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Liberalizing Indian agriculture : an agenda for reform

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  • Pursell, Garry
  • Gulati, Ashok

Abstract

In July 1991, India embarked on a program of economic decontrol that greatly speeded the previously slow process of liberalizing trade and domestic regulatory controls begun in 1978. But the focus of reform has been on manufacturing. Reform has barely touched agriculture, which accounts for two-thirds of employment in India and about 30 percent of India's GDP. Although some crops (notably oilseeds) receive heavy protection, the net effect of interventions to date is to heavily favor manufacturing over agriculture. In this agenda for reform, the authors offer recommendations: Remove all quantitative export and import controls on agriculture, except for special treatment (such as export taxes) when Indian exports would be substantial enough to depress world prices (most likely with rice). Further reduce protection on manufacturing, rather than bring protection for agriculture up to the same level. As a transitional measure, consider the use of variable tariffs based on weighted averages of past international prices as a way to partly insulate domestic prices from extreme fluctuations in world prices. Initially allow the export only of high quality high priced varieties of such commodities as cotton and rice, to limit upward pressures on domestic prices of lower quality varieties, which are important to consumption in low income Indian households. Liberalizing fertilizingr imports and deregulating domestic manufacturing and the distribution of fertilizingrs. Remove subsidies on irrigations, electricity, and credit (and create conditions to facilitate the trading of canal irrigation water rights). Deregulate the wheat, rice, oil and oilseed industries, and abolish compulsory government acquisition at below market prices of sugar, molasses, and milled rice. Reform the food security system to protect low income groups from the increase in the general level of food prices required by the liberalization of agriculture. This would involve better targeting of food subsidies and associated reforms of the public distribution system, or even its eventual replacement by a food stamp system.

Suggested Citation

  • Pursell, Garry & Gulati, Ashok, 1993. "Liberalizing Indian agriculture : an agenda for reform," Policy Research Working Paper Series 1172, The World Bank.
    • Handle: RePEc:wbk:wbrwps:1172
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    References listed on IDEAS

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    1. Antônio Salazar P. Brandão & Will J. Martin, 1993. "Implications of agricultural trade liberalization for the developing countries," Agricultural Economics, International Association of Agricultural Economists, vol. 8(4), pages 313-343, June.
    2. Gulati, Ashok, 1990. "Fertiliser Subsidy: Is the Cultivator 'Net Subsidised?'," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 45(1), January.
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    Cited by:

    1. Independent Evaluation Group, 2006. "Assessing World Bank Support for Trade, 1987-2004 : An IEG Evaluation," World Bank Publications - Books, The World Bank Group, number 6966, December.
    2. Soumik Sarkar & Anjan Chakrabarti, 2022. "Rethinking the Formation of Public Distribution System: A Class-Focused Approach," Review of Radical Political Economics, Union for Radical Political Economics, vol. 54(1), pages 26-43, March.
    3. Ajit Karnik, 2005. "Why Do Governments Lack “Political Will†? An Explanation," Working Papers id:102, eSocialSciences.
    4. K. C. Smitha, 2018. "Agrarian Movements in Neoliberal India: A Case Study of Andhra Pradesh Vyvasaya Vruthidarula Union," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 7(2), pages 123-144, August.
    5. Singh, Nirvikar, 2010. "The Dynamics and Status of India’s Economic Reforms," MPRA Paper 24479, University Library of Munich, Germany.
    6. Parikh, Kirit S. & Narayana, N. S. S. & Panda, Manoj & Kumar, A. Ganesh, 1997. "Agricultural trade liberalization: growth, welfare and large country effects," Agricultural Economics, Blackwell, vol. 17(1), pages 1-20, October.
    7. Faruquee, Rashid, 1995. "Government's role in Pakistan agriculture : major reforms are needed," Policy Research Working Paper Series 1468, The World Bank.
    8. Kalirajan, K. P. & Sankar, U., 2001. "Agriculture in India's economic reform program," Journal of Asian Economics, Elsevier, vol. 12(3), pages 383-399.
    9. Gopinath, Munisamy & Laborde, David, 2008. "Implications for India of the May 2008 Draft Agricultural Modalities," WTO Doha Round 320118, International Centre for Trade and Sustainable Development (ICTSD).
    10. Faruqee, Rashid, 1995. "Pakistan's agriculture sector : is 3 to 4 percent annual growth sustainable?," Policy Research Working Paper Series 1407, The World Bank.
    11. Storm, Servaas, 1997. "Agriculture under trade policy reform: A quantitative assessment for India," World Development, Elsevier, vol. 25(3), pages 425-436, March.
    12. Harriss-White, Barbara, 1995. "The changing public role in services to food and agriculture : The legal regulation of food markets in India," Food Policy, Elsevier, vol. 20(6), pages 585-596, December.

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