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Agriculture and The World Trade Organisation

 | 
Gurdarshan Singh Bhalla
, 
Jean-Luc Racine
, 
Frédéric Landy

I. The national legacies in India and in France

1. The National Legacy in India: Evolution of Agricultural Policy since the Sixties

G.S. Bhalla

Texte intégral

Introduction

  • 1 This happened in spite of the fact that as a result of the belated response to recurring famines du (...)

1India was a semi-feudal and backward agrarian economy on the eve of independence. With nearly two thirds of the work force engaged in agriculture and more than half of total domestic product originating in it, agriculture constituted by far the most dominant sector of the Indian economy. The agricultural sector was characterised by high pressure of population, low levels of productivity and income and extreme institutional rigidities. These outmoded institutional structures combined with poor infrastructural facilities in most parts of India resulted in near stagnation of agriculture during the British period1. In spite of large investments in irrigation during the first half of the 20th century (1901-04 to 1940-44), foodgrains growth rate was even lower than the population growth rate thereby resulting in a substantial reduction in the per capita availability of foodgrains (Blyn, 1966).

2It was only after independence that a planned attempt was made to bring about agrarian transformation in India with the objective of removing institutional bottlenecks to growth and improving the lot of the poor peasantry. Since peasant movement constituted a part of the national movement and imparted immense strength to it, the national leadership was committed to bringing about radical land reforms after independence. The second main objective of policy was that of providing food security to India’s rising population and simultaneously providing employment to a large proportion of workforce traditionally engaged in agriculture. Keeping in view the fact that food availability had emerged as a major concern and constraint to the development process, accelerating agricultural and foodgrains growth with a view to providing food security became the central objective of the agricultural policy (Chakravarti, 1987).

3The policy package employed to achieve this consisted of institutional changes like land reforms, large investments in rural infrastructure including irrigation and power, and agricultural research and extension. After the mid-’sixties, these measures were supplemented by a positive price policy and other market interventions that ensured remunerative prices for major foodgrains and some other crops.

4This policy was instrumental in accelerating agricultural growth and in raising the output and income level of a large number of cultivators particularly in the irrigated regions of India. But because of large interpersonal and inter-regional inequalities, the gains of agricultural growth were not shared equitably amongst various categories of farmers and among various regions. Nevertheless, rapid growth consequent to the adoption of new seed-fertilizer technology resulted in raising foodgrains production in India and thereby enabling the country to meet the foodgrains demand generated by rapid growth of population combined with modest growth in per capita income-albeit at a low level of consumption.

5With the liberalisation of the Indian economy in June 1991, agricultural policy is also bound to undergo a significant change. Quite a few of the new policy measures taken already are expected to significantly affect the agricultural sector. The most important among these are trade reforms that have resulted in the devaluation of the Indian currency, withdrawal of excessive protection to industry and reduction of tariffs on imports. All the above measures are supposed to have benefited the agricultural sector and made it highly competitive in the international market. The signing of the Dunkel text in April 1994 has committed India to multilateralism. Further, there is a general expectation that with the reduction of subsidies by the developed countries, exports of sub-tropical and temperate products from developing countries would register significant increases. The other important steps that have been taken as a part of new policy are reduction of subsidies to fertilizers, proposals to raise the prices of other administered inputs and measures designed to rationalise the institutional rural credit market. On the other hand, major hikes have been given to output prices with a view to giving higher incentive to the producers even though these price hikes are likely to adversely affect the poor in India.

6An attempt is made below to critically examine the efficacy of agricultural policy adopted during the pre-liberalisation era and to assess the extent of challenges and opportunities likely to become available with agricultural liberalisation. The first part of the discussion is devoted to a description of the main feature of economic policy during the planned era. An attempt is then made to briefly review the efficacy of these policy measures in achieving the stated objectives of land reforms, higher growth, regional equality and achievement of food security. Finally, an attempt is made to critically review the prospects of Indian agriculture in the era of economic liberalisation.

Agricultural policy in India prior to liberalisation in 1991

7Prior to the liberalisation of the Indian economy in June 1991, a planning framework governed agricultural policy like all other sectoral policies. The entire gamut of macro-economic policies, notably trade, fiscal and monetary policies were designed to subserve the plan objectives. The quantum of Plan outlay, its financing and targets set for the agricultural sector were all decided through the planning process at the State and Central levels.

8It needs to be underlined that the nature and role of planning for the agricultural sector of India was primarily determined by its specific characteristic of being under the operation of millions of independent producers. Hence, agricultural planning in India consisted of creation of a rural infrastructure combined with the provision of modem inputs and a framework of incentives for the farmers to enable them to increase output through the adoption of modem technology. In this respect, there was a basic difference in the nature of agricultural planning in India and in China before China initiated its agricultural reforms in 1977. In China, after liberation in 1949 under the programme of village communes, co-operative farming had superseded the private ownership and operation of land. Much of the post 1977 reforms in China had to do with restoring private ownership and reinstating price incentives–, the two institutions that have always existed in India.

9There were several components of agricultural policy and programmes in the First and subsequent Five Year Plans in India during the post-independence period.

10The first and the most important was the implementation of land reforms during the mid-’fifties with the objective of eliminating the intermediaries and bringing about a greater degree of equality in land distribution. The second was to undertake substantial investment in rural infrastructure like irrigation and power; agricultural research and extension; roads and communications; regulated markets; and credit institutions. Promotional policies like the Special Food Production Programme (SFPP) and Agroclimatic Regional Planning, Land and Water Development Programmes, etc. initiated by the Planning Commission were also aimed at accelerating agricultural development.

11During 1950-51 to 1966-67, the Community Development Programme and a network of extension services were the main instruments employed to transform traditional agriculture. This was supplemented by the initiation of the Intensive Area Development Programme (IADP) in a few well endowed districts during the early ‘sixties.

12The advent of green revolution in the mid-’sixties marked a turning point in the technological up-gradation of Indian agriculture. To begin with, the new technology was confined to wheat production in the north-western states of India. The focus of agricultural policy became modernisation of agriculture through extending the Borlaug seed-fertiliser technology to different parts of the country. Deliberate measures were also taken to involve the small and marginal farmers in the production process through up-gradation of their technology by providing them new inputs including seeds, fertilisers and credit at subsidised rates. During the mid-sixties, positive price policy was also introduced with a view to encourage the adoption of new technology. The objective of the price policy was to reconcile two opposing interests. It had to ensure remunerative price to the farmers to encourage them to adopt the new technology while simultaneously ensuring a reasonable price for the consumers.

