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Political Economy of Reform and

Agricultural Sector

Dr. A.Venkateswarlu*

1. Economic Reform

The economic reforms are generally imposed from the political compulsions either at the national or international levels. Again these political compulsions depend on the dominance of the changed economic paradigm. Some times they go together. So long as cold war conditions prevailed, the First world under the leadership of the US supported the theory of development economics under the influence of Keynesianism for the development of the Third world, as against the growing influence of the Second world (with the Soviet Union leadership). By the early 1980s, the stagflation in the post oil-price hikes (1973 and 1979) questioned the credentials of Keynesian demand management theory to replace with supply side economic theory in the First world under Reagon and Thatcher, on the one hand, and the Second world socialist construction was brittling down in the post-Solidarity Movement of Poland, on the other. Exactly at this time the Third World was reeling under the debt-crisis, in the post Mexico default scenario. The time was ripened for the IMF-World Bank, with their neo-liberal agenda, to impose Structural Adjustment Programme (SAP) to prise open the markets of the Third world countries and they became debt-collectors of private International Banks (Dasgupta, 1997b). The Fund-Bank policies of SAP got reinforced by the formation of World Trade Organisation (WTO), as a result of signing on the Dunkel Draft through Uruguay Round talks on GATT.

Thus the economic reforms implemented have to be divided into two main phases: (i)

The SAP related reforms, and (ii) WTO related reforms. In India, these two phases have been carried out and a brief account of them is given. 1.1 SAP related Reforms – Preconditions and Genesis

In this part, the period 1980-1991 is concerned with the preconditions and 1991 as the year of genesis. 1.1.1 Preconditions

The Congress party regained power in 1980 elections, under the leadership of Smt. Indira Gandhi. To keep its election promises, the government got approval of loan of 5000 SDRs from IMF, in 1981-82. The conditionalities of the loan were exposed by N.Ram of Hindu and there were great opposition movements, built up in India. The government on its own had to give up to take last traunche(s). In the post Indira Gandhi’s assassination scenario, Rajiv Gandhi was brought to power by thumping majority in December, 1984. He was very much attracted by the practitioners of Supply side economics, Reagon and Thatcher. Rajiv Gandhi adopted their market friendly policies for which he was appreciated as ‘Indian Reagon’ in the American media. He boldly carried reforms in the name of New Economic Policy (NEP) since 1985, with his vision of entering 21st century. His reforms mainly touched the industrial sector. But the new textile policy caused to sudden rise in cotton exports during 1986-87 by 10.0 lakh bales from 4.5 to ----------------------------- * Fellow at CESS, Hyderabad. It is presented at Indian Council of Social Science Research, Fourth Development

Convention, held at Centre for Economic and Social Studies (CESS), Hyderabad, March 4 - 5, 2005.

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14.5 lakh bales (Table-1). Further, there was increase in the imports of pulses during 1985-89 (Table-2). Some liberalisation in regard to the entry of MNCs, which operated in agri-business, was made. The Congress party was voted out of power in 1989 elections. There was political crisis in the country, when the Mandal issue (Reservation to OBCs) was raised by the Prime Minister, Sri V.P Singh and the BJP raised the issue of Mandir. In November 1990, there was change in the leadership of government from V.P Singh to Chandrasekhar. The minority government of Chandrasekhar was supported by the single majority party, the Congress party. The foreign exchange crisis was precipitated due to Gulf war. The minority government of Chandrasekhar could not function in a meaningful way to solve foreign exchange problem, and it could not even present a full scale budget (only interim budget), due to declaration of mid-term poll. In the middle of elections, Rajiv Gandhi’s assassination occurred. As a result, the Congress party showed its performance in the elections of 1991.

1.1.2 Genesis

As a single largest party, the Congress party regained power, in 1991, under the leadership of Sri P.V.Narasimha Rao. Exactly by this time, two events of historical importance on the international arena took place, (i) the socialism of East Europe and Soviet Union collapsed, and (ii) the US came as victorious in Gulf war, as cold war situation no more existed. Thus the new regime - under P.V. Narasimha Rao, the PM, guided by the Finance Minister, Sri Manmohan Singh - opted for the WB loan, which imposed SAP on India. The question then is whether imposition of SAP could be averted in India. Patnaik and Chandrasekhar (1995) give answer in the affirmative as follows:

(i) If the benefits of reverse migration were exploited, by accepting Kuwaiti currency, nearly $5.7 billion foreign exchange could have been secured, whereas the benefits were exploited by Western Banks. The minority government of Chandrasekhar could not act upon this.

