Agri Reform
Transcript of Agri Reform
-
8/14/2019 Agri Reform
1/23
1
E c ono m ic R e fo rm s i nA gri cu l t ur e - Th e N e xtPhas e
V.S. Vyas
Professor EmeritusInstitute of Development Studies, Jaipur
-
8/14/2019 Agri Reform
2/23
2
Nature & Pace of Economic Reforms
in India
Growth of Indian Economy during last decade at
6.5 percent per annum exceeded all
expectations.
The growth was achieved in the face of
serious domestic problems
adverse international situations
-
8/14/2019 Agri Reform
3/23
3
Nature & Pace of Economic Reforms
in India
The growth was accompanied with
manageable rate of inflation
burgeoning foreign exchange reserves
adequate foodgrains stocks
some reduction in poverty
-
8/14/2019 Agri Reform
4/23
4
Nature & Pace of Economic Reforms
in India
Basic tenets of economic reforms, i.e., liberalization
and globalisation were accepted in India as well.
However, nature of economic reforms in India was
characterised by
sequential approach to reforms
slow and cautious manner in which reforms were
implemented
It spared the country from initial shocks faced by
number of developing countries.
-
8/14/2019 Agri Reform
5/23
5
Stagnation in Agricultural Growth Deceleration in the growth rate of agricultural
production
Stagnation in yields of important crops; with
larger intake of modern inputs
Disappointing performance of commercial
crops
Large fluctuations in the output prices
-
8/14/2019 Agri Reform
6/23
6
Economic Reforms in Indian
Agriculture - The First Phase
Slow and cautious approach to reforms
Main benefits due to reforms in non-agricultural
sectors
Only major reform being abolition of zones and
emergence of the country a single market for
agricultural commodities
Privatization also got a fillip.
-
8/14/2019 Agri Reform
7/23
7
Factors Contributing to Agricultural
growth in Previous Decades
Performance of Agriculture in the last decade was
in sharp contrast to performance in two previousdecades.
The factors contributing to earlier growth included
larger investment in agriculture
size neutral technology
reforms in supporting systems
-
8/14/2019 Agri Reform
8/23
8
Economic Reforms in Indian
Agriculture - The First Phase
Integrated system of Minimum Support Prices,
Procurement and Public Distribution of foodgrains
These policies made salutary impact on
producers incomes
Kept real prices of foodgrains low
Contributed to growth of agriculture in so-called
backward regions.
-
8/14/2019 Agri Reform
9/23
9
Economic Reforms in Indian
Agriculture - The First Phase
The earlier policies were implemented when
the major goal was food self-sufficiency.
Economy was an inward looking economy.
-
8/14/2019 Agri Reform
10/23
10
Economic Reforms in Indian
Agriculture - The First Phase
There were and continue to exist certain weak
spots in Indian agriculture. These are
degradation of land and water resources
low value production
declining productivity of modern input, and
inefficient support systems.
-
8/14/2019 Agri Reform
11/23
11
Agricultural Reforms - The Next
PhaseThe Cha ng ed Circu ms ta nc esThe next phase of reforms has to take into accountfollowing circumstances
Indian Agriculture is progressively acquiring a small
farm character
The country is wedded to domestic market reforms
It is committed to an open global economy
It is a democratic multi-party competitive polity.
-
8/14/2019 Agri Reform
12/23
12
Measures which need immediate attention are
review of the policy on input subsidies
review of the policy on agricultural prices
reforms in the support systems completing the unfinished agenda on domestic
market reforms.
Agricultural Reforms - The Next
Phase
-
8/14/2019 Agri Reform
13/23
13
Input Subsidies
The rationale for input subsidies can be provided if
input is a new and risky input warranting sharing of
risks by the state
it contributes to increase in productivity which isshared both by the producers and consumers
subsidizing income is the only way to transfer
income to the poor producers
in case of heavily traded products, the trading
partners are resorting to overt or covert
subsidization and there is no other way for redress
-
8/14/2019 Agri Reform
14/23
14
Input Subsidies
In case of India, none of these conditions
obtain now
-
8/14/2019 Agri Reform
15/23
15
Input Subsidies
There is a need to retreat without disarray
put a cap on subsidies
earmark the savings obtained for investment inrural infrastructure
improve efficiency of input production and
supplies
involve users in the distribution of inputs
bring states on the common platform of
reforms.
-
8/14/2019 Agri Reform
16/23
16
Agriculture Price Policy
Present policy is disfunctional and has created
serious distortions.
The major weakness arises due to the fact that
we are using administrated prices as vehicle
for income transfer.
-
8/14/2019 Agri Reform
17/23
17
Agriculture Price Policy
Reforms in Agriculture Price Policy will include
Long-term strategy to strengthen crop
insurance and forward trade. In the interim, the scope and coverage of MSP
be limited.
A price band may be announced to trigger
open market operations.
-
8/14/2019 Agri Reform
18/23
18
Agriculture Price Policy
Procurement operation should be organised
strictly as business operation
Responsibility for PDS should be passed on to
states, and subsequently to lower units of
Panchayati Raj. Better coordination between price policy and
trade policy should be ensured.
-
8/14/2019 Agri Reform
19/23
19
Economic Reforms
Emphasise reforms in the support institutions i.e.,
institutions to provide research, extension, credit
and marketing services.
-
8/14/2019 Agri Reform
20/23
20
Reforms in Support Systems
Case of Rural Fina nc ia l Inst it ut io nsTo strengthen Rural Financial Institutions address
some of the critical problems improve absorptive capacity of the borrowers
with
emphasis on investment in infrastructure strengthen channels of investment credit.
use various options available to reduce
transaction cost.
-
8/14/2019 Agri Reform
21/23
21
Reforms in Support System (RFI)
Mitigate risk at borrowers level with crop
insurance and forward trade .
Mitigate risk for RFI through an Agricultural
Risk Fund contributed by the Centre, states
and banking institutions.
-
8/14/2019 Agri Reform
22/23
22
Economic Reforms - The Next Phase
Have proper sequencing and practical
approach to reforms -
HASTEN SLOWLY.
-
8/14/2019 Agri Reform
23/23
23
Economic Reforms in Agriculture
The Next Phase
Thank You
June 4, 2005