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

A Ganesh KumarSubscribe to A Ganesh Kumar

Employment Guarantee for Rural India

A report of a round-table discussion held in Mumbai in November on the proposed employment guarantee programme.

Growth and Welfare Consequences of Rise in MSP

This note summarises the results of a recently completed study that examined the consequences of increasing the minimum support price (MSP) of wheat and rice by 10 per cent, with an applied general equilibrium model of India with 65 sectors, and five rural and five urban expenditure classes. The results show that an increase in the MSP of wheat and rice leads to decline in overall GDP, increase in aggregate price index and reduction in investments. Even the increase in agricultural GDP resulting from higher MSP dwindles rapidly and only a minuscule positive impact on agricultural GDP remains by the third year. More importantly, in terms of welfare the bottom 80 per cent of the rural and all of urban population are worse off.

Strategies for Agricultural Liberalisation-Consequences for Growth, Welfare and Distribution

This note summarises the results of a recently completed study which examined the impacts of trade liberalisation, agricultural input subsidy reductions and safety net programmes for India with an applied general equilibrium model with nine agricultural sectors, one non-tradeable non-agriculture sector and one tradeable non-agriculture sector and with five rural and five urban income classes. The study demonstrates the importance of accounting for large country effects in rice trade and estimates the optimal tariff/quota for rice exports for India which is found to be just half a million tonnes of net export of rice. The results show that non-agricultural trade liberalisation is even more important for agriculture than even agricultural trade liberalisation, both of which help accelerate growth The study concludes that a policy package involving trade liberalisation with moderate residual taiffas permitted under GATT and agricultural inputs subsidies removal accompanied by targeted safety net programmes along with stepped up investment in irrigation with the expected additional foreign inflows materialising, produces a scenario that is superior from the point of growth, welfare and distribution and that this can be financed without raising taxes.

Falling Agricultural Investment and Its Consequences

Falling Agricultural Investment and Its Consequences A Ganesh Kumar Neglect of agriculture, an important sector of the Indian economy, is likely to have an adverse impact on the country. Such a neglect has been observed as a fall in agricultural investment during the 80s. Simulations using a computable general equilibrium model help in assessing the adverse impact of the fall in total agricultural investment on agriculture in particular and the economy in general. Though shifting investment resources away from agriculture to non-agriculture may result in a faster growth in total gross domestic product, the growth across sectors is likely to be uneven, with non-agriculture likely to show a far higher growth than agriculture. However, slowing down agricultural growth would lead to growing income inequality in rural areas. If the present trends of investment policy are continued large-scale cereal imports may become necessary and also despite such imports prices would go up substantially. Price increases of foodgrains are known to hit the poor most.
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