Impact of trade liberalization and related reforms on India’s agricultural sector, rural food security, income and poverty

How have reforms affected agricultural output in India? This paper examines the changes in the Indian agricultural sector in both the pre-reform and post reform (1991) period and then analyses the impact of these reforms.The author finds that in the pre-reform period, the most striking changes were: during the 1950s and 1960s, land reforms and the development of irrigation and other infrastructure played a major role in output growth the 1960s and 1970s witnessed high growth in public investments in agriculture in the 1980s, there was a decline in public investments in agriculture and a sharp rise in the level of input subsidies According to the paper, the decline in public investment in agriculture continued during the 1990s. The paper notes that reforms were initiated in 1991, which in turn affected the terms of trade in agriculture. The process of reforms, particularly trade reforms intensified after 1995 following the implementation of the WTO agreement on agriculture. Therefore, the author divides the reform period into two sub periods: 1990-1991 to 1995 –96 and 1996-97 to 2001-02 .In the first sub period, the paper finds that the terms of trade became highly favorable to the agriculture sector due to three factors:the government raised the minimum support prices of main cereals to bring parity between domestic and international prices agricultural exports were liberalized the international price situation was favorable However, the paper observes that the terms of trade declined during the second sub period of reforms, although it remained favourable compared to the period before reforms. The paper also finds that the high growth in the prices of cereals has not helped output growth because price support benefited agriculturally developed regions, which have exhausted their production potential and was missing in regions with low yield and high potential for growth.The author concludes that the growth rate in GDP of the agriculture sector showed almost no change during the pre-reform and post reform period. Furthermore, when reform is divided into pre WTO reforms and post WTO reforms, the growth rates present a very depressing scenario of sharp deceleration and negative growth rates. The paper also finds that there is significant reduction in poverty since the reforms. However, household food security and nutrition have worsened during reforms, due to the government policy of hiking cereal prices.