indian agriculture has always been a very unequal affair. Even before colonisation, there was rampant inequality arising from the feudal structures of agriculture and regional differences. Under British rule many of these inequalities were further exacerbated through heavy taxation of even the smallest farmer. Despite half a century of independence, these inequalities are still getting worse. The arrival of the World Bank and International Monetary Fund strengthened the hand of those within the Indian government who believe that export–oriented agriculture and free trade would 'lift all ships' out of poverty despite the lack of evidence that this has worked in India.Therefore, it is clear that the inequalities in farm sector would not only continue but may tend to widen in the changing scenario. Similarly, the inequalities between developed and backward regions would also increase as the latter, besides being burdened with the price rise, also suffer from inefficient usage of fertiliser consequent to the adverse climatic conditions and lack of resources.Q. Higher fertiliser prices may not affect output becausea)developed regions influence total output much moreb)increased fertiliser prices cannot remove inefficiencies in fertiliser pricesc)price variable is having a limited variationd)price elasticity of demand does not work in an administered price situatione)removal of subsidies may work out to be partially beneficialCorrect answer is option 'A'. Can you explain this answer?, a detailed solution for Directions: Read the following passage carefully to answer the given question.The Government of India has tried to assure a reasonable return to fertiliser industry so that indigenous production can keep pace with the projected increase in demand of fertilisers. At the same time the farmers have also been assured of a reasonable price so that fertiliser use can be encouraged. The Government efforts to meet the twin policy objectives have resulted in a substantial increase in domestic production as well as consumption of fertiliser but at the same time they have also resulted in an increase in subsidy on fertilisers. A proposal was made to increase the price of fertiliser by 40 percent, and this was subsequently reduced to 30 per cent, except in the case of small and marginal farmers where no increase has been envisaged. The impact on the over all cost of cultivation ranging between 0.1 per cent in case of paddy in Assam to highest of 5.25 in case of wheat in West Bengal, depending on the cropping pattern and level of use of fertilisers. The concern now is (i) whether the price increase will reduce the absolute level of consumption of fertilisers and/or, (ii) whether it will cut down the rate of growth of fertiliser consumption, which is necessary for achieving the food and fibre production?Regarding the issue of price elasticity of fertiliser's demand and output response to price change of fertilisers, the recent studies do not give a consistent pattern of output response to price change. The estimated elasticities of rice and wheat are not consistent when time series regression analysis and yield response functions are used. Further, the bias in the selection of elasticities renders them undependable to draw any general conclusions.Besides, relative price movements are expected to be lower in controlled markets than in free markets and hence the estimated elasticities would be upwardly biased when compared with the true demand elasticities.On the other hand, it is argued that price variable is having a limited variation while demand and supply factors determine the actual use of fertiliser by farmers. One can, however, legitimately expect that the increased prices of fertiliser would remove some of the inefficiencies in its use, but this would be limited to those high fertiliser consuming regions. It is noted that in terms of total production, the developed regions still hold the key as the levels of productivity are much higher in these regions when compared to backward regions. Therefore, high fertiliser prices may not affect the output to the extent it is feared. Thus, on the whole, the removal of subsidies may work out to be partially beneficial.An immediate cut in subsidy may (i) trigger the domestic inflation rate which is already conspicuous and (ii) make our agricultural products less competitive in the international markets. The latter may defeat our new export-oriented policies, while the former leads to social unrest. However, the protagonists of new policies perceive these problems as of short run nature. Though the final results of these policies are expected to take 2–3 years to materialise, at the moment these changes are causing ripples in the economy.Given the dominance of small and marginal farmer in the agricultural sector, the fact that the consumption of plant nutrients declined by 8.2 per cent for small farms while it has increased by 6.5 per cent on large farms, when fertiliser prices went up by 38 per cent, is a matter of concern. It shows that the small farmers are the first victims of the cut in these subsidies, at least in the short run. The main problems faced by these farmers are two–fold:Given their low marketable surpluses and lack of capacity to withhold the stocks, they are not in a position to avail the higher output prices which can compensate for higher input prices. Even if they are in a position to do so, the low level of resources availability during the crop season may force them to cut down fertiliser use. This, in turn, would result in decline in productivity and hence marketable surplus.Their subsistence nature would result in paying higher amounts for their consumption needs in the event of an increase in input prices. Therefore, the removal of subsidies may further intensify their non–viability. The pattern of growth in agricultural sector in the new technology phase has created chronic regional imbalances. Part of this can certainly be attributed to the region–specific structural characteristics, but none can deny the failure of policies in minimising the gap between regions. Among the various policy instruments, input subsidies should have been used carefully towards this purpose. If the production performance was regionally even and robust to withstand the reduction in input intensity, then there would have been a case to withdraw the input subsidies.Indian agriculture has always been a very unequal affair. Even before colonisation, there was rampant inequality arising from the feudal structures of agriculture and regional differences. Under British rule many of these inequalities were further exacerbated through heavy taxation of even the smallest farmer. Despite half a century of independence, these inequalities are still getting worse. The arrival of the World Bank and International Monetary Fund strengthened the hand of those within the Indian government who