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Policy Reform and Farm Sector Adjustment in India


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  • Landes, Rip
  • Gulati, Ashok


Policy reforms outside agriculture in the early 1990s accelerated growth in per capita incomes and food demand and also improved the terms of trade for the agriculture. Agricultural policies and institutions, traditionally focused on achieving food grain self sufficiency within a closed economy, have, however, been slow to adapt to a new environment of diversifying demand, more open markets, and a greater role for the private sector. Support price policy has remained delinked from domestic and international market realities, creating significant budgetary costs and market distortion. Inability to reform price policy and contain input subsidies has led to a decline in public investment in agriculture at a time when investment in new infrastructure and institutions is needed. Implementation of targeted safety net programs has proven difficult due to weak administrative capacity and local resource constraints. Reforms at the border, when implemented, have typically exposed inefficiencies in the domestic market that limit competitiveness. Consensus building for change in agricultural policy remains difficult in India. With the farm sector accounting for 25 percent of GDP and 60 percent of employment, there is a deep-rooted perception that the welfare of the poor is linked closely to the protection of agriculture. More research within economy-wide frameworks may be effective in evaluating impacts and provoking debate on fundamental reform. Also needed is research on the implications of market-oriented reforms for food price stability, and on impediments to private investment in agriculture.

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Paper provided by International Agricultural Policy Reform and Adjustment Project (IAPRAP) in its series Policy Reform and Adjustment Workshop, October 23-25, 2003, Imperial College London, Wye Campus with number 15735.

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Date of creation: 2003
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Handle: RePEc:ags:iapr03:15735

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Keywords: India; agriculture; policy; reform; adjustment; Agricultural and Food Policy;


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  1. Montek S. Ahluwalia, 2002. "Economic Reforms in India Since 1991: Has Gradualism Worked?," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 67-88, Summer.
  2. Gulati, Ashok & Narayanan, Sudha, 2003. "The Subsidy Syndrome in Indian Agriculture," OUP Catalogue, Oxford University Press, number 9780195662061, October.
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Cited by:
  1. World Bank, 2008. "India - Taking Agriculture to the Market," World Bank Other Operational Studies 7919, The World Bank.
  2. Gulati, Ashok & Fan, Shenggen & Dalafi, Sara, 2005. "The dragon and the elephant," DSGD discussion papers 22, International Food Policy Research Institute (IFPRI).
  3. Umali-Deininger, Dina & Sur, Mona, 2006. "Food Safety in a Globalizing World: Opportunities and Challenges for India," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25746, International Association of Agricultural Economists.
  4. Aggarwal, Rimjhim M., 2006. "Resource-Poor Farmers in South India: On the Margins or Frontiers of Globalization?," Working Paper Series RP2006/97, World Institute for Development Economic Research (UNU-WIDER).


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