Challenges for Revival of Indian Agriculture

Abstract

In India, economic growth has improved significantly during the past two and a half decades, particularly in the post-reform period. India is considered as one of the fastest growing economies in the world. However, the exclusion problems have not been addressed seriously by the government programmes and strategies. The experience of the economic reforms during the past 15 years indicates that while there have been improvements in the economic growth, foreign exchange, IT revolution, export growth, etc., the income distribution has been unequal and only some sections of the population have been benefited more from this higher growth and prosperity. In other words, real development in terms of growth shared by all sections of the population has not taken place. We have problems of poverty, unemployment, inequalities in access to credit, health care and education and poor performance of the agriculture sector. One of the excluded sectors during the reform period was agriculture which showed low growth and experienced more farmers’ suicides. There are serious concerns about the performance of agriculture sector in the country. The post-reform period growth has been led by the services. The commodity sector growth (agriculture + industry) has not been higher in the post-reform period as compared to that during the 1980s. The particular worry is the agriculture sector which has shown less than 2 per cent per annum growth during the past decade. Also, there is a disconnect between employment growth and GDP growth. In other words, employment is not being generated in the industry and services sector, where growth is high. On the other hand, GDP growth is low in the agriculture wherein a majority of people are employed. Thus, there has been a lop-sided approach to agricultural development in India during the past few decades. Growth may be higher during the past two decades, but the inclusive growth in terms of focus on agriculture has been missing1. It is like running a train with engine only without connecting a majority of the bogies and people to the engine. The role of agriculture in economic development is well known. Agriculture not only contributes to overall growth of the economy but also provides employment and food security to the majority population, which in turn reduces poverty in a developing country. Thus, if we want pro-poor growth and real development, high agricultural growth and rising incomes for farmers are essential. In recent decades, the context within which agriculture policy has to be developed and implemented, has undergone fundamental changes. The relationships operated for much of the 1960s and 1970s have changed. Globalization policies during the 1980s and particularly during 1990s and beyond have created many challenges for agriculture in developing countries. Some of the consequences and impacts of globalization in developing countries are: exposure of domestic agriculture to international competition, growth of non-agricultural sector and its impact on demand for agricultural products, urban middle class life-style changes, including diets, rising food imports, competitiveness and diversification of domestic production systems, vertical integration of the food supply chain, etc. (Prabhu, 2006). Because of demographic pressures, there has been a significant increase in small and marginal farm holdings. These farmers have to face the challenges of globalization. Risk and uncertainty have also increased as cultivation has spread to marginal lands. The diversification of agriculture has also raised concerns on food security. In recent years, there has been a concern regarding increase in the global food prices. Rise in crude oil prices has increased agricultural costs also. Increased use of food crops for biofuels has also pushed up their demand. The USA uses 20 per cent of its maize production for biofuels; Brazil uses 50 per cent of sugarcane for biofuels; and the European Union uses 68 per cent of its vegetable oil production for biofuels. Such large usages, by reducing the availability of these products for food and feed, have exerted pressure on their prices. Food prices have also increased due to low output stocks. International prices of wheat, rice and maize have increased significantly in the past two years. This is another challenge for India in maintaining its food security. This lecture is divided into three sections. Section 1 deals with the performance and problems of agriculture, while Section 2 discusses policy challenges for the revival of Indian agriculture. The last Section provides concluding observations.