(ii) Under the new regime of Sri P.V Narasimha Rao, if IMF was approached for a

low conditionality loan of $2,600 million.

However, the new government decided to go with a notion of TINA (there is no alternative), particularly in the changed international scenario, when the anti-socialist waves were sweeping over the world. Thus, the ground was ready for SAP related economic reforms in India, which brought out the steps for reduction in fiscal deficit, new industrial policy, new EXIM policy, financial sector reforms and so on. First, they were started with devaluation of rupee, which was supposed to encourage the exports.

1.2 WTO related Reforms

From the Uruguay Round talks of the GATT, through the approval of Dunkel Draft, the WTO was formed and it started functioning with effect from January 1, 1995. In addition to Trade related Intellectual Property Rights (TRIPs), Trade related Investment Measures (TRIMs), General Agreement in Services (GATS); Agriculture was incorporated into the fold of GATT to be governed by the WTO. The US, thinking that it was placed in advantageous position, stressed for inclusion of agriculture also in the Uruguay Round. Because of the differences of opinion about the agriculture among developed countries, particularly between the US and EU countries, the approval of Dunkel Draft was delayed. Though nearly 80.0 percent of the international trade

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runs among the developed countries themselves, through WTO they want liberalised trade with the developing countries. Thus, India became part of WTO in 1995, within a few years of accepting the SAP loan in 1991. As per the Agreement on Agriculture (AOA) of WTO, three areas of policy reform were required to be enforced in India, as in other developing countries. They are (i) market access, (ii) domestic support and (iii) export subsidies. As per market

access, the quantitative restrictions (QRs) are to be replaced by tariffication, applied tariffs are to be brought down by 24 percent in 10 years starting from 1995, and as per minimum access commitment clause, 3-5 percent of domestic consumption needs of agricultural commodities are required to be imported at lower duty rate. As per domestic support reduction, the aggregate measure of support (AMS), which is the sum of product specific and non-product specific subsidies, is to be reduced up to 13.3 percent over 10 years, as a means of elimination of trade-distorting measure. In respect of export subsidy reduction, export subsidy is to be reduced by 24 percent in value terms and 14 percent in quantity terms by 2005 (Chand, 2002). 2. Performance of Overall Economy and Agricultural Economy in Pre-and Post Reform

In this section, first we take up the overall performance of the economy in terms of change in growth rates of GDP and per capita GDP between the pre-reform and post-reform periods. Then, we look at the changes in growth rates of agricultural GDP and crop production and examine the changes in the capital formation in agriculture. A little light is thrown on poverty and employment. The pre-reform period (P-I) is 1980-81 to 1990-91, while the post-reform period (P-II) is treated as 1990-91 to 1999-00 or 1990-91 to 1998-99 or 1990-91 to 2000-

01, depending on the data availability. For all these aspects, the source is Bhalla (2004a). Finally, a macroeconomic aberration, the impact of increasing burden of debt of GOI is dealt.

2.1 Growth of GDP and Agricultural GDP

As per constant prices 1980-81, the GDP grew at 5.46 percent in pre-reform period (P-I) whereas in post-reform period (P-II), as in Table-3(a), it increased to 6.23 percent, and the per capita income grew at 3.01 and 4.30 percent in P-I and P-II respectively. Thus the performance of overall growth is good in the post reform period. As regards growth of agricultural GDP, it grew at 3.94 percent in P-I, while it decreased to 1.95 percent in P-II. Thus there is deceleration in the agriculture.

