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

K U ViswanathanSubscribe to K U Viswanathan

Commercialisation and Diversification of Indian Agriculture

to 1985-86). If this is true then the post 1985-86 increase in the wholesale prices of oilseeds clearly establishes the effect of government intervention in this sector. A comparison of the average annual changes in the wholesale price indices of foodgrains and oilseeds during the period 1985-86 to 1991-92 reveals that oilseeds witnessed an increase of 14.81 percent per annum, whereas for foodgrains the increase works out to 9.83 per cent per annum. Further, Dantwala says that the device of Minimum Support Prices (MSP) was not used to favour oilseeds as a group. However, the device of MSP was, in fact, used when the government announced its integrated policy for oilseeds fixing the wholesale price band for oil at Rs 20-25 per kg in 1988-89. The National Dairy Development Board (NDDB) was entrusted with the task of maintaining the above price band by means of buffer-stocking operations. The "price band' policy sought to fix the procurement prices of groundnut and rapesecd- musturd "at least 40 per cent above the present levels recommended by the Prices Commission". The result of such a policy was that the wholesale prices index of oilseeds increased by 55.1 per cent between 1988-89 and 1991-92 and the increase for edible oils during the same period works out to 56.5 per cent. This surely had repercussions on other competing crops thus raising questions regarding the 'efficiency' implications of such policy measures. The correction started from 1992-93 onwards, when India had to import wheat at an import price which was more INDIAN agriculture has experienced spectacular changes in the recent period manifesting large-scale commercialisation and diversification. They broadly include cultivation of new crops and varieties, increase in the share of area under cash crops, large-scale spread of livestock activities and fisheries, pursuance of hi-tech agriculture in the areas of aquaculture, bio-technology, horticulture, processing, etc. The latest changes are basically responses of our agriculture to the new economic environment ushered by the process of liberalisation. In this context, M V Nadkarni's contribution is valuable as it examines the commercialisation in its different dimensions [Nadkarni 1996]. The following discussion is meant to supplement his findings on three counts. Firstly, diversification has taken place towards allied agricultural activities such as animal husbandry, fisheries, hi-tech projects, etc, which Nadkarni has explicitly mentioned but does not cover as he has restricted the scope of his paper to the crop sector only. We, however, wish to highlight some of the interesting trends observed in these allied sectors followed by a brief account of recent than double of what was being paid to Indian cultivators of wheat. The procurement prices of wheat and rice were subsequently raised to somewhere near their export parity levels. Another point that Dantwala makes is in connection with our response to TMO and other production programmes. He says, "GSK speak disparagingly about the government's effort to step up production of oilseeds. They virtually blame the appointment of Technology Mission on Oilseeds (TMO), the National Oilseeds Development Project (NODP), Oilseeds Production Thrust Project (OPTP)." On the contrary, we do recognise that it is not unusual for the government to set up technology missions whenever it finds that a particular crop sector is performing badly. We do welcome that. But our main argument in this respect has been that it should focus more on productivity augmentation and not prices, Unfortunately, it appears that TMO became more a 'prices mission' and less a 'technology mission'. It ought to have concentrated more on the development/diffusion of technology that increases yields, cuts costs and makes larger supplies available at lower prices. But in our opinion, based on empirical analysis, that did not happen. TMO did raise production, primarily by expanding area under oilseeds, and that too under very high protection from world markets. We feel economically it is not an efficient approach to expand production of edible oils at double the world prices, especially when such a policy affects the production of other crops in which the country has a comparative advantage.
Back to Top