The Political Economy of Agricultural Subsidy Reform in India: The Case of Fertilizers.

This paper presents the findings of a research project that investigates the political and economic challenges that thwart reform of the fertilizer sector in India. Fiscal, distributional and environmental concerns make the case for such reform quite compelling. While international organizations have consistently advocated reforms in this sector and successive administrations have attempted changing policies for a decade and a half, actual change has been sporadic and incremental and has had little impact on the burgeoning fertilizer subsidy bill. This paper unpacks the international, national, state-level and societal factors that have shaped policy change. Predictably, the strong fertilizer lobby and representation by large farmers present substantial hurdle in initiating and implementing proposed changes. Domestic institutional factors such as bureaucratic politics and center-state politics have shaped the reform process substantially. Global hydrocarbon prices as well as pressure from international organizations play important roles in the reform process. However, the paper concludes that while the factors mentioned above are important, the strongest explanation for lack of reform is ideational. Based on the literature on discourse coalitions, this paper argues that two distinct coalitions with different world-views on the role of state and markets in the economic arena are engaged in the discourse on policy change. Policy change has not occurred because the coalition for change continues to be much smaller and less articulate about the benefits of change as compared to the coalition in favor of the existing policy framework. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]