The document discusses the impact of economic reforms in India in 1991 on the agricultural sector. It notes that prior to 1991, agriculture was the largest employer in India and the government provided subsidies and protection. The economic crisis of 1990 led to reforms involving liberalization, privatization, and globalization (LPG policies). This affected the agricultural sector through reduced subsidies, spending on rural development and infrastructure, financial reforms limiting rural credit, and trade liberalization. While the reforms aimed to boost agriculture, the sector actually saw declining growth rates, investment, and terms of trade. Rural incomes and food security were adversely impacted. Overall, the reforms exposed farmers to greater risks while reducing government support.

1. ECONOMIC REFORMS &
AGRICULTURE GROWTH OF
INDIA
BY:- KISHAN CHAUHAN
TOVREZ ALAM

2. BEFORE 1991
Largest employer; more than 80% population doing
agriculture related activities
Use of primitive and traditional methods prior to mid-
1960s
Initiatives like the Green Revolution (food grains),
Yellow Revolution (oil seeds), Operation Flood (milk and
dairy products), Blue Revolution (fish) etc.
These initiatives introduced HYV seeds, modern
irrigation facilities like tube wells etc.
Use of fertilizers and pesticides instead of manure was
introduced

3. • The policy used by government was that of protectionism
• Thus the government introduced high tariffs on imports of agro based products, except
for the imports made for cultivation There were also various subsidies provided for by
the
• government : Seeds were provided to farmers in regulated markets at a lower price.
This ensured fairness in the process of provision of seeds and also ensured the quality
of the food grains.
• Fertilizers and pesticides were also provided at a cheap and subsidized rate
• Infrastructure for irrigation was provided by the government itself. If not so, it ensured
that the said item was provided at a subsidized rate
• Also, the farmers were able to avail low-interest loans from the government banks to
finance their various costs.
This Photo by Unknown author is licensed under CC BY-ND.

5. THE LPG POLICY

6. LIBERALISATION
in general, liberalization (or liberalisation) refers to a relaxation of
previous government restrictions, usually in such areas of social,
political and economic policy. In some contexts this process or concept
is often, but not always, referred to as deregulation.
Economic liberalization is the lessening of government regulations and
restrictions in an economy in exchange for greater participation by
private entities; the doctrine is associated with classical liberalism.
Thus, liberalisation in short is the removal of controls in order to
encourage economic development.

7. PRIVATISATION
Privatisation is the process of transferring ownership of business, enterprise,
agency, public service, or public property from the public sector (a government) to
the private sector, either to a business that operates for a profit or to a nonprofit
organisation. It may also mean government outsorcing of services or functions to
private firms, e.g. revenue collection, law enforcement, and prison management.
Privatization has also been used to describe two unrelated transactions. The first is
the buying of all outstanding shares of a publicly traded company by a single entity,
making the company privately owned. This is often described as private equity. The
second is a demutalisation of a mutual organisation or cooperative to form a joint-
stock company.

8. GLOBALISATION
• Economic globalization is the increasing economic integration
and interdependence of national, regional and local
economies across the world through an intensification of
cross-border movement of goods, services, technologies and
capital. Whereas globalisation is a broad set of processes
concerning multiple networks of economic, political and
cultural interchange, contemporary economic globalization is
propelled by the rapid growing significance of information in
all types of productive activities and marketization, and by
developments in science and technology.
• Economic globalization primarily comprises the globalization
of production and finance, markets and technology,
organizational regimes and institutions, corporations and
labour.

9. The economic crisis of 1990 forced the government to reconsider its
economic policy to save the country from economic meltdown and
to be declared a defaulter in the international market.
The policy of Liberalisation, Privatisation and Globalisation not only
affected the largely secondary and tertiary sector of the country but
also the primary sector, which comprised mainly of the agricultural
sector and other agro based sectors and industries.

10. REFORMS IN THE
AGRICULTURAL SECTOR

11. Actual declines in Central government revenue expenditure on rural
development, cuts in particular subsidies such as on fertilizer in real terms, and
an the overall decline in per capita government expenditure on rural areas.
Reduction in public investment in agriculture, including in research and
extension.
Very substantial declines in public infrastructure and energy investments that
affect the rural areas, including in irrigation.
Reduced spread and rising prices of the public distribution system for food. This
had a substantial adverse effect on rural household food consumption in most
parts of the country.

12. • Financial liberalization measures, including redefining priority sector
lending by banks, which effectively reduced the availability of rural
credit, and thus made farm investment more expensive and more
difficult, especially for smaller farmers.
• Liberalization and removal of restrictions on internal trade in
agricultural commodities, across states within India.
• Liberalization of external trade, first through lifting restrictions on
exports of agricultural goods, and then by shifting from quantitative
restrictions to tariffs on imports of agricultural commodities.

