International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-9(1), September, 2016 Impact Factor: 3.656; Email: [email protected]

Ramesh Krishna Vipparthi, Lecturer, Department of Commerce, SCIM Government Degree College, Tanuku, West Godavari Dist., A.P

been unequal and only very small sections of the population have benefited Since the past two and half decades more from higher growth and prosperity. during the post-reform period, Indian The problems such as , economy witnessed significant economic unemployment, inequalities in access to growth to be considered as one of the health and education and poor fastest growing economies in the world. performance of agriculture sector have Standing only after China, even not been seriously addressed by the surpassed of America to government programmes and strategies. occupy the place of second major growing economies of the world. However, during the past 15 years, it is found that improvements in economic growth, foreign exchange, IT revolution, export Since independence, Indian ruling elites growth, etc., the income distribution has and intelligentsia,with a belief generated

  International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-9(1), September, 2016 Impact Factor: 3.656; Email: [email protected] by a mixture of socialism andthe the then Prime Minister P.V. nightmare experience of British colonial Narsimharao’s Government had exploitationhave attempted to close the launched First Round of Economic economy to outside world by emphasising Reforms during 1991–96, bringing more on protectionism through structural changes to Indian economic development of internal markets with the policy to embrace Liberalization and policy of import substitution. Launching Globalization, thus in turn, integrating the License Raj, the barricades of Indian economy into the world economy. inconvertibility of Rupee, high tariffs and The following Government led by import licencing were erected to prevent AtalBihari Vajpayee’s entry of foreign goods into Indian administrationspeeded up economic markets. In order to have complete progress by resolving outstanding control over firms, their investments and problems with the West and then opening development, a system of central gates for FDI investment into planning for the economy was moved to Information Technology (IT) and allied operate making the State and its activities, thus making India second most planning and not the markets, more attractive destination for FDI after powerful to determine how much China. investment was needed in which sectors. The structural reforms attracted Nationalisation of key and basic productivity-enhancing investments in IT industries, launching Five-Year Plans, and IT enabled services, Business Process and elaborate licenceregulationswere part Outsourcing (BPO), Research and of this policy. However, the much Development (R&D) and knowledge cherished Licence Raj created only an management activities.Some of the irresponsible, self-perpetuating consequences and impacts of bureaucracy accompanied with globalization are: exposure of domestic flourishing corruption. agriculture to international competition, In order to curb the adverse effects of growth of non-agricultural sector and its Licence Raj, inspired by Socialisman impact on demand for agricultural attempt was made to liberalise the products, urban middle class life-style economy in 1966. However, emerging changes including diets, rising food serious economic crisis triggered by imports in developing countries, Balance of Payments (BoP) problemsin competitiveness and diversification of mid-1980s, made India stood on the verge domestic production systems, vertical of bankruptcy by the end of 1990. Still integration of the food supply chain, etc. having the fixed exchange rate system – wherethe rupee was pegged to the value of a basket of currencies of major trading partners – Reserve Bank was forced to Ever since the implementation of pledge 20 tonnes of gold to Union Bank of Structural reforms, Indian agricultural Switzerland and 47 tonnes to Bank of sector has shown an oscillating England as part of a bailout deal with the performance at various levels. It has been International Monetary Fund (IMF). impoverished by Globalization wave, Since then, most of the economic reforms leading to many suicidal deaths of were forced upon India as a part of the farmers and rising serious concerns on IMF bailout1. It is in this connection that

  International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-9(1), September, 2016 Impact Factor: 3.656; Email: [email protected] the performance of the sector. It is crops as bio-fuels also has pushed up evident that the commodity sector their demand. For instance, the Under including agriculture and industry could US law, 40% of the corn harvest must be not record any sizable growth during the used to make biofuel4. Moreover, rise in post-reform period as compared to that of crude oil prices led to an increase in 1980s, while the agriculture sector global food prices. Thus, myriad of witnessed a growth much lower than 2 conditions joined together to create tough per cent per annum during the previous times for Indian agricultural sector. decade.

