EC14 Assignment

Manik Goyal

S132E0021

Discuss the challenges faced by Indian agriculture. How pre and post reform issues have
effected agricultural development at different levels.

India being the diverse nation it is in all its dimensions has always has its Agricultural sector and
the rich land resources, at the forefront of the major concentration of economic activity in the
days of the old.

Post independence, Indian economy in 1947 can be easily described with different adjectives and
most of them having a bad connotation to them. 'Backward', 'feudal', 'unorganized' and most of
all agrarian which necessarily is not a bad thing, given India’s resources- theory dictates
agriculture, along with industries such as textile, is what India should specialize in. But what
troubled India were low productivity, over burdening of agriculture (in terms of workers
available as to workers required) due to process of Retardation or de-industrialization during
colonial period; and the kind of agreement we were in during colonial regime. Due to most of
surplus being drained in form of tributes, salary of British officer, remittances etc, India couldn't
have the necessary amount of reinvestment along with hurting the soil by changing production
pattern from crops such as cotton, spices to cash crops.

The initiation of economic reforms in India in 1991 brought about major changes in the
macroeconomic policy framework of the planned economy that existed in India during 1950-51
to 1990-91. Although no direct reference was made to agriculture, it was argued that the new
macroeconomic policy framework, in particular, changes in exchange and trade policy,
devaluation of the currency, gradual dismantling of the industrial licensing system and reduction
in industrial protection would benefit tradable agriculture by ending discrimination against it and
by turning the terms of trade in its favour. This, in turn, was supposed to promote exports leading
to rapid agricultural growth. But despite these changes in the macroeconomic policy framework
and trade liberalisation, the agricultural sector in India neither experienced any significant
growth subsequent to the initiation of economic reforms in 1991 nor did it derive the expected
benefits from trade liberalisation. As a matter of fact, when compared with the immediate pre-
liberalisation period (1980-83 to 1990-93), agricultural growth in India recorded a visible
deceleration during the post-liberalisation period (1990-93 to 2003-06).
A BRIEF REVIEW OF THE AGRICULTURAL SECTOR AND ITS ISSUES

A state-level analysis of levels and growth of agricultural output during 1962-65 to 2003-06 has
brought out the outstanding characteristics of agricultural development in India during the
postgreen revolution period beginning in the mid-1960s. To begin with, the new technology was
instrumental in raising the yield and output levels of wheat and was confined to irrigated states in
the north-western region of India. This resulted in raising crop yields and promoting growth of
agricultural output in most of the north-western states. The rapid growth of output in these states
also resulted in raising agricultural worker productivity in these states. However, the spread of
new technology remained confined to irrigated states only. The new technology matured during
the period 1980-83 to 1990-93 when it spread widely to more areas and encompassed more
crops. The result was a notable increase in the levels and growth rates of yields and output as
well as in agricultural worker productivity in most states and regions of India during 1980-83 to
1990-93. Thus during 1980-83 to 1990-93, the crop output recorded an unprecedented annual
growth rate of 3.40% compared with a growth rate of 2.24% during 1962-65 to 1980-83. Yet
another important improvement during 1980-83 to 1990-93 was significant changes in the
cropping pattern with a visible increase in crop diversification away from coarse cereals towards
more valuable oilseeds crops in the rainfed states of central India, and towards rice and wheat in
the north-western and eastern states. But the post-reform period 1990-93 to 2003-06 is
characterised by a serious retrogression both in the matter of levels and growth rates of yield and
output in most states and regions and a slowdown in diversification towards oilseeds. There are
different reasons for slowdown of growth of yield and output in different regions. However, the
decline in public investment in irrigation and water management, and in scientific research has
adversely affected the profitability of farmers in all parts of India. In the north-western region, it
is an excessive use of inputs and a decreasing input use efficiency that has eroded profitability as
well as adversely affecting its resource base like water table and soil quality. The decline in
public investment in irrigation, water management and flood control has specially affected the
resource-poor eastern region. Although there took place a slowdown in diversification towards
oilseeds at the all-India level, the states in the central region have diversified in favour of cotton
and oilseeds as also towards remaining crops, despite weather-induced uncertainties. Although
this has helped in raising the output and income levels of resource-poor farmers in these regions,
it has also exposed them to much greater weather-borne and price fluctuation risks. These risks
are further exacerbated because of increased vulnerability to world commodity price volatility
following trade liberalisation. These risks pose a serious problem for the livelihoods of cotton
and oilseed farmers driving some of them to utter desperation leading to suicides. The Indian
economy has registered a visible acceleration in its gross domestic product growth rate as well as
of per capita income since the initiation of economic reforms in 1991. It should be a matter of
great concern for the policymakers that in this optimistic scenario, the agricultural sector should
face a deceleration its growth rates of aggregate yield and output and the process of agricultural
diversification should slow down. A more serious matter is that agricultural workers who
constitute 58% of the total workforce should be facing deceleration in their productivity and
income levels as well as distress during the post-reform period. It is beyond the scope of this
article to undertake a comprehensive analysis of the main reasons for the failure of economic
liberalisation to improve the state of agriculture in India. But, it is hoped that the state and
regionwise analysis of agricultural growth during the pre- and post-liberalisation period
undertaken above would provide a backdrop to scholars and policymakers to undertake an in-
depth analysis of the reasons for slowdown in agriculture in the post-reform period.

