Financial Crisis and Indian Agriculture

Abstract

Agricultural growth is a crucial element in resolving food price crises, enhancing food security, and accelerating pro-poor growth. After decades of policy neglect and underinvestment in public goods such as agricultural science, rural infrastructure, and information and monitoring, high food prices have provided some positive incentives for policymakers, farmers, and investors to increase agricultural productivity. By the end of the year 2008-2009, the global crisis had taken a substantial toll of India’s economic performance but it was by no means catastrophic. The rate of economic growth had slowed to the 5-6% range in the second half of the year from the 9% average of the previous five years, but it was still much better than the negative growth rates in industrial countries and better than the performance of most significant developing countries with the exception of China.However, with the sudden shrinkage in world trade after September 2008, India’s exports in January-Mary, 2009 were about 20% lower than in the previous year. This meant that hundreds of thousands of jobs were lost in sectors like garments, textiles, footwear and leather products and gems and jewellery. This paper try to answer the following questions: How did this global crisis come about? How severe is it and how long might it last? And against the backdrop of this world crisis, what are some of the priorities for India’s agricultural sector.To conclude, the unprecedented global economic crisis has definitely taken a toll of India’s economic performance. Most likely it has also reduced our potential for economic development in the next 3 or 4 years. However, despite the severity of the global crisis, India’s economy has demonstrated considerable resilience, in part, thanks to the strength of our agricultural sector. With sound and determined economic policies we should be able to recover a growth momentum of 7-7.5% in a year or two. That will be a little less than our growth performance in 2003-2008. But it will be far better than nearly every other significant economy in today’s world.