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Responding to Policy Reform: India Agriculture in the 1990s and after

Oct 2003
Stanford King Center on Global Development Working Paper
189
By  Ashok Gulati, Kathleen Mullen

The policy environment for Indian agriculture in the 1990s underwent an array of changes, from broad-based domestic economic reforms launched in 1991, to the signing of the Uruguay Round Agreement on Agriculture in 1994, leading to a series of reforms in agricultural trade policies. These changes were accompanied by a slump in international prices of several agro-products after 1997, which led to confusion, roll-backs in tariffs, and a hardened stand on further liberalization. All this was happening in the backdrop of fast-changing consumption patterns towards high-value agriculture: from staple cereals to fruits, vegetables, dairy, poultry, and fish. The decade of the 1990s represents a transition period in Indian agriculture from state-led to market-driven growth, and while this evolution is still in progress and several roadblocks remain, it is useful to evaluate the performance of the agriculture sector during the reform process. To this end, this paper seeks to disentangle the major factors influencing the performance of Indian agriculture during the 1990s, and to identify the policy and institutional reforms needed to foster continued growth. While the overall growth rate in agriculture was largely unchanged in the 1990s vis-à-vis the 1980s, the composition of the production mix has changed in favor of high-value commodities.

 

The change in the production portfolio is a result of changing domestic consumption patterns and increasing exports of high-value products. Continued growth in the agriculture sector will require innovative institutions that link consumers’ preferences to production structures, from “plate to plough,” through vertical coordination in search of cutting down transaction costs in a small-holder dominated agriculture and fast-emerging urban middle-class in the country.