This report presents two case-studies that illustrate problems arising from subsidising fertiliser and electricity for groundwater irrigation in India — a policy put in place in the 1960s to boost food production and food security. It aims to analyse why subsequent reforms of these policies have done little to resolve economic and environmental problems; identify reforms that could prove successful; and outline political processes that could help achieve them.

Using India's experience, it highlights political challenges of using subsidy policies that could also be relevant to other countries.

This analysis is based on a literature review and interviews with stakeholders. The report also presents the conceptual framework, and gives an overview of fertiliser policy in India: how it has evolved, the stakeholders involved in the political process, and the policy implications of subsidy reform. Case-studies of electricity supply in Andhra Pradesh and Punjab are used to demonstrate policy reform feasibility.

The report concludes that for both electricity supply and fertiliser policies, various reforms could be adopted that are unlikely to face significant political obstacles. It argues that experimental and research-based knowledge could be used more effectively.