ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Putting the Cart before the Horse

The 2019 union budget has neither proposed any bold policy moves, nor any big allocations for investments in the agri-food sector. What it has is massive welfare programmes, predominantly the remnants of its predecessor government’s welfare policies. It appears that India has already become a welfare state before generating enough wealth. Has the budget for the agricultural sector actually put the cart before the horse?

Secret of Gujarat's Agrarian Miracle after 2000

Semi-arid Gujarat has clocked high and steady growth at 9.6% per year in agricultural state domestic product since 1999-2000. What has driven this growth? The Gujarat government has aggressively pursued an innovative agriculture development programme by liberalising markets, inviting private capital, reinventing agricultural extension, improving roads and other infrastructure. Canal-irrigated South and Central Gujarat should have led Gujarat's agricultural rally. Instead it is dry Saurashtra and Kachchh, and North Gujarat that have been at the forefront. These could not have performed so well but for the improved availability of groundwater for irrigation. Arguably, mass-based water harvesting and farm power reforms have helped energise Gujarat's agriculture.

The Dragon and the Elephant: Learning from Agricultural and Rural Reforms in China and India

What can we learn from the process of economic reform in China and India? Does the sequencing of reform and an agriculture-led package matter? What could other developing countries and countries in economic transition learn from the experiences of India and China? What could these two countries learn from their own as well as each other's experiences? How can the two largest developing countries cooperate in their agricultural and economic development and work together at multilateral negotiations, such as those conducted through the World Trade Organisation, to address the concerns of developing countries? This paper summarises the key findings of a number of studies that were prepared for two international conferences devoted to comparing the rural development and agricultural reform experiences of China (the dragon) and India (the elephant) over the last several decades.

Can the Budget Boost Agricultural Performance?

More than any other budget, which has been presented in recent years, the budget for 2005-06 was expected to correct the neglect of the agricultural sector. The budget is noteworthy for its focus on creation of greater employment in rural areas through increased allocations for rural development and irrigation. It also acknowledges some of the important changes that need to be implemented in agriculture, including a policy for diversification, rationalisation and restructuring of subsidies and greater decentralisation. But are the fiscal allocations and the policy impetus emanating from the budget adequate to revitalise agricultural growth performance in the economy? In this regard, the budget falls short of expectations. Not much of an effort has also been made to cut the food and fertiliser subsidy and stimulate public investment in agricultural research and development. Institutional changes necessary to improve service delivery in rural areas have also not been addressed adequately.

Farm Sector Performance and Reform Agenda

Recent political changes in India have brought back agriculture to the centre stage of policy discussions. How long it stays there is yet to be seen. But it would be worth analysing the structural and policy-induced changes in agriculture since the reforms started in 1991, and try to build a political consensus on the reform agenda that can put agriculture on a higher growth trajectory, makes it globally competitive and enables the masses to share in its gains, and is also sustainable in the long run. This paper is an attempt in that direction.

Agriculture Diversification in South Asia

South Asian countries are gradually diversifying with some inter-country variation in favour of high value commodities, namely, fruits, vegetables, livestock and fisheries. Agricultural diversification is strongly influenced by price policy, infrastructure development (especially markets and roads), urbanisation and technological improvements. Rainfed areas have benefited more as a result of agricultural diversification in favour of high value crops by substituting inferior coarse cereals. Agricultural diversification is also contributing to employment opportunities in agriculture and increasing exports. The need is to suitably integrate production and marketing of high value commodities through appropriate institutions. Market reforms in developing and strengthening desired institutions through required legal changes would go a long way in boosting agricultural growth, augmenting income of small farm holders and promoting exports.

Rice Trade Liberalisation and Poverty

This paper explores the important link between rice trade liberalisation and poverty, seeking specifically to respond to two questions: What would be the effect of freer trade in rice on trade flow patterns? How will rice trade liberalisation and consequent rice price equalisation across countries influence the prevalence of poverty in the poorer economies? In doing so, the paper focuses primarily on Asia.

Capital Formation in Indian Agriculture

Is capital formation in Indian agriculture really declining? How and to what extent has it affected growth in agriculture? These questions have been at the centre stage of a debate sparked off in the late 1980s. This paper re-visits this debate by dissecting different components of capital formation, by digging into the very concept and estimation procedures followed in the Indian system of National Accounts vis-à-vis the UN system. The study, after re-defining and re-estimating trends in capital formation in agriculture, concludes that the situation is definitely not good, but not as alarming as is sometimes made out to be. This is because of the increasing share and role of private sector investments in agriculture over time. And the trend in that has remained robust despite decline in public sector capital formation in agriculture, and despite the fact that public sector investment has an inducement effect on private sector capital formation. This only goes to suggest that private sector investment in agriculture has been increasingly influenced by other factors, especially the terms of trade. And this has implications for the structure of growth within agriculture.

Millennium Budget

The overall approach of the budget in regard to agriculture and rural development, of containing subsidies and increasing investment, is right. But real rationalisation of subsidies requires not merely price revisions but substantial institutional reforms. Similarly, it would require massive doses of investment in irrigation and R and D before a significant weather-proofing of Indian agriculture can be achieved and to expect that the proposals contained in the budget for 2000-2001 can put agriculture on a sustainable growth path of 4 per cent per annum is naive.

Demystifying Fertiliser and Power Subsidies in India

Broadly half of the huge supposedly agricultural subsidy on fertilisers and power, amounting to more than Rs 31,000 crore and comprising 2 per cent of GDP, is either going to industry in the case of fertilisers or is simply being stolen by non-agricultural consumers in the case of power. This paper estimates plant-specific domestic resource cost of all urea plants in the country, and aggregate measure of support for selected commodities through power subsidies. It also gives some policy options both for the centre to tackle fertiliser subsidy and to the states to minimise power subsidy

From Marrakesh to Seattle

The Agreement on Agriculture (AOA), one of the major agreements signed in Marrakesh under the Uruguay Round in April 1994, has three basic clauses; market access (tariffication), domestic support and export competition. The authors review India's status with regard to each one of these and also try to compare it with what is happening in the rest of the world, especially how the developed countries are adjusting their agricultural policies to make them compatible with the provisions of the AOA. In the light of this analysis, they delineate the broad contours of an agenda for Indian negotiators in the Seattle round with respect to these three clauses, keeping India's interests in mind. Section II of the paper concentrates on the issue of market access, Section III on domestic support and Section IV on export competition. Section V presents some concluding remarks and also refers to some other important issues that too need to be taken care of in the Seattle round.

Freeing Trade in Agriculture-Implications for Resource Use Efficiency and Cropping Pattern Changes

If India frees up imports and exports of agricultural products at zero duty, there is a possibility of reaping significant gains from trade, while promoting resource use efficiency (RUE) in domestic cropping patterns. The declining share of cereals in gross cropped area may slow-down and even see reversal in some pockets. Similarly, area expansion under oilseeds will decelerate. India may emerge as a marginal exporter of cereals and cotton, while importing edible oils and pulses. From overall efficiency point of view, agricultural trade liberalisation would benefit India.

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