Food Security in India Under Free Market Conditions: A Macro-Theoretic Study

This chapter addresses the issue of food security in India. This chapter shows that under conditions of free market in India, food output is likely to be substantially less than its potential level given the stocks of available land and agricultural infrastructure. Because of the preponderance of small and marginal farmers in Indian agriculture, Indian farmers’ bargaining strength vis-à-vis agricultural traders is very low; they have to keep a large fraction of their output for self-consumption; they are unable to secure credit on an adequate scale and interest rates charged on these loans are also fairly high. All these factors, as we have shown in this paper, make food output in India substantially less than its potential level, gravely threatening India’s food security. Inadequate agricultural infrastructure makes India’s food sector subject to vagaries of nature. In such circumstances, as our paper shows, even a one-period incidence of natural adversity depresses food output below its normal level for several periods. During these periods of below-normal food output, food output of the poorest of the farmers may be less than the subsistence level, making them starve and commit suicide. We have also shown that the policy of one-time loan waiver improves food output and farmers’ economic condition only temporarily. However, in times of one-period incidence of natural adversity, the policy of one-time loan waiver can provide some relief to the farmers.