One of the paradoxes of the Indian economy is that the decline in the share Wide disparity between employment of agricultural workers in total generation and GDP growth is surfaced nationwide work force. It has been slower as the growing industry and services as compared to the decline in the could not generate sizable employment contributing share of agriculture in GDP. opportunities while the agriculture where It is observed that there was a 34 majority of people are employed could not percentage point decline in the share contribute to the GDP ofagriculture in GDP between 1961 and growth.BinaAgarwal, Professor of 2004-05, while the decline in share of Development Economics and agriculture in employment generation Environment at the University of was mere 19 percentagepointsonly5. As a Manchester, UK, observes that there has result, the labour productivity in been a lop-sided approach to development agriculture has shown a marginal in India during the past few decades. increase, while that of non-agricultural Despite the higher growth during the workers has increased rapidly. There previous two decades, the inclusive were only about 259 million agricultural growth in terms of focus on agriculture workers in the year 2004-05 out of which has been missing2.Noting that agriculture female workers formed around 42 per contributes to overall growth of the cent of the total agricultural workforce in economy by ensuring employment and India6. food security to majority population which in turn reduces poverty in a developing country, she opines that if Farm business incomes decelerated with pro-poor growth and real development is the increasing wage costs of hired labour needed, high agricultural growth and leading for cost increases in non-cereal rising incomes for farmers are essential3. crops. It was also mentioned that reduction in subsidies could be compensated by higher output prices, but Demographic pressures on the other to compensate for the decline in yields hand, have increased small and marginal and farm income, much higher output farm holdings. Cultivation spreading to prices are needed. Mid-term Appraisal of marginal lands and diversification of the Tenth Plan also attributes part of the agriculture has raised serious concerns decline in agriculture growth to lower for India in maintaining its food security. input-use which in turn, was due to In addition, the increased use of food

  International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-9(1), September, 2016 Impact Factor: 3.656; Email: [email protected] lowerprofitability during the post-reform depletion, deterioration insoil quality, etc. period7. have also been responsible for the agrarian crisis and farmers’ suicides.

With Liberalisation and reduction in protection to industry, termsof trade Despite the signs of improvement in became very unfavourable to agriculture recent years, agriculture sector has since 1990-91. In the years 1999-00 and recorded a growth rate less than 2 per 2000-01, despite an increase in private cent since the mid-1990s. Yield growth investment in agriculture, therewas a hasalso declined. Farmers’ suicides have decline in the index based onimplicit continued/increased in some states. prices of GDP encompassing a four point Farming is becominga non-viable activity. decline in theagricultural TOT during In addition, there is a little scope for 1998 to 2004. increase in net sown area. Land degradation in the form of depletion of

soil fertility, erosion and water logginghas increased. There has been a The growth of Total Factor Productivity decline in the surface irrigation (TFP) has been almost identical staying expansion rate and reduction inground at 1.13 per cent per annum in both the water table. Risk and vulnerability have agriculture and non-agriculture sectors increased. Disparities in productivity during the 50-year period from 1950 to across regions and crops have persisted. 20008.However, it declined during the Long-term factors like steeper decline in post reform period as the non-agriculture per capita land availability and shrinking sector’s TFP growth was higher than of farm size are also responsible for the that of agriculture. agrarian crisis. The Steering Committee report on agriculture for 11th Plan has identified In recent years, farmers’ suicides have the possible reasons for deceleration in increased in some states. There were agriculture since mid-1990s9. According around 167,000 farmers’ suicides in the to the report, the major sources of previous decade. Indebtedness of farmers agricultural growth are: public and and increasing risk in agriculture are the private investments in agriculture and main factorsresponsible for the suicides5. rural infrastructure including irrigation, Sharper decline in absolute productivity, technological change, diversification of price uncertainty due totrade agriculture and fertilizers. It looks like liberalization and rise in costs due to that the progress on all these sources domestic liberalization, decline in credit slowed down in the 1990s particularly and non-farmwork intensified the crisis. since mid-1990s According to the report, Most of thestudies haveidentified the causes of slow down are: increase in household indebtednessas the main subsidies crowding out investment in reason for the suicides. However, infrastructure, degradation of natural indebtedness is due to increase in input resources, failure in conservation and intensity ofagriculture. Long-term factors improvement of rain-fed land, knowledge like decline in farm size, groundwater gap with existing technology, low market

