Effect of input subsidies and extension services: Evidence from rice productivity in Bangladesh

Abstract

This study examines the effect of agricultural input subsidy cards and extension services on Bangladesh’s rice productivity, using plot level panel data from three waves (2011–2019) of the Bangladesh Integrated Household Survey. To control for endogeneity of the two programs, instrumental variable and control function approaches are used. Findings reveal that access to input subsidy cards and extension services raise productivity in rice-planted plots by nearly 20% and 22%, respectively. Further, the channels and type of advisory services matter. Finally, access to input subsidy cards and extension services is more beneficial in areas prone to droughts and excessive rainfall. These findings underscore the value of complementary investments in robust extension systems, especially in vulnerable regions, to optimize the performance of input subsidy programs. Expanded extension services coupled with input subsidies can be an effective policy mix to raise productivity, strengthen climate resilience, and promote inclusive agricultural growth in Bangladesh.