Agriculture and Globalisation

AGRICULTURE AND ECONOMIC REFORMS

INTRODUCTION:

Indian economy was ruled by social democratic policies since independence to 1991. It was characterized by regulation, protectionism, licensing, import substitution and central planning, industrialization, economic interventionism, and slow growth. The collapse of Soviet Union, the major trading partner of India and tremendous hike in oil price led major loop crises in India. India had to take $ 1.8 billion conditional loan from IMF. The condition of reform for loan imposed by IMF in 1991 did away with the license permit-quota Raj, reduced tariffs and interest rates, ended public monopolies and allowed foreign direct investment in many sectors.

By the turn of 20^th century, India moved towards a free market economy with reduction in state control and increased financial liberalization.

After the mid 1990s, agriculture lost its momentum and subsequently entered  near a crisis situation, reflected farmer suicide in some areas. In some areas one of the major challenges was to reverse the deceleration in agricultural growth.

Agriculture is the cornerstone of our economy. With 14.6% contribution to the GDP, agriculture is still livelihood of more than 50% of country’s population. Unfortunately agriculture alone is no longer able to provide a reliable livelihood for growth of population. Indian agriculture has taken notable strides in last two decades. India was food deficient country since two decades after independence but due to Green Revolution during mid 1960s with the introduction of HYV seeds, irrigation facilities, fertilizers and pesticides, creations of storage and marketing facilities and provisions of adequate and fair distribution of food grains  improved drastically. But green revolution was limited to certain areas which are endowed with irrigation and other agro infrastructure. But in 1990 there was failure in agriculture front. Prof Y.R.Alagh  has noted that India’s net sown area under the crops has fallen drastically for the first time and also for the first time in history, area under canal irrigation has fallen. In such a backdrop, agricultural revival is an important aspect of entering into double digit growth rate. Apart from investment in farm sector, we must strengthen our natural resources which have remained undeveloped. The targeted growth of 4.15 in agriculture may be possible to achieve by providing required inputs. But defensive position of the country relating to the impacts of globalization and liberalization has not been clearly dealt by the existing national agricultural strategy. The various rounds of negotiation in WTO at Doha 2001, Cancun 2003 & Singapore 2005 indicate that Indian agriculture is no more insulated from any development in world agriculture. In the wake of economic reforms agriculture products and commodities will have to play an active role in country’s international trade. But India is still exporting less valued agricultural goods like tea, coffee, cashew, soya-meals, spices etc. Thus it is  high time to rewrite the agricultural strategy to get maximum benefits from the new opportunities generated by economic reforms of last two decades.

This paper tries to discuss the challenges faced by agriculture development and give some suggestions to improve the situations.

The total geographical area of the country is 328.7 million hectare where gross cropped area is 190 million hectare and net sown area is 141 million hectare. The net area under irrigation is 57 million hectare. We have not been able to make optimum use of the vast potential in agriculture. To achieve and maintain GDP growth rate above 8%, agriculture has to grow by at least 4% every year.

INVESTMENT

Economic reforms led to entrance of private sector and restriction on public sector investment in agriculture especially in irrigation along with other sectors. The capital formation in agriculture sector is already low due to lower income which also decline to 1.7% of GDP in 2004-05 from 2% GDP in 1990s. The stagnant investment in agriculture led to low productivity. Investment on research and development of agriculture also reduced. Agriculture should be industrialized and emphasis should be given on farm mechanization.

PROTECTION

During economic reforms period and post Green Revolution period, the industries were highly protected and agriculture remained unprotected. Opening of Indian agriculture under WTO and changing world agriculture strategies was not shared by all sections of the society.

AGRICULTURE PRICE POLICY

In the post reform era, the policy of maximum support price of food grains, their procurement and distribution system and lack of reforms  restricted the  free movement of agricultural goods across the states.

Some states imposed purchase levies on essential commodities lead to decelerate the demand for food grains in spite of rise in per capita income and decline in relative price of food grain. These deceleration was the  root cause of problem of rural distress that has surfaced in many parts of the  country as reflected in farmer suicides.