When we go by the constant prices of 1993-94, as in Table-3(b), the GDP showed its better performance rising from 5.62 percent in P-I to 6.19 percent in P-II and similar was the change in growth of per capita income. But it is interesting to find that agricultural GDP also showed marginal increase from 3.13 percent in P-I to 3.30 percent in P-II. This favourable growth rate of agricultural GDP has been attributed by the National Statistical Commission to the data on horticultural crops (both fruits and vegetables) obtained from National Horticultural Board from 1993-94 onwards rather than from the Directorate of Economics and Statistics, Ministry of Agriculture (Bhalla, 2004a; p.301). 2.2 Growth of Crop Production

Growth of total crop production has come down from 3.19 percent in P-I to 1.96 percent in P-II (1990-91 to 2000-01), as portrayed in Table-4. The yield growth has decreased substantially from 2.56 percent to 1.09 percent, while area under total crops has increased only marginally; which indicates that yield impact on the total crop production is high only in pre-reform period.

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The growth of rice production has decreased from 3.56 percent in P-I to 1.74 percent in P-II. The growth of wheat has only marginally decreased over the period. The yield growth has slowed down more in respect of rice than for wheat. Cropped areas under coarse cereals, total pulses, total cereals and food grains have exhibited negative growth rates in both the periods (P-I and P-II); their production and yield growth rates have come down. It is important to note that production growth rates of coarse cereals and total pulses have also become negative in P-II. In respect of sugarcane, though area growth has increased, the production growth has remained constant and as a concomitant, the growth of yield decelerated. For oil seeds, though all growth rates have come down, the production growth has declined substantially. Despite the fact that area growth of cotton has significantly high in P-II, compared to the negative growth in P-I, production growth of cotton has declined from 2.80 percent in P-I to 1.37 percent in P-II; while the yield growth, which is substantial in P-I with 4.10 percent, has assumed negative value with (-)0.94 percent in P-II. The performance of cotton seems to throw some light on the causes of suicides of farmers. 2.3 Capital Formation in Agriculture

At 1980-81 constant prices, in 1980-81, the share of public investment in total investment was 38.7 percent, which decreased to 25.1 percent by 1990-91 and by 1996-97 it further decreased to 16.2 percent in the post reform scenario, as seen from Table-5. Even as per the constant prices of 1993-94, the decrease in the share of public investment was transparently clear and the share came down from 33.0 percent in 1993-94 to 23.0 percent in 1999-2000. Thus the decline in the share of public investment in agriculture may be attributed to the deceleration of growth of production and productivity for total crops and individual crops. In this context, Bhalla (2004a) says:

This has resulted in reducing the potential for future growth. A decline in research investment has had more serious consequences and seems to be the main cause for stagnation and deceleration of yields of major crops. The increased private investment has not benefited agricultural research either. The major reason for

decline in public sector investment has been fiscal compression, which has mainly fallen on investment

(italics mine).

2.4 Employment and Poverty

In the overall economy (rural +urban), the growth of total employment came down from 2.40 percent during 1987-94 to 1.03 percent during 1993-2000, as shown in Table-6(a). In the same period, growth of employment in agricultural sector declined from 2.18 to 0.02 percent, which is highly alarming. That is, the zero growth of employment in agricultural sector. In the rural economy, total employment growth came down from 2.14 percent to 0.66 percent and agricultural sector also showed decline from 2.19 percent to 0.19 percent, as given in Table-6(b). Thus agricultural sector is not in a position to absorb labour any more. As regards the poverty estimation in India, there has been a lot of controversy in the recent past, as the figures of 1999-00 (55th Round of NSS) showed less poverty. As per this estimation, poverty in all-India came down from 35.97 percent in 1993-94 to 26.10 percent in 1999-00, as given in Mahendra Dev (2003, p.21). In the same period, the rural poverty declined from 37.27 percent to 27.09 percent. However, these figures are doubtful, and actual poverty might be somewhat high definitely. The alternative estimates of Deaton and Dreze show low poverty for urban India, but rural poverty remains more or less the same. It is time now to recast the Below poverty line, increasing the basket of goods to enter the human consumption, to decide cut of point, as it has elapsed 45 years since Planning commission has devised the’ magic figure’ of poverty, as Sen calls it.