believe that export–oriented agriculture and free trade would 'lift all ships' out of poverty despite the lack of evidence that this has worked in India.Therefore, it is clear that the inequalities in farm sector would not only continue but may tend to widen in the changing scenario. Similarly, the inequalities between developed and backward regions would also increase as the latter, besides being burdened with the price rise, also suffer from inefficient usage of fertiliser consequent to the adverse climatic conditions and lack of resources.Q. Higher fertiliser prices may not affect output becausea)developed regions influence total output much moreb)increased fertiliser prices cannot remove inefficiencies in fertiliser pricesc)price variable is having a limited variationd)price elasticity of demand does not work in an administered price situatione)removal of subsidies may work out to be partially beneficialCorrect answer is option 'A'. Can you explain this answer? has been provided alongside types of Directions: Read the following passage carefully to answer the given question.The Government of India has tried to assure a reasonable return to fertiliser industry so that indigenous production can keep pace with the projected increase in demand of fertilisers. At the same time the farmers have also been assured of a reasonable price so that fertiliser use can be encouraged. The Government efforts to meet the twin policy objectives have resulted in a substantial increase in domestic production as well as consumption of fertiliser but at the same time they have also resulted in an increase in subsidy on fertilisers. A proposal was made to increase the price of fertiliser by 40 percent, and this was subsequently reduced to 30 per cent, except in the case of small and marginal farmers where no increase has been envisaged. The impact on the over all cost of cultivation ranging between 0.1 per cent in case of paddy in Assam to highest of 5.25 in case of wheat in West Bengal, depending on the cropping pattern and level of use of fertilisers. The concern now is (i) whether the price increase will reduce the absolute level of consumption of fertilisers and/or, (ii) whether it will cut down the rate of growth of fertiliser consumption, which is necessary for achieving the food and fibre production?Regarding the issue of price elasticity of fertiliser's demand and output response to price change of fertilisers, the recent studies do not give a consistent pattern of output response to price change. The estimated elasticities of rice and wheat are not consistent when time series regression analysis and yield response functions are used. Further, the bias in the selection of elasticities renders them undependable to draw any general conclusions.Besides, relative price movements are expected to be lower in controlled markets than in free markets and hence the estimated elasticities would be upwardly biased when compared with the true demand elasticities.On the other hand, it is argued that price variable is having a limited variation while demand and supply factors determine the actual use of fertiliser by farmers. One can, however, legitimately expect that the increased prices of fertiliser would remove some of the inefficiencies in its use, but this would be limited to those high fertiliser consuming regions. It is noted that in terms of total production, the developed regions still hold the key as the levels of productivity are much higher in these regions when compared to backward regions. Therefore, high fertiliser prices may not affect the output to the extent it is feared. Thus, on the whole, the removal of subsidies may work out to be partially beneficial.An immediate cut in subsidy may (i) trigger the domestic inflation rate which is already conspicuous and (ii) make our agricultural products less competitive in the international markets. The latter may defeat our new export-oriented policies, while the former leads to social unrest. However, the protagonists of new policies perceive these problems as of short run nature. Though the final results of these policies are expected to take 2–3 years to materialise, at the moment these changes are causing ripples in the economy.Given the dominance of small and marginal farmer in the agricultural sector, the fact that the consumption of plant nutrients declined by 8.2 per cent for small farms while it has increased by 6.5 per cent on large farms, when fertiliser prices went up by 38 per cent, is a matter of concern. It shows that the small farmers are the first victims of the cut in these subsidies, at least in the short run. The main problems faced by these farmers are two–fold:Given their low marketable surpluses and lack of capacity to withhold the stocks, they are not in a position to avail the higher output prices which can compensate for higher input prices. Even if they are in a position to do so, the low level of resources availability during the crop season may force them to cut down fertiliser use. This, in turn, would result in decline in productivity and hence marketable surplus.Their subsistence nature would result in paying higher amounts for their consumption needs in the event of an increase in input prices. Therefore, the removal of subsidies may further intensify their non–viability. The pattern of growth in agricultural sector in the new technology phase has created chronic regional imbalances. Part of this can certainly be attributed to the region–specific structural characteristics, but none can deny the failure of policies in minimising the gap between regions. Among the various policy instruments, input subsidies should have been used carefully towards this purpose. If the production performance was regionally even and robust to withstand the reduction in input intensity, then there would have been a case to withdraw the input subsidies.Indian agriculture has always been a very unequal affair. Even before colonisation, there was rampant inequality arising from the feudal structures of agriculture and regional differences. Under British rule many of these inequalities were further exacerbated through heavy taxation of even the smallest farmer. Despite half a century of independence, these inequalities are still getting worse. The arrival of the World Bank and International Monetary Fund strengthened the hand of those within the Indian government who believe that export–oriented agriculture and free trade would 'lift all ships' out of poverty despite the lack of evidence that this has worked in India.Therefore, it is clear that the inequalities in farm sector would not only continue but may tend to widen in the changing scenario. Similarly, the inequalities between developed and backward regions would also increase as the latter, besides being burdened with the price rise, also suffer from inefficient usage of fertiliser consequent to the adverse