An important part was played by states to facilitate growth- subsidies were provided to
small farmers, irrigation was being modernized (a gradual process and still in work),
public distribution system was made stronger and minimum support prices were
introduced- under which state used to procure crops from farmers with a minimum price
(announced in advance of sowing season) guaranteed and then with the help of extensive
distribution channels was brought to market. Development of institutes such as NABARD
(National Bank for Agriculture and Rural Development) in 1982, to provide credit to small
farmers, to promote investment in machinery- tractors, tube wells etc was also successful to
an extent. It is improving the absorptive capacity of the credit delivery system in India,
including monitoring, formulation of rehabilitation schemes, restructuring of credit
institutions,

Whether successful or not, these ‘institutional reforms’ in themselves were not enough to
change the existing, Indian image of a food beggar society. During the sixties, India was
facing a crisis of availability of food (China war in 1962, and Pakistan war in 1965, on top
of that bad crop in 1966-67 worsened the condition- production dropped by 20%), which
was more visible with a Balance of Payment deficit crisis as well as adversely affected
foreign policy as the terms were clearly being dictated by the food providing country.
Solution to it was clearly a requirement for miracle in terms of agricultural production.
THE MAJOR CHALLENGES TODAY

-SMALL AND FRAGMENTED LAND-HOLDINGS: Large land holding enable the farmer to
implement modern technique, which will lead to the more production in an effective manner, but
Indian agricultural land is divided into very very small fragments, in some areas it is less than a
hectare, so implementing modern technology on these small parts would not increase production
but only adds cost.

-IRRIGATION PROBLEM: Most of the farming in India is monsoon dependent, that is if

-SEED PROBLEM: Seeds are one of the most basic requirement for agriculture growth. It is
critical for growth in agriculture production. The quality of product depends upon the quality of
seeds. But the farmers are not getting the required quality and they are enable to go for better
quality due to its exorbitant prices.

-MANURES, FERTILISERS, BIOCIDES: Indian Soil has been degrading continuously without
replenishing. This lead to a major concern of lost in soil fertility. This is a serious problem which
can be solved using manures and fertilisers. Cow dung are the best manures for the soil. But
there are practical difficulties in providing the proper fertilisers and manures to the soil.
Chemical fertilisers are costly and hard to afford by poor farmers. So the problem of fertiliser is
both acute and complex. For proper growth of soil only organic manures are required.

-SOIL EROSION: It is the most dangerous problem faced by indian farmers. Large piece of
fertile land turns into barren field because of wind and water. Such type of areas should be
properly treated and maintained.

-INADEQUATE STORAGE FACILITY: Poor and grossly inadequate storage facility to farmers
in rural areas compel them to sell their products after the harvest at the prevailing market prices
which are bound to be low. Such distress sale deprives the farmers from their legitimate income.

-INADEQUATE TRANPORT: The biggest example of this problem is the recent happening in
punjab. Farmers are not getting the transport facility for their harvested wheat. Due to politics
involved in all this scenario. All this has resulted into a big loss to farmers.
CONCLUSION

The Indian agricultural story has been an immersive experience, right from the days when the
India cropping patterns and the subsequent production flourished the early global trades before
the British colonization of the country. How the policies put in place by the British affected the
productive Indian agriculture and the plethora of troubles the farmers of the old had to live
through made its way through with the post 1947 era when the big question of development was
faced by the first governments. Development if any is always and always be would be zeroed in
on with economic development and with a majority of the Indian workforce employed in
agriculture even today much less then, the path towards development was always relied upon in a
major way towards taking care of the Primary Agrarian Sector as well. The policy changes put in
place post independence and the opening up of the economy post the 90s and the varied
consequences have today led to a respectable, still problems exist but a respectable position is
nonetheless is where the India Agrarian Sector stands today at.

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REFERENCES

-Jain, T.R. & Ohri, V.K. (2011) Indian Economic Development, New Delhi, V.K. Global
Publications

-Bipan Chandra et. Al, India After Independence (chapter 28-31), New Delhi, 1999.

-M.S. Swaminathan, “50 Years of Progress in Indian Agriculture” in Hiranmay Karlekar (ed.),
Independent India: The First Fifty Years, Delhi, 1998.

-C.H. Hanumantha rao, “Agriculture: Policy and Performance”, in Bimal Jalan (ed.). The Indian
Economy: Problems and Prospects, New Delhi, 1992.

-Bhalla, G.S. & Singh, G., Recent Developments in Indian Agriculture- A State Level Analysis,
Economic and Political Weekly (March, 1997)