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2.5 Increasing Debt burden

In 1950s and 1960s there was surplus in revenue accounts to be transferred to capital account. But by mid-1970s the revenue accounts of the Central budgets used to have deficits over the revenue receipts, due to higher revenue expenditure (Patnaik and Chandrasekhar,1995). That is, by getting from capital account, the expenditure is incurred in revenue account, without creating any assets. Particularly in the Janata party government, this tendency started. Later, the political parties coming to power are making promises to people at the time of elections to attract the voters, through their election manifestos. Thus, populist slogans and emulation among the political parties to capture power or regain power (Dasgupta, 1997a) from the perspective of new political economy, by disbursing spoils to the aspiring people after assuming power, are causing more and more fiscal deficits in the budget. As a result, both central and state governments are facing debt burden. Interest payments as proportion of total expenditure of the respective governments are going up year by year. A type of Ponzi finance has been in practice in Indian public finance management (Payer, 1996) i.e: to take new loans to repay interest and old loans partially.

As seen from Table-7, it is clear that the share of interest payments in Revenue

expenditure was less than 30.0 percent in 1990-91 and since then this share has gone up, reaching peak (37.42 percent) in 1996-97, but assumes 33.59 percent in 2004-05 budget estimates. Thus, more than one-third of the revenue expenditure is going for the interest payments, which is unproductive in the sense of value addition. Though it is claimed that subsidies are occupying some large share in the budgetary expenditure, its share in revenue expenditure has gone down over the period, with 11.29 percent share in 2004-05 (BE). What is most annoying to note is that the diversion of excess of capital receipts over capital expenditure into revenue expenditure has been going up continuously since economic reforms of 1991, with Rs. 1,322 crores in 1989-90 to Rs. 1,22,574 crores in 2004-05 (BE); while their shares in revenue expenditure also have been going up, with 1.43 percent in 1989-90 to 25.65 percent in 2004-05 (BE). This increasing burden may be one of the reasons for neglecting the public investment in Indian agriculture. Thus, it is important to divert such loan amounts for more productive

investment, which generates employment. 3. Impact of Reforms on Indian Agriculture

In the immediate reform period, in July 1991, the devaluation of rupee by 25.0 percent was made to make the Indian exports cheaper. 1991-93 economic reforms substantially liberalised India’s external trade regime for many non-agricultural goods. But, removal of restrictions on agricultural goods was slow. Import licensing was relaxed only in case of sugar and cotton in 1994. Only in 1997, on improvement in the position of BOP, India started phasing out QRs and all QRs were lifted in 2001 (Landes and Gulati, 2003):

Although Indian policy makers feared that QR removal would lead to a surge in imports, even establishing ‘war room’ to track imports of 300 sensitive items (about two-thirds agricultural products), this surge did not occur.

Imports increased only in high value and processed items with tariffs 50 to 100 percent; thus there is no threat to the domestic producers in those goods. By the end of 2002, only a few commodities remain under control of the state trading enterprises.

For the period since 1970, agricultural production was actually disprotected (taxed), as the impacts of public investment and support measures were more than offset by border measures that maintained low prices relative to world markets. 1991-93 reforms in India reduced levels of protection to industrial production, by opening up, that improved incentives in

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the agricultural sector through an improvement in the domestic terms of trade for agriculture (Gulati, 2004).

Through the 1980s and 1990s, Indian agriculture was not export oriented, and so there

were export restrictions combined with overvalued exchange rate. Trading enterprises in the public and cooperative sector used to look after quantitative restrictions for a number of goods. Agricultural export policies began to change somewhat rapidly from 1994. Reforms included: (i) reduction of number of products, subject to state trading, (ii) relaxation of export quotas, (iii) the abolition of minimum export prices (MEPs) and (iv) increased credit availability for exports.

Now some specific aspects of impact of reforms on agricultural sector are considered.

3.1 Changing Consumption Pattern – Shift in Cereal to Non-Cereal Food

In the post-reform period, the GDP growth increased and per capita income rose and there has been tendency to decline in the incidence of poverty (official estimates). Another important feature has been the emergence of a significant relatively affluent middle class. These conditions led to the diversified consumption pattern with a shift towards non-food grain products. In this regard, Landes and Gulati (2003) observe:

Rising incomes, particularly in lower- and middle-income households where the marginal propensity to spend on food is high, are having important impacts on food demand in India. Middle income and urban consumers are also likely to spend on upgrading and diversifying their diets. Indian food consumption patterns have diversified significantly during the 1980s and 1990s. Growth in demand for staple foods, such as wheat, rice and coarse grains, which have been the focus of agricultural development policy, institutions, and spending, is now slowing. By contrast, demand for other foods, including fruits, vegetables, fats, and livestock products are now showing relatively high, even accelerating, growth.