climatic conditions and lack of resources.Q. Higher fertiliser prices may not affect output becausea)developed regions influence total output much moreb)increased fertiliser prices cannot remove inefficiencies in fertiliser pricesc)price variable is having a limited variationd)price elasticity of demand does not work in an administered price situatione)removal of subsidies may work out to be partially beneficialCorrect answer is option 'A'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Directions: Read the following passage carefully to answer the given question.The Government of India has tried to assure a reasonable return to fertiliser industry so that indigenous production can keep pace with the projected increase in demand of fertilisers. At the same time the farmers have also been assured of a reasonable price so that fertiliser use can be encouraged. The Government efforts to meet the twin policy objectives have resulted in a substantial increase in domestic production as well as consumption of fertiliser but at the same time they have also resulted in an increase in subsidy on fertilisers. A proposal was made to increase the price of fertiliser by 40 percent, and this was subsequently reduced to 30 per cent, except in the case of small and marginal farmers where no increase has been envisaged. The impact on the over all cost of cultivation ranging between 0.1 per cent in case of paddy in Assam to highest of 5.25 in case of wheat in West Bengal, depending on the cropping pattern and level of use of fertilisers. The concern now is (i) whether the price increase will reduce the absolute level of consumption of fertilisers and/or, (ii) whether it will cut down the rate of growth of fertiliser consumption, which is necessary for achieving the food and fibre production?Regarding the issue of price elasticity of fertiliser's demand and output response to price change of fertilisers, the recent studies do not give a consistent pattern of output response to price change. The estimated elasticities of rice and wheat are not consistent when time series regression analysis and yield response functions are used. Further, the bias in the selection of elasticities renders them undependable to draw any general conclusions.Besides, relative price movements are expected to be lower in controlled markets than in free markets and hence the estimated elasticities would be upwardly biased when compared with the true demand elasticities.On the other hand, it is argued that price variable is having a limited variation while demand and supply factors determine the actual use of fertiliser by farmers. One can, however, legitimately expect that the increased prices of fertiliser would remove some of the inefficiencies in its use, but this would be limited to those high fertiliser consuming regions. It is noted that in terms of total production, the developed regions still hold the key as the levels of productivity are much higher in these regions when compared to backward regions. Therefore, high fertiliser prices may not affect the output to the extent it is feared. Thus, on the whole, the removal of subsidies may work out to be partially beneficial.An immediate cut in subsidy may (i) trigger the domestic inflation rate which is already conspicuous and (ii) make our agricultural products less competitive in the international markets. The latter may defeat our new export-oriented policies, while the former leads to social unrest. However, the protagonists of new policies perceive these problems as of short run nature. Though the final results of these policies are expected to take 2–3 years to materialise, at the moment these changes are causing ripples in the economy.Given the dominance of small and marginal farmer in the agricultural sector, the fact that the consumption of plant nutrients declined by 8.2 per cent for small farms while it has increased by 6.5 per cent on large farms, when fertiliser prices went up by 38 per cent, is a matter of concern. It shows that the small farmers are the first victims of the cut in these subsidies, at least in the short run. The main problems faced by these farmers are two–fold:Given their low marketable surpluses and lack of capacity to withhold the stocks, they are not in a position to avail the higher output prices which can compensate for higher input prices. Even if they are in a position to do so, the low level of resources availability during the crop season may force them to cut down fertiliser use. This, in turn, would result in decline in productivity and hence marketable surplus.Their subsistence nature would result in paying higher amounts for their consumption needs in the event of an increase in input prices. Therefore, the removal of subsidies may further intensify their non–viability. The pattern of growth in agricultural sector in the new technology phase has created chronic regional imbalances. Part of this can certainly be attributed to the region–specific structural characteristics, but none can deny the failure of policies in minimising the gap between regions. Among the various policy instruments, input subsidies should have been used carefully towards this purpose. If the production performance was regionally even and robust to withstand the reduction in input intensity, then there would have been a case to withdraw the input subsidies.Indian agriculture has always been a very unequal affair. Even before colonisation, there was rampant inequality arising from the feudal structures of agriculture and regional differences. Under British rule many of these inequalities were further exacerbated through heavy taxation of even the smallest farmer. Despite half a century of independence, these inequalities are still getting worse. The arrival of the World Bank and International Monetary Fund strengthened the hand of those within the Indian government who believe that export–oriented agriculture and free trade would 'lift all ships' out of poverty despite the lack of evidence that this has worked in India.Therefore, it is clear that the inequalities in farm sector would not only continue but may tend to widen in the changing scenario. Similarly, the inequalities between developed and backward regions would also increase as the latter, besides being burdened with the price rise, also suffer from inefficient usage of fertiliser consequent to the adverse climatic conditions and lack of resources.Q. Higher fertiliser prices may not affect output becausea)developed regions influence total output much moreb)increased fertiliser prices cannot remove inefficiencies in fertiliser pricesc)price variable is having a limited variationd)price elasticity of demand does not work in an administered price situatione)removal of subsidies may work out to be partially beneficialCorrect answer is option 'A'. Can you explain this answer? tests, examples and also practice Banking Exams tests.