15. • Agricultural sector is the mainstay of the rural Indian economy around which
socio-economic privileges and deprivations revolve, and any change in its
structure is likely to have a corresponding impact on the existing pattern of
social equality. No strategy of economic reform can succeed without
sustained and broad based agricultural development, which is critical for
-rasing living standards,
-alleviating poverty.
-assuring food security,
-generating buoyant market for expansion of industry and services
-making substantial contribution to the national economic growth.
• As such, the economic reforms of 1991 had a large impact on the Indian
agricultural sector

16. • The neo-liberal and North-centric economic reforms have already devastatingly impacted on
the Indian people and society. The new economic policies in India have directly brought about a
serious crisis in Indian agriculture.
• Agricultural growth declined from 3.4% in the 1980s to 3% in the 1990s. What is significant is
that in the post-reforms period it declined from 4.7% of the 8th plan period to 1.8% in the 9th
plan period. The regulated markets for distribution of seeds were handed to private sector. This
led to a substantial increase in the price of seeds and also an increase in the selling of spurious
seeds.
• Poor peasants continued to remain outside the fold of the banking system in the post reform
period. In fact the growth rate of agricultural credit for small and marginal farmers declined in
the 1990s as compared with the 1980s. As a result of accumulating debts on small farmers,
which drove them into a debt trap,many of them of them committed suicide, with 221 deaths
reported in the state of Andhra Pradesh alone in 1993-94, with nationwide deaths of close to
1,000.
• The food crop area and non-food crop area in India were 70.34 and 29.66 percent respectively
in 1981-82. By 1998-99 food crops area got reduced to 65.44% and non food crops area was
enhanced to 34.56%..
This Photo by Unknown author is licensed under CC BY-SA.

20. • Agriculture remains to be one of the largest employer, especially in the rural India,
with more than 70% rural population and 55% population nationwide involved in
agriculture.
• Despite this, the share of agriculture in the GDP of the country is only 12.6% in
2013-14.
• The productivity chart of India is still low as compared to some other developed
nations, considering the fact that more than 60% of total land area is under
cultivation.
• It remains the largest contributor towards disguised unemployment in the country.
• Despite the agriculture ministry providing a high budget towards development of
irrigation facilities, most farmers still depend on rainfall for their irrigation needs.
This Photo by Unknown author is licensed under CC BY-SA.

21. • Lack of proper education related to markets
and unorganised markets make farmers
susceptible towards being cheated.
• Hoarding, corruption, privatisation and
unethical practices cause a loss to farmers as
they are paid less amount than the MSP, even
after strict guidelines from the government.
• Lack of loan facilities from commercial banks
makes farmers take a loan from
moneylenders at high rates. This drives them
into a debt trap if they are not able to repay
the loans and is the number one cause of
farmer suicides in the country, with the figure
crossing 100,000 in 2013.
• The recent Land Acquisition (Amendment)
Bill, 2014, has enabled the government to
acquire lands more easily.

22. CONCLUSIONS
It was argued that with the initiation of reforms in 1991–92, the
bias against agriculture will be reduced, there will be a shift in
the terms of trade in its favour, and price incentives will favour
producers to increase production. This would enable the
producers to increase the surplus from cultivation of agricultural
crops that can be ploughed back to make longterm
improvements on land, undertake purchase of machines and
farm implements that raise productivity of land. However,
contrary to this expectation, the actual performance of the
agricultural sector was not impressive in the post-reform period
in comparison to the pre-reform period. Growth rates of the
agriculture sector as a whole and across major crops cultivated
in India have deteriorated, as has the importance of agriculture
as an income generating activity. However, the sector remains
the main source of employment in India. This implies that
disparity in income generation between agriculture and other
sectors, particularly services, has increased.

23. Non-price factors such as capital formation in agriculture (with an important role for irrigation), rural
credit, and research and extension services were not given adequate importance in the post-reform
period. Share of agriculture in gross capital formation started to decline in the 1980s, with no
turnaround in the 1990s, the greatest casualty being public capital formation in agriculture. A similar
pattern is witnessed for irrigation, where share of outlays in GDP and productivity have declined in the
post-reform period. Trends in rural credit show that there has been a steady decline in rural branches of
commercial banks in line with financial liberalisation initiated after reforms. There was a decline in
credit–deposit ratio in the 1990s as compared to the 1980s, adversely affecting supply of credit in rural
areas.
The increase in the credit–deposit ratio, as well as the share of priority sector and agriculture in total
outstanding credit since 2001 were largely due to definitional changes benefiting large agri-business
corporations and large cultivators. Agricultural research and extension are seen to have been
systematically neglected during the reform period. It needs to be mentioned here that it was neglected
prior to the initiation of reforms as well; this neglect further accentuated after the 1990s.
Expectations regarding improvements in terms of trade for agriculture did not materialise after the
reforms. Besides, agricultural trade liberalisation has exposed domestic producers to the volatilities of
international prices of agricultural commodities that have turned agriculture into an unviable
occupation. Studies carried out in different parts of India have also shown that a signifi cant proportion
of households were earning negative incomes from crop production. Neither there has been any signifi
cant movement in the terms of trade in favour of agriculture after reforms, nor have the cultivators
gained from more exposure to international markets and prices.

24. PRESENTED BY:-KISHAN CHAUHAN(19/1072)
TOVREZ ALAM(19/1134)