Sowing Dependency: Unravelling the Rational Addiction of Agricultural Fertilizer Subsidies in India

By utilizing the rational addiction framework, this article investigates the dynamics of fertilizer consumption influenced by subsidy policies. By estimating a demand equation that incorporates addictive behaviours—tolerance, reinforcement and withdrawal—the research highlights how past consumption influences future usage, creating a cycle of dependency that is difficult to break. Empirical evidence supports the hypothesis that subsidy dependence in Indian agriculture mimics addictive behaviour, with farmers increasing consumption over time despite diminishing returns. This addiction not only perpetuates environmental and financial inefficiencies but also hinders policy reforms aimed at sustainable agricultural practices and showcases the need for a gradual transition towards more sustainable farming methods. JEL Classification: N55, Q18, H53, C23