It is true even with bottom 30% percent of population, although their base level consumption of high value agriculture is small. For example, during 1983 to 1999-2000, the demand for milk by this low income category increased by 31%, of vegetables by 50%, of fruits by 162%, and of meat, eggs and fish by 100%, (Gulati, 2004); however they depend on lower base and so they have to be taken with caution.

3.2 Rising Minimum Support Prices of Rice and Wheat: Increasing Buffer Stocks

The Food Corporation of India (FCI) maintained (buffer) stocks of foodgrains upto 63 million tones by July 2002, as against the ‘norm’ of 24.3 million tonnes for that date (Prabhat Patnaik, 2005). This was the result of two factors: (i) the MSP prices increased, and (ii) the poor reduced their demand. 3.2.1 Rise in Stocks due to Rise in MSP Prices

The MSPs set for wheat and rice increased steeply during the period 1997-98 to 1999-2000

when there was downward trend in international prices, and for wheat alone the prices rose by 45.0 percent in that period (Rao, 2001). There was no difference between the MSP and procurement price. Further, the cost of production concept used in setting the price became a ‘full cost’ measure, which includes rental value of land, the imputed value of labour and a return to management, in addition to variable costs. Despite the recommendations of the Commission for Agricultural Costs and Prices to freeze the MSPs, they were overridden at the Ministerial level because of the political compulsions of the coalition governments (Landes and Gulati, 2003). In fact, from 1996 onwards frequent changes of governments took place at the Centre. Devegowda and Gujral governments in the first spell and later Vajpayee government twice

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wanted to woo the farmers in elections before coming to power and after coming to power. This is in consonance with the ‘new political economy’ perspective (Dasgupta, 1997a). After the rise in procurement prices as a consequence of MSPs, not only the farmers who produced in current year sold their surplus grains to the FCI, the traders of food grains also unloaded their own stocks, by selling to the FCI, due to high MSPs. As a result, the procuement of food grains reached an all time high of 19.7 percent of net production in the year 2000 (Rao, 2001). 3.2.2 Rise in Stocks due to Reduction in Demand by the Poor

Reduced consumption of food grains is to be treated as one the facets of ‘advanced

country syndrome’ of support prices, as per Rao (2001). The issue prices for the people above APL (above poverty line) were pegged to the high economic cost incurred by the FCI, which led to reduced offtake of foodgrains. The steep rise in food grain prices in the 1990s might have dampened consumption among the bottom 30.0 percent of population for whom the consumption of food grains was increasing in the 1980s, particularly in meeting the gap in demand for food grains above the PDS supply levels; which ultimately resulted in the increasd stock of food grains with the FCI.

3.2.3 Rise in MSPs leading to Environmental Problem

The policy of maintaining higher prices for wheat and rice due to higher levels of MSPs, coupled with low cost irrigation water, leads to intensive wheat-rice cropping pattern which causes the rapid deterioration of ground water resources, on the one hand, and on the other, the deterioration of soil fertility due to overuse of land with fertilisers and pesticides (Landes and Gulati, 2003).

3.3 Farmers Suicides

Jayati Ghosh gave an estimate of 10,000 farmers suicide deaths spanning over a decade from mid-1990s to the end of 2004 in the entire country (Deccan Chronicle, January 21, 2005). Andhra Pradesh, being the experimental station of SAP policies, tops in such suicide deaths among the states in India and they are continuing even today in this state. The reasoning for this process of suicides may be accounted for as follows.

In the post liberalisation scenario, euphoria has been generated among the middle, small

and marginal farmers that they can cultivate and export commercial agricultural commodities, such as chilly, cotton and groundnut in Andhra Pradesh. The farmers engaged in growing these crops have to invest more on seeds, chemical fertilisers and pesticides. For example, some seeds of chilly or tomato cost Rs. 30,000 to 35,000 per Kg. Untrained pest management, due to lack of proper extension, has led them to use high quantities of pesticides and chemical fertilisers, due to dependence on local input-sellers/dealers for advice. As a result, per acre cost goes up, while the yield levels are falling. For example, as seen in subsection-2.2, cotton yield growth assumed negative value, during 1990-91 to 2000-01.