13The fourth important component of policy was the establishment of a comprehensive food management system of procurement, storage and public distribution of foodgrains with a view to providing food to consumers at reasonable prices. During periods of scarcity, minimum support and procurement price operations were combined with compulsory procurement, levy on millers, zonal restrictions etc. for maximising procurement to enable distribution of foodgrains at subsidised rates through the public distribution system (PDS). Sufficient food stocks were kept not only for the smooth running of the PDS but also for use in helping to stabilising prices through open market operations.

14The fifth component was tightly controlled trade and exchange rate policy. In the case of agriculture, except for a few traditional commercial crops, the rest of the agricultural sector was insulated from world agricultural markets through almost total control of exports and imports. The estimated surplus over domestic consumption requirements determined the marginal quantities to be exported and vice versa for imports. More importantly, foodgrains, sugar and edible oils were imported in times of scarcity to prevent domestic prices of essential commodities from rising and to impart a measure of stability to domestic prices in the interest of both producers and consumers. Foreign trade in most agricultural goods was subject to quota restrictions or canalised or subject to other restrictions such as minimum price requirements.

15Finally, the financial policy was primarily geared to mobilising resources for public sector expenditures and for co-operative and institutional credit to the rural sector with a view to facilitating private investment in infrastructure and in encouraging the adoption of new technology.

Critical assessment of agricultural policies during the planning period

16Having listed the various policies pursued in India before 1991, it is worthwhile to review how far these policy packages were successful in firstly transforming the outmoded agrarian structure. Secondly, it is also important to evaluate their success in terms of accelerating the growth rate through modernising of Indian agriculture; reducing regional inequalities and raising the standard of living of working peasantry. These aspects are briefly discussed below.

Land reforms and changes in production relations

17Implementation of land reforms in all the states of India was one of the most important measure designed to change the agrarian structure in India. Broadly speaking, there were four bouts of land reform legislation in India after Independence. The most important legislation dealing with abolition of absentee landlordism and introduction of tenancy reforms were enacted during the mid-’fifties. The acts imposing ceiling on land holdings and distribution of surplus land among landless and small holders were first passed during the mid-’fifties and subsequently, during the mid-’sixties as also during the emergency as a part of the Twenty Point Programme.

18An evaluation of the implementation of land reforms would suggest that the stated objectives were only partially realised. Land reforms were fairly successful in fulfilling the objective of abolition of intermediaries in most parts of India. As a result as many as 20 million tenants were brought in direct contact with the state and Rs. 6700 million worth of compensation was to be paid to the ex-intermediaries of which nearly half had been paid by the beginning of the Fifth Five Year Plan. It is, however, notable that in many parts of the country, the landlords with the connivance of the local bureaucracy were able to resume land for self-cultivation by ejecting a large number of tenants. In states like Bihar, Orissa, Rajasthan, Madhya Pradesh and West Bengal, landlords managed to keep very large holdings because of their power and influence. In general, the level of success of zamindari abolition depended on the strength of the peasant movement. In spite of these failures, the legislation on abolition of intermediaries was fairly well implemented, except in the states mentioned above. One important consequence of the abolition of intermediaries was that the extent of tenancy declined considerably and selfcultivation became the dominant mode of production in most parts of India. At the all India level, the proportion of tenant holdings declined from 40 per cent in 1953-54 to 23.5 per cent in 1961-62 and in the meantime, the percentage of area under tenancy declined from nearly one-fifth of total operated area to onetenth. By 1992, the number of tenant holdings had declined to 11 per cent and the area under tenancy to only 8.3 per cent (Table 1).

TABLE 1. PERCENTAGE OF OPERATED AREA LEASED-IN

States/ Year

1953-54

1961-62

1971-72

1981-82

1992-93

Andhra Pradesh

21.20

9.05

9.01

6.23

9.57

Assam

43.00

NA

19.69

6.35

8.87

Bihar

12.40

10.25

14.50

10.27

3.91

Gujarat

19.40

5.83

3.91

1.95

3.34

Haryana

NA

NA

23.26

18.22

33.74

Himachal Pradesh

NA

NA

15.89

3.20

4.83

Jammu & Kashmir

22.10

NA

8.06

2.37

3.73

Karnataka

21.50

18.16

15.89

6.04

7.43

Kerala

20.15

15.03

8.59

2.05

2.88

Madhya Pradesh

19.80

6.40

7.46

3.56

6.30

Maharasthra

19.70

8.74

6.15

5.20

5.48

Orissa

12.60

10.75

13.46

9.92

9.48

Punjab

39.80

35.39

28.01

16.07

18.83

Rajasthan

21.01

4.87

5.26

4.31

5.19

Tamilnadu

27.00

16.55

13.07

10.92

1.89

Uttar Pradesh

11.40

8.06

13.01

10.24

10.49

West Bengal

25.40

17.65

18.76

13.39

10.40

All India

20.55

10.70

10.57

7.18

8.28

Source: Government of India, National Sample Survey from 8th round to 48th round. See bibliography

19Despite several bouts of legislation during the 50’s, the late 60’s and early 70’s, all attempts regarding imposition of ceilings on land holdings and distribution of surplus land among the landless and poor peasants failed miserably. This was primarily due to loopholes in law and large scale connivance of the surplus farmers with revenue administration, lack of will power of policy makers and relative weakness of the peasant movement. Consequently, the pattern of land distribution has remained extremely skewed and has not undergone any significant changes (Table 2).

  • 2 One of the important development is that along with the increase in the proportion of small and mar (...)

20To begin with during the early `fifties, the land distribution was extremely skewed. The distribution of operational holdings shows that in 1953-54, marginal and small cultivators with less than 2 hectares constituted 60.0 per cent of all cultivating households, but accounted for only 15.4 per cent of operated area. By 1992, the proportion of marginal and small farmers had increased to 78.0 per cent although the area under their cultivation constituted 34.3 per cent of total area.2 The phenomenal increase in the number and proportion of marginal and small farmers and landless labour has very serious implications for the emerging agrarian structure in india.