  International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-9(1), September, 2016 Impact Factor: 3.656; Email: [email protected] infrastructure and too much regulation, agricultural production. Studies have institutions not geared to help women shown that aggregate supply response is farmers, imperfections in land market higher for non- price factors as compared and plight of small farmers10. to price factors. Therefore, in the context of Globalization, tariff policy becomes important for agricultural commodities and it is important to monitor exports, In order to revive and rejuvenate the imports, global supply and demand and agricultural growth, appropriate policies fix tariffs accordingly. There is a need to are needed at least toreach 4 per cent strike a balance between producer prices growth rate in agriculture and to increase and consumer prices by careful in incomes of farmers. However, slow calibration of minimum support prices growth of the agricultural sector, where and tariff policy with respect to import half of Indians earn most of their income, duties. highly restrictive and complex labour laws, high inflation, high poverty, The experience in several countries corruption and graft as well as lack of during the reform period shows that political consensus and will,are some of public expenditure as percentage of GDP the crucial issues that are to be is low and declining. As a result, public addressed, before identifying policy issues investment in rural development has and the needed reforms in declined sharply in most of theAsian agriculture.The policies needed for countries12. Consequently, agricultural revival of Indian agriculture are growth slowed down in most countries in discussed below: the 1990s leading to sluggishaverage annual rate of growth of gross capital Major underlying objective of the Indian formation in many countries.On the Government’s price policy is to ensure other hand, financial sector has food security by protecting both historically had an urban bias and the producers and consumers, which are macro policies have not been pro- achieved through three instruments, employment and pro-poor in the post- namely procurement prices/Minimum reform period in many developing Support Prices (MSPs), buffer stocks and countries, including India. There is a Public Distribution System (PDS). need to have pro-agriculture, pro- (GOI) follows a employment and pro-poor macro policies. Minimum Support Price (MSP) Policy for

24 major crops including paddy, wheat, It is important to record and register jowar, bajra, maize, ragi, pulses, oilseeds, actual cultivators including tenants and copra, cotton, jute, sugarcane and women cultivators,and issue passbooks to tobacco11. Cost of production is the them, to ensure that they gain access to important factor in determining MSP. institutional credit and otherinputs. As There is a need to provide remunerative part of the reforms, lease market should prices to farmers in order to maintain be freed and some sort of security for food security and increase incomes of tenants has to be guaranteed. This will farmers. For this, both price and non- ensure availability of land for cultivation price factors are important in raising on marginal and small farmers.

  International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-9(1), September, 2016 Impact Factor: 3.656; Email: [email protected]

The land rights of people living in the economy of the regions, growing crops agency areas must be protected. There is such as plantation, cotton and oilseeds in considerable scope forfurther land which foreign trade is important. In the redistribution, particularly when waste recent years, domestic prices of and cultivable lands are taken into severalagricultural commodities have account.Commenting on land market, the turned higher than international prices. Steering Committee in its report not able to checkimport of a large recommended, “Smallfarmers should be number of commodities even at high assisted to buy land through the tariffs. This is true not only in the caseof provision of institutional credit, on a import from developed countries where long-term basis, at a low rate of interest agriculture is highly subsidized but also and by reducing stamp duty. At the same in the caseof products from developing time, they shouldbe enabled to enlarge countries. India is facing severe import their operational holdings by liberalizing competition in the case of items like palm the land lease market. The twomajor oil from Malaysia and Indonesia, spices elements of such a reform are: security of from Vietnam, China and Indonesia,tea tenure for tenants during the period of from Sri Lanka and rice from Thailand contract;and the right of the land owner and Vietnam15. Costreduction is, to resume land after the period of therefore, important for increasing contract is over”13. Thus, it is crucial to producers’ profit margins. The policies ensure land leasing, create conditions have toinduce larger investments in including credit, whereby the poor can yield-augmenting technological access land from those who wish to leave improvements and contain theadverse agriculture. environmental impact of misuse of water and agro-chemicals for sustainability of

growth. The nationalization of banks in 1969 and To compete in the global market, the subsequent developments led to country needs to reduce various post- expansion ofthe geographical and harvest costs andundertake suitable functional reach by commercial banks, reforms to improve efficiency of domestic regional rural banks (RRBs) markets and delivery systems. To beable andcooperative credit institutions. Public to successfully compete in a liberalized policy is aimed at ‘social’ and trade regime, therefore, there is need for ‘development banking’ inthe form of a paradigmshift from merely maximizing meeting rural credit needs and reducing growth to achieving efficient growth. The the role of informal sector credit. A effect of volatility ininternational prices largenumber of small and marginal on domestic agriculture should be farmers and other vulnerable groups checked by aligning tariffs with remain excluded from theopportunities thechanging price situation. and services provided by the financial Implementation of the WTO Agreement sector. It is important to curb this on Agriculture (AOA)16since 1995 has exclusion and include small and marginal brought outthe inadequacies inherent in farmers as beneficiaries14. the agreement. The on-going negotiations in the WTO on the AOAprovide an There has been adverse impact of trade opportunity for India to rectify these liberalization on the agricultural inadequacies and inequalities. India

