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Subsidies in Agriculture, Car Industry and Solar energy/wind


Subsidies in Agriculture, Car Industry and Solar energy/wind



A subsidy can be identified as a measure of financial aid that is mainly initiated by the government to ensure that the specific sector chosen is devoid of any obscurities and to ensure that those sectors are able to address the factors that causes an ineffective functioning or destructions in their operations. This report will entirely focus on the pros and cons of subsidies that are being addressed in the agriculture, car industry and in the renewable energy sector. Special attention will be paid on countries such as Nepal, Japan and Australia because these countries are prominently known for these sectors so it is important to understand the extent of governmental aid that are being provided to them. At the same time, the report will also focus on the positive and negative aspects that are associated with the subsidy policies of these few countries.

The fertilizer supply in the agricultural sector of Nepal is entirely based on the subsidy scheme offered by the government rather than the production demand of the country (Shively and Sununtnasuk, 2015). The automobile industry of Japan is highly innovative and has its name registered as one of the prominent carmakers in the world. The government subsidies allow in boosting the manufacturing and enhancing the ability of the R&D department that could effectively enhance the functioning of the organization. The subsidies for renewable energy, however, is considered irrelevant by many but this report will allow in the better understanding of both the positive and negative proportion involved in the aid provided for their advanced functioning. In the current scenario, the common queries for the subsidies are the extent of their necessity in the countries.

Positive Aspects


Government subsidies play an integral role in improving the financial condition of a specific sector. The subsidies provided by the government also ensure that the production process of the industry functions in a convenient manner without any disruptions. The subsidies help in boosting the production process of the industry and helps in increasing the overall supply of the goods and services. On the consumer side, they are provided with the option of availing products and services through tax credits. Government subsidies benefits both on the supplier and on the consumer side as well.

Subsidy for the Nepal Agricultural Industry

Majority of the population of Nepal is focused towards farming. About 66% of the Nepalese population is engaged in the agricultural sector (Gauchan and Shrestha, 2017). This country is blessed with substantial amount of agro-biodiversity and rice, maize, millet, wheat, barley, buckwheat being some of the major food crops grown in the country. Apart from agricultural crops, livestock is the biggest source of income in the country because of the unfavourable agronomic conditions and uncertain weather conditions. Due to the changes and advancements in the technological machineries, it has been cited that it is important to initiate changes in the agricultural mechanisms to ensure that the farmers are able to use of modern techniques of production that would enable in reducing the chances of liability in the sector.

The Nepal Government provides the farmers with subsidized fertilizers because of the lack of the participation of private sector in providing the farmers with enough amounts of extension services that would allow them to cope up with the financial demands of the importers. Due to the subsidy provided in terms of fertilizer, the famers have been able to encounter benefits such as increasing the production of different kinds of crops, a steady income and proper management of supply and demand. Apart from the advancements in the products, the government’s investment in the taxpayer’s money have also led to the use of high tech machineries such as solar irrigation project and the ability to purchase at least 39 types of agricultural tools (Amgai et al., 2017). In the year of 2017, the government shifted its focus on the purchase of agricultural equipments to ensure that the farmers are able to cope with the agricultural modernisation project. 

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