TABLE 2. PERCENTAGE DISTRIBUTION OF OPERATIONAL AND OWNERSHIP HOLDINGS AND AREA OPERATED OVER 3 BROAD CATEGORIES OF OPERATIONAL HOLDINGS IN INDIA FOR 1954-54, 1961-62, 1970-71, 1981-82 AND 1992-93

Year

Small (0.00-1.99ha)

Medium (2.00-5.99ha)

Large (6.00 ha & above)

Holdings

Area

Holdings

Area

Holdings

Area

Operational Holdings

1953-54

59.99

15.44

27.48

31.15

12.52

53.41

1961-62

61.69

19.19

27.75

34.90

10.56

45.92

1971-72

67.98

24.02

24.13

36.81

07.72

39.17

1982

75.04

28.09

19.71

38.75

05.25

33.16

1992

78.00

34.30

15.77

37.54

03.64

28.16

Ownership Holdings

1953-54

67.14

16.31

22.81

31.18

10.05

52.51

1961-62

71.92

19.99

20.33

34.51

07.74

45.50

1971-72

75.77

24.43

18.32

36.49

05.90

39.08

1982

78.96

28.71

16.56

38.02

04.48

33.26

1992

83.42

35.52

13.63

37.80

02.94

26.68

Landless Households

1953-54

23.09

1961-62

11.69

1971-72

09.64

1982

11.33

1992

11.24

Source: Government of India, National Sample Survey, from 8th round to 48th round. See bibliography

21The legislation regarding security of tenure to the tenants and determination of fair rents has also remained more or less on paper except in Jammu & Kashmir, Kerala and now West Bengal. In actual practice, tenants hardly enjoy any security and it is the market forces that determine the terms of tenancy. In a few areas where mechanisation has proceeded on a rapid rate, the phenomenon of reverse tenancy (large farmers leasing in from the small and marginal farmers) has become quite important.

22To sum up, unlike among East Asian countries and China, land reforms miserably failed to bring about equitable distribution of land among peasantry and to protect the tenants. However, with the abolition of intermediaries and the emergence of self-cultivation as the dominant mode of production in most parts of India, a few of the serious institutional constraints have been removed and conditions have been created for the growth of agriculture albeit on capitalist lines.

Nature of agricultural growth and transformation

23The post-independence period marks a turning point in the history of the development of Indian agriculture. This is clear from the fact that compared with a paltry rate of growth of less than 0.25 per cent annum during the first half of this century, agricultural and foodgrains output rose at the unprecedented rate of 2.7 per cent annually during the post-independence period 1949-50 to 1996-97. Nevertheless, though this growth rate represents a major advance over the earlier historical record and is higher than a population growth rate of 2.1 per cent, it falls considerably short of the needs of the economy because of increasing demand arising out of rapidly increasing population and per capita income.

24Broadly speaking, two periods can be distinguished in the history of post independence agriculture, characterised by two different strategies which were adopted for agricultural development. The first period roughly extended from 1949-50 to 1964-65. In this period the main thrust was to bring about institutional changes and land reforms and to expand the irrigation infrastructure. The community development programmes sought to spread the benefits of development to all parts of the country. Having weakened the power of semi-feudal landlords, an attempt was made to acquaint a large number of owner cultivators with better practices associated with irrigation.

  • 3 Imports of foodgrains which averaged only 2.8 mn tonnes during the 50’s nearly doubled to an averag (...)

25The expansion of irrigation led to a notable increase in crop yields in the irrigated regions of India. But for the country as a whole agricultural production was characterised by wide yearly fluctuations. The agricultural situation deteriorated considerably during the early sixties and 1964-65 and 1965-66 turned out to be two among the worst drought years of the century. Consequently the country had to import large quantities of foodgrains.3 But despite these fluctuations, taking the entire period 1949-50 to 1964-65, agricultural output grew at an average compound rate of 3.15 per cent per annum and area increases accounted for nearly 50 per cent and yield increases 38 per cent of the total growth of output (GOI, 2001).

26During the second period 1967-68 to 1980-81, the growth rate of agricultural output decelerated to 2.19 per cent per annum. During this period, while the contribution of yield to growth of output increases to 58 per cent that of area declined to 23 percent.

27The third period namely 1980-81 to 1990-91 is characterised by a very significant acceleration in agricultural output to 3.19 percent per annum compared with only 2.19 per cent during the earlier period. The consolidation of green revolution and its spread to all parts of India was primarily responsible for this acceleration. During this period growth in agriculture contribution of productivity increase to total output growth rose to about 77 per cent compared with only 58 per cent during the earlier period while that of area increase declined from 23 per cent to only 8 per cent (Table 3). But agricultural growth has experienced a notable deceleration form 3.19 per cent per annum to 1.96 percent during the post-reform period of nineties. The main reason for this is a sharp deceleration in total investment in agriculture.

TABLE 3. ALL INDIA COMPOUND GROWTH RATES OF AREA (A), PRODUCTION (P) AND YIELD (Y) OF MAJOR CROPS

1949-50 to 1964-65

1967-68 to 1980-81

1980-81 to 1990-91

1990-91 to 2000-01

Crop

A

P

Y

A

P

Y

A

P

Y

A

P

Y

Rice

1.21

3.5

2.25

0.77

2.22

1.46

0.40

3.56

3.47

0.81

1.74

0.92

Wheat

2.69

3.96

1.27

2.94

5.65

2.62

0.46

3.57

3.10

1.03

3.27

2.21

Coarse C.

0.90

2.25

1.23

-1.03

0.67

1.64

-1.34

0.40

1.62

-2.07

-0.54

1.18

T. Cereals

1.25

3.21

1.77

0.37

2.61

1.70

-0.26

3.03

2.90

-0.06

1.86

1.38

T. Pulses

1.72

1.41

-0.18

0.44

-0.4

-0.67

-0.09

1.52

1.61

-0.79

-0.04

0.55

T. Foodg

1.35

2.82

1.36

0.38

2.15

1.33

-0.23

2.85

2.74

-0.19

1.66

1.28

Sugarcane

3.28

4.26

0.95

1.78

2.6

0.8

1.44

2.70

1.24

1.87

2.70

0.82

Oilseeds

2.67

3.2

0.3

0.26

0.98

0.68

1.51

5.20

2.43

0.88

1.62

1.04

Cotton

2.47

4.55

2.04

0.07

2.61

2.54

-1.25

2.80

4.10

2.33

1.37

-0.94

NonFoodg

2.44

3.74

0.89

0.94

2.26

1.19

1.12

3.77

2.31

1.19

2.41

0.86

All Crops

1.58

3.15

1.21

0.51

2.19

1.28

0.10

3.19

2.56

0.19

1.96

1.09

Coarse C. = coarse cereals; T. Cereals = Total cereals; T. Foodg = Total foodgrains; Non Foodg = Total non-foodgrains
Source: Government of India, 2001, Agricultural Statistics at a Glance, Ministry of Agriculture.