  International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-9(1), September, 2016 Impact Factor: 3.656; Email: [email protected] should stresson the implementation of Times; available at: Uruguay round agreements to reduce http://www.nytimes.com/1991/06/29/worl subsidies and other distortionscaused by d/economic-crisis-forcing-once-self- policies pursued by developed countries. reliant-india-to-seek-aid.html 2. Agarwal, Bina (1994),

As the Globalization and Liberalization , Cambridge University Press. policies have created many juxtaposing 3. . conditions, it is important for the 4. Mardell, Mark (2012), Government to frame policies to convert the inherent weaknesses into strengths , BBC News Business; available at: and threats into opportunities to attain http://www.bbc.com/news/business- higher agricultural growth. To achieve 19206199 this, both price and non-price factorsare 5. Singh, V. Surjit and important. Hence, the Indian ruling elite Reddy,Ratna(eds.) (2009), and intelligentsia should focus on dealing with the challenges created by globalization, volatility in , New prices,shrinking farm size, dry land Delhi: Academic Foundation. farming challenges and environmental 6. . stress. Any upcoming Government policy 7. GOI (2005), Mid-Term Appraisal or economic policy reforms should of 10th Five Year Plan (2002-2007), New address the issues created by highly Delhi: Planning Commission; available at restrictive and complex labour laws, high http://planningcommission.gov.in/plans/m inflation, high poverty, corruption and ta/midterm/midtermapp.html graft as well as lack of political consensus 8. Dev, S Mahendra (2008), and will. It should also attempt to remove or at least minimize the deficits , New Delhi: National Centre underlying in Indian agriculture for Agricultural Economics and Policy spreading across the areas such as Research; available at: investment, credit and infrastructure, http://www.ncap.res.in/upload_files/jml/j research and technology extension, ml1.pdf market, diversification, institutionsand 9. GOI (2007a), education/skill orientation. Last, but not , Ministry of Finance, least, India, on the international Government of India. diaspora, should stress on the 10. . implementation of Uruguay round 11. GOI (2011), , agreements to reduce subsidies and other Department of Agriculture and distortions caused by policies pursued by Cooperation, Ministry of Agriculture, developed countries. Government of India. Available at: http://www.agricoop.nic.in/Annual%20rep ort2010-11/AR.pdf 12. Dev, S Mahendra 1. Weinraub, Bernard (1991), (2006), , Chennai: The Hindu. , New York

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13. Kapila, Raj and Kapila, Uma , Economic and Political (eds.) (2007), Weekly, Vol. 40, No.26. 20. Dev, S.Mahendra (2008), , New Delhi: Academic Foundation. , New 14. Dev, S Mahendra (2005), Reform Delhi: Oxford University Press. and formal credit, [Review of the book, 21. GOI (2007), , by V. K. Ramachandran and Ministry of Finance, Government of MadhuraSwaminathan (Eds), Chennai: India. The Hindu. 22. Gulati, A. and SudhaNarain 15. GOI (2007), (2003), , New Delhi: Oxford University Press. , 23. Sivasubramonian (2004), New Delhi: Planning Commission; available , New Delhi: Oxford athttp://planningcommission.nic.in/about University Press. us/committee/strgrp11/str11_agriall.pdf 24. Swaminathan, M.S. (2007), 16. WTO (1995), , , Academic Information and Media Relations Foundation. Division, WTO; available at 25. Thorat, Usha (2006), http://www.wto.org/english/docs_e/legal_e /14-ag_01_e.htm , RBI Bulletin,February. 26. Vaidynathan, A. (1996),

17. Bhalla, G.S. (2006), ‘Agricultural ,Economic and Growth and Regional Variations’, in R. Political Weekly, Vol.31, No.35-37. Radhakrishna, S.K. Rao, S. MahendraDev 27. Vaidyanathan, A. (2006), and K. Subbarao (eds.), , New Delhi: Oxford University Press. 28. Vyas, V. S. (2004): , New Delhi: Academic Foundation. , Economic andPolitical Weekly, 18. Chand, R., S.S. Raju and L.M. 25 December. Pande (2007), 29. GOI (2008), , Ministry of Finance, , Economic and Government of India. Political Weekly, Vol.42, No.26. 19. Dev, S. Mahendra and N. ChandrasekharaRao (2005),

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