The phenomenon is to be understood from the point of view of capitalist culture that

induces even marginal and small farmers to adopt unsuitable cropping pattern. When Bhardwaj (1974) referred distress cropping pattern in the FMS studies of mid-1950s and early 1960s, the farmers used to involve in the cash crops, by compulsion depending on the financial burdens and the soil type of the farmers. But now this is a new phenomenon, where the farmers by their exposure to global media become overoptimistic and grow cash crops, beyond their means by

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borrowing from the private money lenders / merchant agents. In fact the farmers are trapped by the ambitious outlook, induced either by the demonstration effect (from local rich farmers or fanciful media) or local inexpertise dealers of seeds, chemical fertilisers and pesticides. This is where we have to locate the farmers, who are against subsistence farming, as against Chaynov (1987, pp.88-89) who thought the peasant farms / farmers would have the competitive capacity against market-oriented capitalist agriculture, as he says:

Given a deterioration in the market situation negative quantities (losses), thanks to the mechanism of the labour calculation, appear much later on the peasant farm than on the capitalist one (hence, the exceeding viability and stability of peasant farms). Frequently, the family farm’s internal basic equilibrium makes acceptable very low payments per labour unit, and these enable it to exist in conditions that would doom a capitalist farm to undoubted ruin.

In the subsistence farming, even the small or marginal farmers used to sustain by overwork and underconsumption, as envisaged by Kautsky. Once the subsistence farming is given up and market vagaries are bound to take place and kill the farmers of non-economically viable size. If subsistence farming is there or low cost input is there the small farmers would survive by maximizing their per acre farm business income (FBI), as described by Banaji (1976):

The labour-intensifying-techniques-which households, faced with the pressure of surplus labour or consumer demand (c/w: consumer-worker ratio), adopt by way of expanding the annual consumption fund-will not necessarily increase the productivity of each unit of labour expended, they must, however, increase the gross output per unit of land area worked. … Since, by the argument proposed, what matters to an enterprise of this sort is an expansion of family-income, adoption of labour-intensifying-techniques would be fully justified from the household’s point of view, as long as they expand net output (FBI) per acre, even if at lower levels of labour-productivity and payment.

But, the small and marginal farmers are growing cash crops, which require waterings and so they dig borewells by borrowing from private sources at exorbitant rates of interest and ultimately immerse in the debt burden. As the government provides electricity at lower rate or free, the digging of borewells picked up. Added to this, highly costlier inputs are leading to low output-high cost agriculture, culminating in suicides. 3.4 Reduction in Fertiliser Subsidy

As a part of SAP, the effect of reduction of fiscal deficit first fell on fertiliser subsidy, in

August 1991, which led to a rise in the fertiliser prices. Fertiliser is a part of biochemical inputs and its use is size-neutral, as it is used by all farmers including marginal and small ones. Its price rise would cause reduction in its consumption, resulting in reduction of both productivity and production. Utsa Patnaik (1993) expressed concern, as this would lead to price rise of food ultimately. Rao (1998), who accepted for a gradual increase over the years for which the farmers would not oppose, has the following to say in this connection:

There was a sudden rise of 30 per cent in the prices of nitrogenous fertilisers and a doubling of the prices of phosphatic and potassic fertilisers following their decontrol in the early 1990s. This led to a sharp decline in the growth rate of fertiliser consumption from around 8 per cent per annum during the 1980s to only about 2 per cent per annum in the first half of 1990s. What is more ominous, there has been an absolute decline in the consumption of phosphatic and potassic fertilisers resulting in an adverse NPK ratio which may have reduced the productivity of fertilisers, apart from causing damaging soils.

In response to the struggle of farming community in India against rise in fertiliser price in

1991, there was some reduction or special subsidy was given to marginal and small farmers. Thus, it also has become a political problem. The continuance of subsidy on fertiliser has become necessary. But, this subsidy regime includes price subsidies for farmers as well as for domestic producers of some products, particularly urea. In 1999-2000, 60.0 percent subsidy

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benefited farmers and about 40.0 percent benefited fertiliser producers, particularly the least efficient manufacturers of urea. In 1999-2000, fertiliser subsidy alone accounted for Rs. 132 billion ($2.75 billion) as per Landes and Gulati (2003).