28The main strategy adopted to increase the growth rate of agriculture in the post-green revolution period was to increase yields through the use of modem inputs and improved methods of production the role of technology as a major input in agriculture was accorded explicit recognition. The new strategy in agriculture which was successfully introduced in a few northwestern states and was confined mainly to wheat, gradually spread to other crops and new areas. The culmination of new technology came about only after the eighties, when it expanded from irrigation belt to almost all regions of India. The new strategy became successful as a consequence of large scale investments in irrigation and in scientific research and large scale use of fertilisers.

29That the input use increased significantly leading to large increase in yield and output of many crops over the period 1960-61 to 1996-97 is brought out by Table 4. Further, the introduction of positive price policy during the mid-’sixties as a result of the creation of Agricultural Prices Commission, provided the necessary incentive to the farmers to adopt new technology on a large scale.

TABLE 4. USE OF MAJOR INPUTS AND INCREASE IN YIELDS OF MAJOR CROPS DURING 1950-51 ΤΟ 1999-2000

Input Use

1950-51

1970-71

1990-91

1997-98

Net Area Sown ( mn Hect)

118.75

140.27

143.00

142.02

Gross Cropped Area (mn Hect)

131.89

165.79

188.15

190.76

Land Under Forests (mn Hect)

40.48

63.91

67.80

68.86

Cropping Intensity

111.10

118.19

131.70

134.3

Net Irrigated Area (mn Hect)

20.85

31.10

53.00

54.5

Gross Irrigated Area (mn Hect)

22.56

38.19

70.64

79.9

Area Under HYV( mn Hect)

--------

15.38

72.11

76.0

Area Covered Under Soil

Conservation (mn Hect)

1.58

13.37

9.3

na

Fertilizer Consumption (mn tons)

0.29

2.2

12.5

16.2

Fertilizer Consmp ( kg per Hect)

1.90

13.13

67.64

88.6

Progress

Yield Levels (kg per Hect) :

1960-61

1970-73

1999-2000

Rice

1013

1123

1990

Wheat

851

1307

2725

Oilseeds

507

579

944

Cotton

125

106

190

Sugarcane (tons per Hect)

46

48

70

Tea

971

1787

Source: GOI (2001), Agricultural Statistics at a Glance, Ministry of Agriculture

Regional patterns of agricultural growth

30Data on levels and growth of aggregate crop output at the state and the regional levels are available for 1962-65 to 1992-95 (Bhalla, G.S. and G.Singh, 1997). Table 5 gives details about regional pattern of agricultural growth during 1962-95 and the three sub periods, namely 1962-65 to 1970-73, 1970-73 to 1980-83 and 1980-83 to 1992-95. Taking the entire period 1962-65 to 1992-95, total agricultural output in India increased at a compound annual growth rate of 2.71 per cent at constant 1990-93 prices. During this period, the highest growth rate of output of 3.35 per cent per annum was recorded by the north-western region of India, followed by the central region and southern region. The lowest growth rate of only 1.98 per cent was registered by the highly populated eastern region.

31There were important changes during the various sub-periods in the pattern of agricultural development. Firstly, during the first phase of the green revolution, that is from 1962-65 to 1970-73, the new technology was only confined to wheat and the main beneficiaries were the irrigated north-western states of India, in particular Punjab, Haryana and western Uttar Pradesh. Another state that benefited from wheat revolution was West Bengal. The new technology had hardly any impact on rice, the main foodgrain crop, with the result that the rice growing eastern states were not able to derive appreciable gains from the new technology. The southern states of Karnataka, Kerala and Tamil Nadu also registered medium to high growth, but in their case also the new technology could make any appreciable contribution only in limited areas. Crop output in the dry rainfed states in the central region was hardly influenced by new technology and agricultural production in that region was characterised by sharp weather-borne year to year fluctuations.

32The second period from 1970-73 to 1980-83 is characterised by the extension of new seed-fertiliser technology from wheat to rice and its spread from Punjab and Haryana not only to eastern Uttar Pradesh but also to the rice producing states in the southern region. Along with Punjab and Haryana, Uttar Pradesh also slightly accelerated its growth from 2.54 per cent during 1962-65 to 1970-73 to 2.77 per cent per annum during 1970-73 to 1980-83.

33In the matter of growth of agricultural output, the period 1980-83 to 1992-95 marks a turning point in India’s agricultural development. At the all India level, the growth rate of crop output accelerated from 2.38 per cent during 1970-73 to 1980-83 to 3.40 per cent during 1980-83 to 1992-95. An interesting feature of the ‘eighties was that agricultural growth permeated to all the regions in India.

34The most significant development was a notable acceleration of growth in the eastern region. Specially creditable was the performance of West Bengal where the growth rate increased to an unprecedented level of 5.39 per cent per annum. Bihar also recorded a significant acceleration in growth rate. However, there was a deceleration in growth rates in Assam and Orissa. Rapid growth in the densely populated states of eastern India is likely to percolate to large population dependent on agriculture, thereby making a significant dent on rural poverty.

35Two of the major states in central India namely Madhya Pradesh and Rajasthan recorded an significant acceleration in their growth rates during this period. In these states, besides increase in yields, cropping pattern changes resulting in large shifts of areas from coarse cereals to oilseeds also made an important contribution to higher growth. However, there took place a sharp deceleration in Maharasthra and Gujarat primarily as a result of persistent drought for several years during the late ‘eighties.

36Among the southern states, the growth rate accelerated very significantly during this period and the southern region recorded even a higher growth rate than the north-western region. But most interesting development was an unprecedented rate of growth of 4.59 per cent recorded by Tamil Nadu during 1980-83 to 1992-95 compared with a negative growth registered by it during the earlier decade.

37One of the important consequences of widespread growth over all the regions has been a reduction in inequalities in both the yield levels and growth rate of output The coefficient of variation of yields which had increased from 56.9 in 1962-65 to 58.2 in 1970-73 declined to 46.3 during 1992-95. The coefficient of variation for growth rates declined from 88 during 1962-65 to 50 during 1980-83 to 1992-95, but increased again to 112 during 1996-99.

