1. Effects of Economic
Reforms on Indian
Agricultural Sector
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2. Before 1991
Largest employer; more than 80% population doing agriculture related
activities
Use of primitive and traditional methods prior to mid-1960s
Initiatives like the Green Revolution(food grains), Yellow
Revolution(oil seeds), Operation Flood(milk and dairy products), Blue
Revolution(fish) etc.
These initiatives introduced HYV seeds, modern irrigation facilities
like tube wells etc.
Use of fertilizers and pesticides instead of manure was introduced
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3. The policy used by government was that of protectionism
Thus the government introduced high tariffs on imports of agro-
based products, except for the imports made for cultivation
There were also various subsidies provided for by the
government :
Seeds were provided to farmers in regulated markets at a lower price.
This ensured fairness in the process of provision of seeds and also
ensured the quality of the food grains.
Fertilizers and pesticides were also provided at a cheap and
subsidized rate
Infrastructure for irrigation was provided by the government itself. If
not so, it ensured that the said item was provided at a subsidized rate
Also, the farmers were able to avail low-interest loans from the
government banks to finance their various costs.
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5. Liberalisation
In general, liberalization (or liberalisation) refers to a relaxation of previous
government restrictions, usually in such areas of social, political and
economic policy. In some contexts this process or concept is often, but not
always, referred to as deregulation.
Economic liberalization is the lessening of government regulations and
restrictions in an economy in exchange for greater participation by private
entities; the doctrine is associated with classical liberalism. Thus,
liberalisation in short is "the removal of controls" in order to encourage
economic development.
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6. Privatisation
Privatisation is the process of transferring ownership of business, enterprise,
agency, public service, or public property from the public sector (a
government) to the private sector, either to a business that operates for a
profit or to a nonprofit organisation. It may also mean government
outsorcing of services or functions to private firms, e.g. revenue collection,
law enforcement, and prison management.
Privatization has also been used to describe two unrelated transactions. The
first is the buying of all outstanding shares of a publicly traded company by a
single entity, making the company privately owned. This is often described
as private equity. The second is a demutalisation of a mutual
organisation or cooperative to form a joint-stock company.
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7. Globalisation
Economic globalization is the increasing economic integration and
interdependence of national, regional and local economies across the world
through an intensification of cross-border movement of goods, services,
technologies and capital. Whereas globalisation is a broad set of processes
concerning multiple networks of economic, political and cultural interchange,
contemporary economic globalization is propelled by the rapid growing
significance of information in all types of productive activities and
marketization, and by developments in science and technology.
Economic globalization primarily comprises the globalization of production
and finance, markets and technology, organizational regimes and institutions,
corporations and labour.
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8. The economic crisis of 1990 forced the government to reconsider its economic
policy to save the country from economic meltdown and to be declared a
defaulter in the international market.
The policy of Liberalisation, Privatisation and Globalisation not only affected
the largely secondary and tertiary sector of the country but also the primary
sector, which comprised mainly of the agricultural sector and other agro-
based sectors and industries.
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10. Actual declines in Central government revenue
expenditure on rural development, cuts in particular
subsidies such as on fertilizer in real terms, and an the
overall decline in per capita government expenditure on
rural areas.
Reduction in public investment in agriculture, including in
research and extension.
Very substantial declines in public infrastructure and
energy investments that affect the rural areas, including
in irrigation.
Reduced spread and rising prices of the public distribution
system for food. This had a substantial adverse effect on
rural household food consumption in most parts of the
country.
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11. Financial liberalization measures, including redefining priority
sector lending by banks, which effectively reduced the
availability of rural credit, and thus made farm investment
more expensive and more difficult, especially for smaller
farmers.
Liberalization and removal of restrictions on internal trade in
agricultural commodities, across states within India.
Liberalization of external trade, first through lifting
restrictions on exports of agricultural goods, and then by
shifting from quantitative restrictions to tariffs on imports of
agricultural commodities.
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13. Agricultural sector is the mainstay of the rural Indian economy around which
socio-economic privileges and deprivations revolve, and any change in its
structure is likely to have a corresponding impact on the existing pattern of
social equality. No strategy of economic reform can succeed without sustained
and broad based agricultural development, which is critical for
raising living standards,
alleviating poverty,
assuring food security,
generating buoyant market for expansion of industry and services, and
making substantial contribution to the national economic growth.
As such, the economic reforms of 1991 had a large impact on the Indian
agricultural sector.
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14. The neo-liberal and North-centric economic reforms have already devastatingly
impacted on the Indian people and society. The new economic policies in India have
directly brought about a serious crisis in Indian agriculture.
Agricultural growth declined from 3.4% in the 1980s to 3% in the 1990s. What is
significant is that in the post-reforms period it declined from 4.7% of the 8th plan
period to 1.8% in the 9th plan period.
The regulated markets for distribution of seeds were handed to private sector. This led
to a substantial increase in the price of seeds and also an increase in the selling of
spurious seeds.
Poor peasants continued to remain outside the fold of the banking system in the post-
reform period. In fact the growth rate of agricultural credit for small and marginal
farmers declined in the 1990s as compared with the 1980s.
As a result of accumulating debts on small farmers, which drove them into a debt trap,
many of them of them committed suicide, with 221 deaths reported in the state of
Andhra Pradesh alone in 1993-94, with nationwide deaths of close to 1,000.
The food crop area and non-food crop area in India were 70.34 and 29.66 percent
respectively in 1981-82. By 1998-99 food crops area got reduced to 65.44% and non-
food crops area was enhanced to 34.56%.
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16. Agriculture remains to be one of the largest employer,
especially in the rural India, with more than 70% rural
population and 55% population nationwide involved in
agriculture.
Despite this, the share of agriculture in the GDP of the country
is only 12.6% in 2013-14.
The productivity chart of India is still low as compared to some
other developed nations, considering the fact that more than
60% of total land area is under cultivation.
It remains the largest contributor towards disguised
unemployment in the country.
Despite the agriculture ministry providing a high budget
towards development of irrigation facilities, most farmers still
depend on rainfall for their irrigation needs.
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17. Lack of proper education related to markets and
unorganised markets make farmers susceptible towards
being cheated.
Hoarding, corruption, privatisation and unethical
practices cause a loss to farmers as they are paid less
amount than the MSP, even after strict guidelines from the
government.
Lack of loan facilities from commercial banks makes
farmers take a loan from moneylenders at high rates. This
drives them into a debt trap if they are not able to repay
the loans and is the number one cause of farmer suicides
in the country, with the figure crossing 100,000 in 2013.
The recent Land Acquisition(Amendment) Bill, 2014, has
enabled the government to acquire lands more easily.
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