As Rao (1998) pointed out about the possibility of imbalance in the NPK ratio, the World

Bank (2004) finds that in 2001-02, the NPK application ratio was 6.9:2.7:1 aggregated for the whole India, whereas the ideal application ratio is 4:2:1. Thus, the fertiliser subsidies, which are largely concentrated on urea, distorted input use, leading to nutrient imbalances in the soil and groundwater contamination in many areas.

3.5 Rice and Wheat Trade The Indian rice particularly non-basmati rice became cheaper and these exports started

picking up. As seen from the Table-8, it is clear that during 1990-91 to 1994-95, the share of non-basmati rice crossed 50.0 percent ( except in 1993-94, when it was 31 percent). Peak shares are seen in 1995-96 and 1998-99 with 92.4 percent and 88.0 percent respectively. In 2000-01, it is 45.0 percent. In the immediate post-liberalisation, the international market prices were favourable for India. Chand (1999) reports that we may not gain much by depending on the exports of rice, because the export prices would show sharp year to year fluctuations. For example, the price of rice was below Rs.7,000 per tonne in 1991-92 and 1992-93 and then rose to Rs.9,459 in 1993-94; but the subsequent year it dropped by more than 20.0 percent. Chand had to say that if we go for export market, in respect of rice and maize, the domestic wholesale and farm prices would rise.

In 2000, Indian rice became less price-competitive whereas the growth in rice stocks

went up due to the combined effect of (i) higher Minimum Support Prices (MSPs) and (ii) reduction in domestic distribution of subsidized rice. To strengthen the domestic prices, the government of India began to provide significant budgetary subsidies to support exports of surplus rice, when combination of declining world prices and higher domestic prices made Indian rice uncompetitive in world markets (Landes and Gulati, 2003).

In regard to wheat, we are mainly the net importers, as seen from the Table-9. In the

periods 1985-86 to 1987-88, 1990-91 to 1991-92 and 1995-96 to 1996-97; and only in 2000-01, we were the net exporters, that too when the export prices are less than import prices. In 2000-01, the wheat was also given export subsidy to unload the food stocks at the FCI. 3.6 Edible Oil Imports

As seen from the Table-10, it is clear that the imports of edible oils are high in 1980-81, 1983-84 to 1988-89 and since 1995-96, they have been high and increasing, despite the rising unit values. Between 1989-90 and 1994-95, the imports were substantially less. During this period, domestic production was encouraged by the government policy, which resulted in (Landes and Gulati, 2003):

(i) higher price for oil seeds and oils, (ii) high planted area, and (iii) oil seed cultivation on higher quality land became an inducement to the growers

in the regions, where the yields were high. Since 1994-95, the government reduced protection for oils and no effective MSP was

there for oil seeds. As a consequence, oil seed area has declined and yield levels stagnated; and as a concomitant effect, capacity utilization rates of oil seed processing industry have also fallen.

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3.7 Import of Pulses

The import of pulses has been a continuous process, as can be seen from Table-2. In 1980-81 the import was of 173 thousand tonnes and 2000-01 it was 351 thousand tonnes. The peak levels were in 1990-91 and 1997-98, with 1273 and 1008 thousand tonnes. However there has been some tendency for exports to rise since 1991-92 reaching peak level in 2000-01 with 244 thousand tonnes. It is difficult to say that there is anything to be attributed to the reform policy here, because the imports have been a continuous process. In the post-Independent era, and particularly in the post-green revolution phase, there has been a failure to increase the production of pulses in proportion with the cereals, despite a claim that pulses are the poor people’s protein. It is really an area of great concern for the Indian policy makers and agricultural researchers, because the per capita net availability of pulses per day was only 30.0 gms in 2001 which is only half of what it was in 1951 (60.7 gms) and three-fourths of what it was in 1991 (41.6 gms), as shown in Economic Survey 2003-04.