GRAPH 1. GROWTH RATE OF YIELD DURING 80S AND 90S

GRAPH 1. GROWTH RATE OF YIELD DURING 80S AND 90S

TABLE 5. STATE WISE GROWTH OF AGRICULTURAL OUTPUT, 1962-65 ΤΟ 1996-99

State

1970-73 over 1962-65

1980-83 over 1970-73

1990-93 over 1980-83

1996-99 over 1990-93

Haryana

4.65

3.02

5.04

1.98

Himachal Pradesh

3.33

0.96

2.74

-0.11

Jammu & Kashmir

5.37

3.47

0.17

0.49

Punjab

6.63

4.74

4.22

0.73

Uttar Pradesh

2.54

2.77

3.06

2.47

North WestRegion

3.60

3.21

3.55

1.91

Assam

1.85

2.80

2.42

1.31

Bihar

1.12

-0.41

2.12

3.33

Orissa

0.99

2.65

2.92

-5.14

West Bengal

2.37

0.68

5.97

2.99

Eastern Region

1.57

1.09

3.63

1.25

Gujarat

1.78

3.12

0.86

6.83

Madhya Pradesh

1.97

1.28

4.53

3.86

Maharashtra

-3.64

6.57

2.12

3.29

Rajasthan

4.29

1.26

6.06

4.90

Central Region

0.73

3.13

3.33

4.50

Andhra Pradesh

0.93

3.61

3.42

1.52

Kamataka

2.64

2.32

3.68

3.62

Kerala

4.09

-0.91

1.92

3.60

Tamil Nadu

2.76

-0.57

4.00

3.25

Southern Region

2.40

1.38

3.43

2.19

All States

2.08

2.38

3.44

2.83

C.V.

88

89

50

112

C.V = coefficient of variation
Source: GOI, Area and Production of Principal Crops in India, Various Issues, Ministry of Agriculture.

Increased food security

38One of the most important consequences of accelerated growth in agricultural and foodgrains output was in the provision of a greater degree of food security to a rapidly rising population and in reducing dependence on food imports. By the end of the ‘seventies, India had emerged as marginally self-sufficient in foodgrains production.

39Because of creditable growth in foodgrains production, over time, both the physical and economic access to foodgrains of the population registered a significant increase. The per capita availability of foodgrains (cereals and pulses), which was 395 gm per day in 1951, increased to 497 gm per day during the triennium ending 1991.

40The economic access to food for the poor population increased firstly since the real price of wheat and rice declined over a period of time because of rapid growth in productivity. During 1980-81 to 1989-90, whereas the adjusted wholesale prices of all commodities recorded an annual compound growth rate of 6.9 per cent per annum, the wholesale prices of wheat and rice rose at the rate of only 4.1 per cent and 6.5 per cent, respectively. The producers as well as the consumers shared the gains of productivity increases. Hence, even though the inter-sectoral barter terms of trade became adverse for wheat and rice growers, their income terms of trade remained favourable because of yield and profitability increases.

41Second, access to food for the poor increased also because the proportion of per capita income required to buy food declined over time. While the index of per capita income increased by 545 per cent during 1970 to 1990, the price index of food increased by only 280 per cent. Finally, economic access to food for the poor also increased because of the operation of anti-poverty programmes like the Integrated Rural Development Programme (IRDP), the Rural Landless Employment Guarantee Programme (RLEGP), the National Rural Employment Programme (NREP) and, later on, the Jawahar Rozgar Yojana (JRY). Moreover, effective mechanisms were developed for scarcity relief and in tackling the extremely severe droughts through the initiation of special employment programmes.

Dent on poverty

42Rapid agricultural growth during the post independence period in general and during 1980/83 to 1992/95 in particular, also made a visible dent on rural poverty. The available data from Planning Commission brings out that the incidence of rural poverty which was 56.44 during 1973-74 had declined to 39.09 in 1987-88. The incidence further declined to 37.27 during 1993-94.

43The state-wise incidence of rural poverty also brings out that as compared with the slow growing states, the incidence of poverty is much lower in the agriculturally developed states that recorded high growth in agricultural output (Table 6).

TABLE 6. INCIDENCE OF POVERTY

1973-74

1993-94

Rural

Urban

Rural

Urban

No of poor (lakhs)

Pov Ratio (%)

No of poor (lakhs)

Pov Ratio (%)

No of poor (lakhs)

Pov R (%)

No of poor (lakhs)

Pov R (%)

Andhra Pradesh

178.21

48.41

47.48

50.61

79.49

15.92

74.47

3

Assam

76.37

52.67

5.46

36.92

94.33

45.01

2.03

Bihar

336.52

62.99

34.05

52.96

450.86

58.21

42.49

Gujaral

94.62

46.33

43.81

52.57

62.16

22.18

43.02

2

Haryana

30.08

34.23

8.24

40.18

36.56

28.02

7.31

1

Himachal Prad.

9.38

27.42

0.35

13.17

15.4

30.34

0.46

Karnataka

128.4

55.14

42.27

52.53

95.99

29.88

60.46

4

Kerala

111.36

59.19

24.16

62.74

55.95

25.76

20.46

2

Madhya Prad.

231.21

62.66

45.09

57.65

216.19

40.64

82.33

4

Maharashtra

210.84

57.17

76.58

43.87

193.33

37.93

111.9

3

Orissa

142.24

67.28

12.23

55.62

140.9

49.72

19.7

4

Punjab

30.47

28.21

10.02

27.96

17.76

11.95

7.35

1

Rajasthan

101.41

44.76

27.1

52.13

94.68

26.46

33.82

3

Tamilnadu

172.6

57.43

66.92

49.4

121.7

32.48

80.4

3

Uttar Pradesh

449.99

56.53

85.74

60.09

496.17

42.28

108.28

3

West Bengal

257.96

73.16

41.34

34.67

209.9

40.8

44.66

2

All India

2612.9

56.44

600.46

49.01

2440.31

37.27

763.37

3

1 lakh= 100 000

Growth transmission to other sectors

44Finally, the rapid growth in agriculture in the green revolution region was also instrumental in triggering growth in the secondary and tertiary sectors through the generation of input, output and consumption linkages. This in turn, helped to enlarge the home market. There is sufficient evidence to suggest that during the first phase of green revolution up to the ‘seventies, in many states like Punjab and Haryana agricultural growth resulted in bringing about acceleration in the overall growth of the economy through generation of backward, forward, and consumption linkages. However, the tempo of growth in these states could not be sustained over the ‘eighties partly because of some deceleration in agricultural growth and partly because of import leakages. It is expected that in some states like West Bengal which are late starters in the matter of agricultural development, growth in the agricultural sectors would most likely lead to more diversified growth of the secondary and tertiary sectors.

