Indian agriculture, role in the economy and economic liberalisation: Revisited

This study focuses on the changes taking place in the agriculture sector in India, particularly since the early 1990s. A great deal of focus has been in the academic literature on growth rates in India in recent years, while the ongoing agrarian crisis is less discussed. The study intends to fill this gap and analyse the reasons behind the current crisis in the agriculture sector such as the slowing down in agricultural rates of growth, rising rural unemployment, food insecurity and rising numbers of farmers’ suicides, declining prices of agricultural commodities, and a widening gap between the agriculture and non-agriculture sectors in terms of their share to gross domestic product. The study concludes that Indian agriculture is overburdened in the sense that a very high proportion of the population is dependent on this sector, while it has low productivity and low capital investment. It seems that the agriculture sector has much greater impact on reducing poverty and improving food security than other sectors of the economy. Therefore, public investment is important as it played a positive role in the pre-reform period. Public investment in land and water management seems to be crucial for improving the agriculture sector in the long-term growth and viability in India. The study recommends that for successful inclusive growth, agricultural growth is a prerequisite, and it is important to increase the availability of institutional credits and public investments in rural infrastructure, especially to assist small and marginal farmers and to diversify the rural economy.