SUICIDE & MIGRATION AND RISE OF BURDEN ON WOMEN

 Low farm income due to inadequate productivity combined with low prices of output and with lack of credit at reasonable rates push many farmers into cropping debt. Since nationalization of commercial banks in 1969, the government had strongly pursued a policy of social and development banking in rural areas thereby displacing the money lenders and land lords. The policy of social banking was criticized by proponents of financial liberalization after 1991. Narsimhan Committee decided to delink the monetary policy from the objective of redistribution which was the centre of social and development banking. It was argued that bank should work on commercial basis and profitability should be their prime concern. As a result flow of rural credit declined sharply and credit supply from informal sector sharply raised the cost of credit. Even uncertainties seem to have increased regarding prices, quality of inputs, weather and pests which coupled with unavailability of proper extension and risk insurance have led farmers to despair. This has led to widespread distress migration leading to rise in number of female headed house-hold in rural  areas and a general increase in women work and vulnerability.

In 2004-05 women accounted for 34% principal and 89% of subsidiary worker in agriculture higher than any previous round of National sample survey.

NAXALISM

“Where hunger rules peace can not prevail.

The approach paper of 11^th Plan says that if agriculture goes wrong poverty and hunger persist on a large scale. Naxalism which is already affecting more than 100 districts in the country will spread further. We have the world’s largest number of malnourished children and women .

DEREGULATION OF MARKETING AND LEGALISATION OF CONTRACT FARMING:

India’s food  security is badly affected by reform measures of WTO regime. WTO shifted the policy emphasis from “Food first to Export first’.  After 1991, the policy of promoting high value export oriented crop encouraged through deregulation of marketing system which led to legalization of

1.)  private corporate farming

2.)  direct purchase of agricultural produce from farmers by global retail chains bypassing regulated market.

3.)  Entry of private players/MNCs to open and control new markets. The argument behind this policy is that farmer would become free to sell their produce to buyers of their choice and get higher prices. But according to national commission of farmers has noted three major impacts of contract farming:

a)    the purchaser is likely to be interested in short-term gains and may therefore suggest practices not good in the long run for the land or the producers.

b)    Producer may shift in the favour of export oriented crops at the cost of crops providing basic food.

c)    Larger producer may prefer partner ignoring the small land-owners. This practice in the long run encouraged the small farmers to sell or lease out their land and work as labourers. So contract farming is associated with increase in labour displacement in farm.

SEED SECURITY

WTO Regime opened the doors for many multinational seed companies like Pioneer, Monsonto etc. which tried to gain control over the seeds and made the local farmers dependent on hybrid seeds made by them and thereby checking the self reliance of Indian farmers.

BIO-PIRACY

WTO regime  also  led MNCs in process of stealing the biological wealth of the third world countries in the name of patents by crossbreeding with the  other varieties of  seeds ,plants etc. from developing countries and claiming that they have produced a new variety and secure patent rights and charging royalties for that. The examples are Indian Basmati, Neem etc.

STRATEGIES FOR IRRIGATION:

Only 20% of irrigation area covered by Water User Association should be encouraged to collect water charges and use part of it for maintenance. Only 11 states have enacted legislation for participatory Irrigation Management Act. Excess use of groundwater is depleting ground water levels. Problems compounded by cheap or free power. An expert Group looking at possible solutions.

WATER LAVEL

Fresh water reserves are depleting due to growing population, unsustainable land use practices, extensive deforestation, increasing demand of industries and agriculture. Water has direct effect on the environment and society so water management is the need of the hour. Since rain fall in India is confined mainly to the south-west monsoon from June to September and are quite erratic during summer, tube wells do not function, other water resources dried up due to depletion of water table.

FERTILISERS.

