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REFORMs & policies in INDIAN AGRICULTURE

Presented by Pricila Sunkari Prachi Angwalkar

REFORMS IN AGRICULTURE
A common criticism of Indias economic reforms is that they have been excessively focused on industrial and trade policy, neglecting agriculture which provides the livelihood of 60 percent of the population. The reduction of protection to industry, and the accompanying depreciation in the exchange rate, has tilted relative prices in favor of agriculture and helped agricultural exports. The index of agricultural prices relative to manufactured products has increased by almost 30 percent in the past ten years. Public investment declined, this was more than offset by a rise in private investment in agriculture which accelerated after the reforms. However, there is no doubt that investment in agriculture-related infrastructure is critical for achieving higher productivity and this investment is only likely to come from the public sector.

IMPACT OF ECONOMIC REFORMS


E C O N O M I C
P R O C E S S Since July, 1991 the country has taken..

The New Economic Policy (NEP-1991) introduced..

Salient features of NEP-1991.

The GATT Agreement signed in.

IX P L A N S T R A T E G Y

The agricultural development strategy for the Ninth Five Year Plan..

The Strategy to ensure food security

The Ninth Plan Target is..

In the coming millennium.

P L A N N I N G & D E V E L O P M E N T

India is endowed with

India has a total geographical area .

Development of irrigation potential .

Management of Soil Resources is essential ..

Development of livestock has been

IMPACT OF GLOBALISATION

The liberalization of Indias economy was adopted by India in 1991


The reforms sought to gradually phase out liberalization, privatization ,globalization. Reforms in the agricultural sector in particular came under severe criticism in the late 1990s, when 221 farmers in the south Indian state of Andhra Pradesh committed suicide. Andhra Pradeshs experience particularly critical in this debate because it was headed by Chief Minister Chandrababu Naidu, who pursued liberalization with enthusiasm.

7 STEPS TAKEN BY THE GOVERNMENT


To begin with government took lead in providing various facilities on its own. In course of time different types of activities were entrusted to specific public agencies.

The government abolished the zamindari system. It was followed with the consolidation of small holdings to make them economically viable.

Another important input was the widespread use of radio and television for acquainting farmers in new and improved techniques of cultivation.

The crop insurance was another step to protect the farmers against losses caused by crop failure on account of natural calamities like drought, flood, hailstorm, cyclone, fire, diseases etc.

Easy availability of capital or investment input through a well-knit network of rural banking and small scale cooperative societies with low interest rates were other facilities provided to the farmers for modernization of agriculture.

Special weather bulletins for farmers were introduced on radio and television.

The government announced minimum support price for various crops removing the elements of uncertainty. It ensures minimum price for the crop grown by the farmers.

INTRODUCTION TO POLICY REFORMS


India was a latecomer Economic reforms Earnest only in 1991

Indias economic

Post-reforms period
Ten year period from 1992-02

Positive features

The average growth rate

6.0 percent

POLICY CHALLENGES
PRICE POLICY
India has done well in protecting the consumers from global food prices In the post-reform period, terms of trade increased initially, declined during 1999 to 2004. It was 106 in 1997-98. In 2006-07 it was only 102.

Prices play important role in cropping pattern shifts and also increase in private investments in agriculture. INVESTMENTS AND SUBSIDIES

Investment in irrigation and rural infrastructure is important for agricultural growth.


public investment in agriculture is lower than the requirements needed for achieving 4% growth. subsidies continue to mount, at cost of investment.
Subsidies led to highly wasteful use of canal water, ecological degradation from water logging, salinity, pollution, over drawl of ground water

POLICY & REGULATORY FRAMEWORK


FDI
100 % of FDI is allowed under the automatic route in floriculture, horticulture, 30 development of seeds, cultivation of 25 vegetables and mushrooms under 20 uncontrolled conditions and services related15 to the agriculture and allied sectors. 10 5 100 % is allowed in the tea sector, including 0 tea plantations under the government route subject to the following conditions:

plans layout

Compulsory divestment of 26% equity of the company in favour of an Indian partner/the public within a period of five years. Prior approval of the State Government, in the event of any land future use change.

POLICY RECOMMENDATIONS
WTO is receiving the deepest Affecting the major sectors of Indian economy Intensively in the coming years

A major concern growing


The challenge to policy makers

Impact of WTO

Dominate the Indian agriculture Impendi ng WTO threat

Protect Indian agriculture

INDIAN FARMERS NOT BENEFITTING FROM W.T.O AGREEMENT


Despite clear evidence that Indian farmers do not gain from the implementation of the trade liberalization process under the World Trade Organization's Agreement on Agriculture, and are in fact badly hit by it Five years after the World Trade Organization (WTO) came into existence, the anticipated gains for India from the trade liberalization process in agriculture are practically zero. The kind of export subsidies that need to be pruned is not provided in India. India was forced to either phase out or eliminate the quantitative restrictions (QRs) on agricultural commodities and products.

GREEN REVOLUTION

NATIONAL AGRICULTURAL POLICY

MARKET OVERVIEW

ECONOMIC REFORMS

POST INDEPENDENCE

PERFORMANCE OF THE AGRICULTURE SECTOR DURING THE CURRENT 5 YEAR PLAN (2007- 2011)
During the first three years of the current Five Year Plan, the griculture sector (including allied activities) recorded an average growth of 2.03 per cent against the Plan target of 4 per cent per annum. Things are looking bright in the current year with a relatively good monsoon and the agriculture-sector is expected to grow at 5.4 per cent as per the 2010-11 advance estimates. The agriculture sector growth in the first four years of the Plan is estimated at 2.87 per cent. In order to achieve the Plan target of average 4 per cent per year, the agriculture sector needs to grow at 8.5 per cent during 2011-12.

Conclusion
Agriculture is expected to be a point of focus for the private sector in India, as a number of private players are expected to venture into organic farming, contract farming, and setting up hubs for the procurement of farm produce. Increased corporate investment in this sector is expected to offer a new frontier of growth across many areas such as economies of scale through advanced models of farming, effective distribution systems and food security.