Some limitations of plan performance

45Most studies recognise the achievements of Indian policy in achieving higher growth and providing increasing food security to its rising population. However, some distortions also emerged in the pattern of agricultural development.

46Firstly, land reforms failed to bring about equitable distribution of land and consequently very large interpersonal inequalities continue to exist in the countryside. This has given rise to a great deal of social tension in rural India.

47Secondly, in the absence of employment opportunities in the non-agricultural sector, the increasing workforce in the country has per force to find employment in low productivity agriculture. In 1991, 60 per cent of the male workforce was engaged in agriculture. Although there is some evidence of creeping diversification of labour force since 1971 and some increase in rural non-farm employment, the population burden on agriculture continues to be very high (Bhalla, S., 1993). It also tends to increase the number of small and marginal holdings and the number of landless agricultural labourers many of whom are poor because of low productive asset base.

48The third major distortion was that the new technology was confined to the richly endowed irrigated region of India. Consequently, the regional inequalities in productivity and income have remained high. The plight of agriculturists in general and that of small and marginal farmers and landless labour remains extremely poor in the lagging regions.

49Finally, even though there has taken place a reduction in the incidence of poverty as a result of agricultural growth, in absolute numbers the extent of rural poverty continues to be very high. Further, as many as 83 million children in India were malnourished during 1991 (World Bank, 1994).

New economic policy and critique of planning framework

The critique of planning framework

50Until recently, while many critics focussed their attention on the above limitations, the general thrust of agricultural policy within the framework of planning had not been seriously questioned. However, in the wake of the introduction of new economic policy, all aspects of planning framework and associated macro-economic policy have come under attack.

51The argument is firstly that the macro-economic policy under the planning framework pursued in most developing countries, including India, were discriminatoiy against agriculture. The inward-looking import substitution development strategy aimed at rapid industrialisation is said to have shifted resources from tradable agriculture to industry by turning the terms of trade against agriculture. (It is interesting to note that many writers now talking about discrimination against agriculture did not think so earlier. See Srinivasan, 1987).

52Secondly, the overvaluation of the exchange rate not only made the import and domestic production of agricultural inputs more costly, it also adversely affected all exports and specially hurt agricultural exports (Manmohan Singh, 1994).

53Finally, most sector-specific policies at all stages of production, consumption and marketing of agricultural produce, it is argued, also worked against agriculture. For example, the price policy was designed primarily to help the consumers. Farmers were generally given low administered prices in the name of helping the urban poor even while they had to pay higher prices for domestically produced industrial inputs because of protection given to local industry. In addition, a major proportion of the costs of inefficient functioning of state-inspired organisations like the Food Corporation of India were borne by the farmers (World Bank, 1986).

  • 4 Mundle has also argued that agriculture sector in India which was being subsidised in 1950-51 was b (...)

54It is also argued that large subsidies given on agricultural inputs also led to resource mis-allocation. According to one study, the various subsidies given to the agricultural sector on account of fertilisers, irrigation and electricity were estimated to be of the order of Rs. 90.9 billion per year during the 80’s. (Gulati, 1986). These subsidies placed an unsustainable burden on state and central finances and reduced the capacity of government to undertake large investments. But these subsidies failed to compensate the farmers for the negative impact of lower administered price paid on outputs; discrimination against agriculture due to overvalued currency; and higher input prices due to excessive protection given to industry. The net effect, it was argued, was that agriculture had negative protection and was discriminated against (Mody, 1989).4

55It is accordingly argued that agricultural liberalisation and trade and exchange reforms including devaluation of the rupee and lifting of protection to industry are likely to end agricultural discrimination and make Indian agriculture competitive thereby resulting in enhanced exports and growth of the economy.

Critical examination of arguments for agricultural liberalisation

56Various arguments given above need a careful examination. First, is the very popular argument about discrimination against agriculture. There are three reasons given for it, these being overvaluation of currency and discrimination against agricultural exports; protection of industry and availability of industrial inputs to agriculture at a high price; and keeping terms of trade adverse for agriculture by giving it low administered price (including compulsory procurement, controls, and movement restrictions that kept price low). Discrimination in general and adverse terms of trade in particular are said to have acted as major barriers to rapid growth of agriculture because of lack of incentive for the producers.

57The first argument is theoretically sound but it was a hypothetical proposition till the mid-’sixties since India faced serious food shortages and had very little foodgrains to export. As far as commercial crops are concerned, exports were encouraged except in the case of cotton, where the interests of domestic textile industry were protected sometimes at the cost of farmers. It is interesting to note that with the achievement of self-sufficiency in food grains by the middle of 80’s, sometimes before the economic liberalisation in 1991, India had relaxed its policy and had started encouraging exports of superior rice. With devaluation of the currency in 1991, India has acquired a comparative advantage in many agricultural commodities, and therefore export opportunities for agriculture have certainly increased.

58The second argument about protection to industry having resulted in providing inputs at a higher price to agriculture also seems valid. But for some of the inputs like fertilisers where India along with China was a major importer, and where monopolistic position existed, border prices charged by the monopolistic suppliers were not very favourable for the farmers. In this situation the building of an indigenous fertiliser industry specially after the discovery of oil in Bombay High was a correct strategy.

59Finally, the third argument namely adverse terms of trade is the most popular argument given for proving that Indian agriculture was discriminated. This argument is basically flawed since barter terms of trade do not necessarily lead to adverse income terms of trade because of changes in productivity and cost of production. And income terms of trade is a more valid concept for providing incentive for growth. As noted earlier, in India there were very large productivity gains in many agricultural crops consequent to the introduction of new technology in agriculture. This led to substantial decline in cost of production of these commodities. For example, in the case of both wheat and rice, the productivity gains were substantial after the introduction of new technology. Consequently, the growth rates in the real price of wheat and rice were lower than that in the wholesale price of all agricultural commodities (Table 6). Simultaneously the profitability of producers was also kept quite high. The fact that there was an unprecedented growth in both the area and output of wheat and rice after the adoption of new technology is indicative of their increased profitability and is borne out by numerous studies (Bhalla G.S. and D.S. Tyagi, 1998). For example, according to Vyas, instead of import substitution strategy leading to high unit cost of production, because of new technology, not only the task of food self-sufficiency was accomplished, the country could fill in the gap between demand and supply of foodgrains without raising the real cost of production - a fact which is generally not appreciated. “In fact along with higher yields, the unit cost of production of superior cereals came down and benefits of growth could be shared by the producers (in terms of higher income) and consumers (in terms of stable prices) in an equitable manner”. (Vyas, 1998).

