Farm subsidies have been a major issue in recent times in India and elsewhere. Which among the following is / are implications on the economy of a country which provides farm subsidies to its farmers?
1. Farm subsidies reduce the cost of agricultural inputs
2. Farm subsidies increase the export competitiveness
3. Farm subsidies bloat the fiscal deficit of the country
Choose the correct option from the codes given below:

Answer: [D] 1, 2 & 3

Subsidy keeps farm inputs artificially cheap, bloats the fiscal deficit and exaggerates export competitiveness. Exports take off. Prices tend to rise.

This question is a part of GKToday's Integrated IAS General Studies Module