Impact of Economic Liberalization in Rural India

Abstract

Indian agricultural has been hit hard during post WTO period (1995 - 2003). The share of agro goods in India's global export has declined during this period. During post WTO period, agricultural subsidies of developed countries have been rather increased. Therefore it is very difficult for India to face global agricultural competitiveness. In this scenario, the global agricultural trade would likely to become oligopolistic. The returns of various crops have declined due to increase in cost of production, slow growth of agricultural productivity, weak marketing mechanism, increase in input intensity and fall of water table. As a result farmers have become highly indebted and are resorting to suicides. In the near future also the total quantum of exports particularly agriculture and light manufacturing goods can not be raised significantly in the global market in the near future because of limited and uncertain domestic export surplus and particularly their inelastic demand at world market. In other words, Indian exports were considered to be supply constrained and also were not responsive to relative price changes at the global level. Raising the level of productivity and quality standards to internationally competitive levels is one of the major challenges following the dismantling of quantitative restrictions on imports, as per the WTO Agreement on Agriculture.