The selling price of fertilizers has increased since 2002 and it is going on increasing although Govt. is giving subsidy on it. The consumption of N, P, K fertilizers is reduced from 109.2 lakh tones to 64.4 from 2000 to 2006 from 42.2. lakh tones to 25.4 lakh tonnes 15.7. to 11.5 respectively. When negotiations on agriculture is complete in WTO India will have no way but to reduce direct and indirect subsidy on agriculture.

Economic reforms have ended License Raj but it has increased corruption in various forms and fields. Last two decades have become witness of happiness and prosperity also . Crores of people got the keys of cars, crores of people become house owner for the first time majority people attached themselves with banking system. India made its position as 2^nd emerging economic power in international platform. Economy is among one of some economies which stood firmly during last financial Tsunami when many stalwart economies started collapsing like playing card castles.

WIDENING the gap between haves and have nots:

During last two decades the gap has widened in consumption also along with income so far as poverty is concerned then after economic reforms neither the number nor the percentage of poor reduced. During 1991 46 NSSO report 35% were poor today also their no. is 50 crore.

SUGGESTIONS

1.    Polyhouse cultivation

2.    Organic farming

3.    contract farming

4.    credit facilities KCC etc though SHG, MFI/NGO

5.    financial Inclusion

6.    Agriclinic, soil test

7.    Land acquisition Law

8.    Marketting , Cold Storage, Godowns, NSP

9.    Financing for farm machinery

10.Krishi Bima Yojna

11.Commodity Supply Chain

12.Export of Agri products

13.Farmers  Corner

14.Minor and drip irrigation

15.Production of commercial crops, fruits, mushrooms , medicinal plants etc.

CONCLUSION

Indian agriculture which continues to provide livelihood for more than half of the population, economic reforms policies after 1991 has acute adverse effects on Indian economy.  Green Revolution helped India to achieve self sufficiency in agricultural production. This was built on platform of state support, price subsidy, credit and marketing support.

Economic reform after 1991 was based on explicit rejection of the need to transform the institutional framework of Indian Agriculture. The need of the hour was industrialization of agriculture i.e. extra investment, mechanization, credit facilities, irrigation facilities, storage facilities etc. But reform process in India significantly weakened the institutional support structure. The protection offer to agriculture from import was removed, resulted in fall in price of many commodities. Many subsidies were brought down. Public capital formation in Agriculture started falling and public expenditure on research and development slowed down. The expansion of rural credit decreased and agriculture production shifted from food crops to high value export crops. Regulated markets become obsolete. All these resulted fall in growth of food grain production for the first time after independence, the per-capita availability of food grain fell down from 175 kg in 1992 to  163 kg in 2001.NSSdata show  that the average calorie intake has declined by 298 points in rural areas and by 30 points in urban areas of our country.

The number of farmer suicide reported from certain parts of the country shows the distress state of agriculture. Between 1997 to 2006, there were about 150000 suicides by farmers in rural India (Nagraj 2008).

Due to lower productivity, weak inputs and lack of market support the Indian farmers are not able to compete in world market.

India needs the immediate measures of insuring markets, developing roads, creating appropriate infra structure and encouraging private sector participation .Co-operative farming should be encouraged , and farmers should be made share- holders in  contract farming  scheme .Otherwise MNCs,CORPORATE SECTORS  will take away all the profits and farmers will remain tillers only

No doubt India is shining. It is one of the fastest growing economy of the world .For 2010, India was ranked 124^th among 179 countries in index of Economic Freedom World Rankings, which is an  improvement. But India is on crossroads. While one road leads India to prosperity and glory ,the other roads leads it to social inequality. What has been conveniently suppressed till date have been the disparities, mainly the socio economic issues. This led to growing discontent among the population and it has gathered momentum since the reforms bean. It will very soon reach a critical point wherein the very   purpose for which the reforms were  started ,will start to lose their significance rapidly and throw the country back to the license raj and unionist era.

References:-

1.Chanakya,Civil Services Today,( Magazine)September 2011,pp125.

2.Jalan, Bimal, The Future of India,2006,pp-79

3.Bhagwati ,Jagadish & Panagariiya, India’s Tryst With Destiny,2012, pp183-89