60Thirdly, the argument that turning the terms of trade in favour of agriculture through the provision of higher relative prices for agricultural commodities vis-à-vis other sectors of the economy provides an appropriate incentive structure for the growth of agriculture is based on the assumption of a high price responsiveness of agricultural output in general and that of exportable commodities, in particular, to rise in prices envisaged as a result of trade liberalisation and the expected withdrawal of subsidies by the developed countries. Although price is an important determinant of acreage shifts among competing crops, all empirical studies bring out that price elasticity of aggregate agricultural output (aggregate supply elasticity) in most developing countries including India is quite low even in the long run and that it is investment in rural infrastructure which has a much more important impact on promoting agricultural growth. As discussed earlier, it is established by most studies that one of the precondition of generating export surpluses for growth would be to undertake large investment in infrastructure including irrigation, water management, electrification, rural roads, and market intelligence including information technology. On the other hand, as a result of fiscal compression and the erosion of planning and the diminishing role of public sector, infrastructural investments in India have declined perceptibly after 1985 and more so after the economic liberalisation in 1991. For example, although the share of private investment has risen, the share of total agricultural gross capital formation (GCF) has declined from 14.8 per cent to 9.88 per cent by 1995-96.

61Further, a disproportionate rise in the price of foodgrains with the aim of turning the terms of trade in favour of agriculture is generally detrimental to the interests of the poor as it generally leads to disproportionate rise in the price of foodgrains. This is for several reasons. One is the need to contain fiscal deficit through withdrawal of input subsidies. This generally leads to more than proportionate hike in output prices under the pressure of the kulak lobby. The second is the need to reduce food subsidy through a big rise in issue prices from the public distribution channel. As the experience of liberalisation in 1991 shows, the excessive rise in foodgrains prices during 1994 resulted not only in increasing the incidence of poverty but also fostered high rate of inflation in the country, thereby eroding a great deal of comparative advantage of agriculture in these countries (Tendulkar and Jain, 1995). The rise in foodgrains prices, an important wage good, besides adversely affecting the food security of the poor, is also likely to reduce employment opportunities in the non-agricultural sector.

62Finally, there is no assurance that the rise in prices of foodgrains would end up in turning the terms of trade in favour of agriculture, the opposite is more likely to happen as prices of non-agricultural commodities bought by agriculture may rise faster because of inflation caused by rise in foodgrains prices.

Challenges and opportunities of agricultural liberalisation

63These arguments notwithstanding, it is to be underlined that India is now committed to economic liberalisation and to multilateralism under a free trade environment to be guaranteed and enforced by WTO. The question therefore is not that of abandoning reforms but that of undertaking agricultural reforms in a manner that best subserves the interest of the country. Some of the steps that ought to be taken are listed below.

64First, while liberalising agriculture, the most important caveat is that food security and foodgrains self-sufficiency must continue to get the highest priority. This is for several reasons. India is a big country with very rapidly growing large population. The foreign exchange cost of imports can be excessively high unless most of the demand is met from domestic production. Further, the demand is likely to increase very rapidly as a result of increase in population and more so increase in per capita income (Bhalla, Hazell and Kerr, 1999). With world stocks of foodgrains dwindling, a large scale dependence on imports would lead to unprecedented rise in imports and would certainly erode food security so assiduously built over the years. This can be very detrimental to the interests of the country. Food self-sufficiency also imparts a certain degree of self-confidence in large countries. By providing an assurance of food availability at reasonable price throughout the year, it also lays down the basic condition for agricultural diversification into high value export crops by a large proportion of small and marginal fanners. Thirdly, most of the agricultural households are also producers of foodgrains and their income depends on growth of foodgrains sector. Finally, the poor in India spend a large proportion of their income on foodgrains (this constitutes as much as 40 per cent of the expenditure of three lowest expenditure groups during 1993-94) and have very high income elasticity of demand for foodgrains. In this situation, price volatility which is characteristic of international prices of foodgrains is likely to hurt the poor (Vyas, 1998).

65Given the important consideration of food security, India should try to avail of the opportunities arising form trade liberalisation. There is a general agreement that export opportunities in agriculture have increased as a result of trade liberalisation and exchange devaluation. The rise in prices following the withdrawal of agricultural subsidies by the developed countries as envisaged in the GATT Agreement is expected to further increase the export potential of many agricultural commodities like cereals, horticultural and vegetable crops, sugar and livestock and agro-processing industries products (Nayyar and Sen, 1993). But one should not get an exaggerated view about the likely benefits of GATT Agreement. This is for two reasons. Firstly, it is now agreed by various experts that the price rise in the international market for agricultural commodities would be much lower (only about 5 to 7 per cent) than envisaged earlier (20 to 25 per cent). Contrary to earlier expectations, this would hardly provide much of additional export market to developing countries. Secondly, and it is more important, the developed countries are dragging their feet on withdrawal of subsidies to their agriculture and are trying to put several extraneous conditionalities that obstruct free flow from developing countries.

66Finally, the benefits from export prospects can only accrue if and only if a country could maintain its comparative advantage through higher productivity, lower relative prices and generation of adequate exportable surpluses. This could only be achieved through much higher public and private investment which needs great emphasis. As underlined by Vyas, “nothing should be done to impair food security and poverty alleviation efforts in the process of economic reforms. Adjustments in the food sector should be gradual and non-doctrinaire” (Vyas, 1998).

67This only highlights the facts that reforms in agriculture sector should take into account the necessity of maintaining food security, protecting the interest of a large number of small and marginal farmers and ensuring that the new policy framework does not lead to accentuation of intra-personal and intra-regional inequalities.

68But while keeping in mind these caveats, there are numerous areas like trade reforms, exchange rate reforms and other macro-economic reforms, which benefit export competitiveness and which should be carried on. Some of the WTO requirements would have to be met over time. India should not only try to improve its bargaining position in the next round of negotiations, it should also try to improve its competitiveness in many agricultural commodities through increased productivity. Secondly, domestic controls like restrictions on movement of agricultural commodities, zonal restrictions, compulsory procurement, etc. which were products of scarcity conditions, should be removed. Thirdly, while no sanctity can be accorded to border prices for investment decisions, they cannot be disregarded for the purpose of export competitiveness. The Commission for Agricultural Costs and Prices should keep in mind the border prices also as referral prices while recommending prices for important commodities. Fourth, there is a need to proceed further with the consolidation of holdings and gradually freeing the lease market, keeping in mind the interests of existing occupancy tenants. On the other hand, nothing should be done to dilute the legislation on ceilings on land holdings despite the suggestion of some scholars, industrial interests, and kulak lobby for their abolition. This is because in a country where small and marginal farmers constitute 70% of the land-holders, it would be disastrous to endanger their only source of livelihood. Instead, a pro-active policy should be designed to involve them in deriving benefits of increased agricultural exports through innovative institutions like integrated cooperatives like the Mother Dairy and other service co-operatives. Special efforts should also be made to develop new technologies for the farming sector and extend these to the small farmers for enabling them to diversify their production towards high value commercial and export commodities, including provision of processing facilities. The efforts on the production front should be supplemented by creation of institutions like trading houses and market intelligence services.

69To sum up, agricultural policy during the post-independence period was determined by the sociol-economic conditions prevalent at that time. The policy underwent a change in response to changing conditions in agrarian scenario. The land reforms were initiated during the mid fifties with a view to abolishing the semi-feudal barriers to agricultural modernisation. The acute food shortage and humiliation of dependence on food imports (some time combined with arms twisting) resulted in major emphasis on accelerating foodgrains growth through large investments in infrastructure and in new agricultural technology during the mid-’sixties. This technology was successful in raising food output and in making India self-sufficient by the end of eighties.

70The achievements of food self-sufficiency has imparted a great deal of flexibility in the matter of policy options since the binding constraint of striving of higher foodgrains production is no longer applicable. However, food self-sufficiency has to continue to be one of the main objective of policy in India for quite some time to come. The alternative of dependence on imports of foodgrains on a large scale is extremely dangerous for a large country like India where food production is a major activity of a large proportion of agricultural workers and where any rise or fluctuation in foodgrains prices immediately results in eroding the food security of the small and marginal farmers and other rural and urban poor.

71But even within the framework of foodgrains self-sufficiency, there exist large areas where India can partake the benefits of globalisation in general and trade liberalisation in particular. It is also possible for India now to remove many of the internal and external controls and to evolve a framework of agricultural reforms that is consistent with its interests. This is because besides achievement of food security, in the process of achieving higher agricultural growth, a large rural infrastructure has been created in irrigation, scientific research, credit and markets etc. The farmers have also learnt a great deal about the use of new technology. This makes it possible for India to diversify its agricultural production. It is possible for India to enter a new phase of agricultural liberalisation with much greater confidence and avail of new opportunities that have arisen as a result of trade liberalisation under the new GATT agreement and WTO, despite many of the irritants (like human rights, child labour, rigorous provision about phyto-sanitary measures, etc) constantly being introduced by the developed countries. The only caveat is that large investments would be required for generating surpluses and for diversifying in a big way in high value added agricultural and allied products like milk and dairying, horticultural crops and flowers and fisheries.

72Globalisation of Indian agriculture offers both opportunities and challenges to the policy makers. There do exist opportunities for deriving large benefits through massive increase in agricultural exports specially exports of high value labour intensive agricultural commodities. Since the diversification of Indian agriculture for both domestic consumption and exports can only take place after achievement of self-sufficiency in foodgrains output and after agricultural sector is able to generate large surpluses, the challenges lie in generating these surpluses. This has to be done through increased public and private investment in rural infrastructure, in research and development, new technology and in market infrastructure. The other important challenge is to undertake specific policy measures to enable the mass of peasantry including the small and marginal farmers and agricultural labourers, in all parts of India to partake in the gains form development and from increased export opportunities likely to become available with multilateral trade liberalisation (Bhalla, G.S. 1995).

Bibliographie

Bibliography

Bhalla, G. S. ed. (1993), Economic Liberalisation and Indian Agriculture. Institute for Studies in Industrial Development (ISID). New Delhi.

Bhalla, G.S. (1995). “Globalisation and Agricultural Policy in India”, Presidential address delivered at the 54th Annual Conference of the Indian Society of Agricultural Economics, at Kolhapur, Indian Journal of Agricultural Economics, Vol 50, No 1, Jan-March, 1995.

Bhalla, G. S. & Gurmail Singh (1997), Recent Developments in Indian Agriculture. A State Level Analysis. Economic and Political Weekly, 29 March.

Bhalla, G.S. and D.S. Tyagi (1988), Implementation of Price Policy in India. FAO, Rome.

Bhalla, G.S., Peter Hazell and John Kerr (1999), Prospects for India’s Cereal Supply and Demand to 2020, International Food Policy Research Institute, Discussion Paper 29, Washington D.C.

Bhalla, Sheila (1993), Patterns of Employment Generations in India, Indian Journal of Labour Economics. Vol. 36 No. 4, pp 507-524.

Blyn, G, 1966, Agricultural Trends in India, 1891 to 1940-41, Bombay.

Chakravarti, Sukhamoy (1987), Development Planning. The Indian Experience. Clarendon, Oxford. Chap 3 and p. 22.

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Notes

1 This happened in spite of the fact that as a result of the belated response to recurring famines during the late nineteenth and early twentieth century, the British Government had undertaken a fair amount of investment in irrigation in some parts of India, the growth rate of agriculture during the first half of the century was truly dismal as the total crop output index registered an increase of only 12 per cent during 1904-05 to 1944-45. While the output index of non-foodgrains rose by 54 per cent that of foodgrains did not show any increase whatsoever. Consequently, with 0.83 per cent per annum increase in population during 1901 to 1941, the per capita food availability declined from 200.2 kg. per year in 1905-06 to only 152.2 kg. per year in 1945-46.

2 One of the important development is that along with the increase in the proportion of small and marginal farmers, their share in total area operated is also increasing relative to other categories.

3 Imports of foodgrains which averaged only 2.8 mn tonnes during the 50’s nearly doubled to an average of 5.4 mn tonnes during the ‘sixties. In two years 1965-66 and 1966-67 India imported as much as 19 mn tonnes of foodgrains.

4 Mundle has also argued that agriculture sector in India which was being subsidised in 1950-51 was being net taxed by 1970-71. The opposite view that agriculture is being subsidised is given by Mody. See Mody, Ashok (1989).

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