3.8 Acquaculture and Environmental Imbalance

As seen from Table-11, it is clear that the exports of fish and fish preparations have assumed importance in the post-reform period. In 1990-91, their exports had a value of Rs.960 crores only and by 1994-95, the value reached Rs.3547 crores, by showing a growth of 270 percent in the immediate post-reform period. By 2002-03, the value of these exports assumed Rs.6928 crores, which again grew by 95.3 percent over the value of 1994-95. Their share in the value of exports of agricultural and allied products accounted for 14.08 percent in 1990-91, which went up to 25.79 percent in 1994-95 and came down to 20.56 percent in 2002-03. But, it is noteworthy that the fish and fish preparations are assuming one-fifth to one-fourth of the value of exports of agricultural and allied products. Further, their share in the value of total exports varied between 2.5 and 4.3 percent during 1990-91 to 2002-03, with the peak level share in 1994-95.

But it is important to understand at what cost this export drive has been achieved. For

exporting sea foods, the paddy fields are converted into prawn and fish ponds along the coastal belt in India, particularly in Andhra Pradesh, Orissa and Tamilnadu. It is not known how long the external demand would survive. Again if those fields are to be converted into paddy fields, they become unfit for cultivation due to salination. Apart from this, labour is displaced from the old paddy cultivation, without any alternative employment (Patnaik, 1996). Further, the people, who are living in the coastal areas, face problems of drinking water, fuel for cooking and other contingent shortages. It is reported that women folk are the most affected in such areas.

4. Can WTO Really Stand for Fair and Free Trade in Agriculture ?

The history shows that international trade is always decided by the political and military domination. Ultimately, the so-called ‘comparative advantage’ theory is only a proposition in an ideal situation. This was proved in colonial exploitation. Utsa Patnaik (1996) depicted how Britain succeeded through a combination of naval bullying and diplomacy wresting from Portugal the highly lucrative slave trade for supplying slaves to the Spanish empire in South America from Potuguese West Africa, while making Portugal to accept for the exchange of their wine for cloth of England. This compulsive trade between Portugal and Britain was portrayed as ‘comparative advange’ by Ricardo. Thus, the competition is never fair and free. Ricupero (1997), the Secretary General, UNCTAD, while dealing with competition in international trade

11

in the era of globalisation, considers that there is the limit to competition:

Problem is to define what should be the limit to competition from the development point of view. I would suggest that the answer lies in the differences in the stages of development, the differences in the capacity to compete. Competition requires rules. And one of the basic rules of any game is that if you want to compete with some chance of winning, you have to be more or less equalised. If you do not have possibility of competing on equal footing, and equal footing requires treating differently different stages of development. If you do not have that, you will be crushed by the competition.

The WTO formation itself is an imposition from the side of developed countries. The developing countries had only a partial interest. At whose behest the Dunkel Draft was prepared gives an inference how it does function. It was either to be accepted in toto or to be rejected. To be covered under the umbrella of multilateralism, most of the developing countries agreed to become members of WTO and signed the Dunkel Draft. The agreements are so voluminous that it is weighing some quintals. Further, these agreements are prepared by the experts from the developed countries, and they are highly litigant and involve lot of technicalities. It is so esoteric and dubious that the inclusion of Green and Blue Boxes was never imagined by the member developing countries. The WTO has provisions of cross retaliatory clauses, keeping the burden of proof with the respondent. On the other hand, developed countries try to restrict the goods from the developing countries, by introducing clauses, such as labour and environmental conditions. All these give scope for undemocratic functioning of the WTO. Ram Mohan Reddy of Hindu (November 16, 2001), explained what happened at Doha, in regard to the events on the fateful night of November 13, 2001, as quoted in Venkataramaiah (2001), and it is as follows:

When the stakes are high, it comes down to the wire, the WTO returns to its old non-transparent and bullying ways… WTO officials initially said that Doha would be the first Ministerial meeting without the notorious ‘Green Room’ process of the former GATT when ministers from a dozen or so rich and poor countries used to be called in to be brow beaten by the US and the EU behind closed doors and the results then sent to the larger assembly of all WTO members to be rubber stamped for approval. With no agreement in sight, November 13, the scheduled last day of the Conference. …. some ministers from 20 odd countries of 142 WTO members were called at 6 P.M for closed door negotiations in presidential suite 11 of the the Conference center. That meeting went on, with one brief interruption, up to 3 P.M on November 14 as the EU, the USA and Director General, Mr. Mike Moore, sought to impress a recalcitrant bloc of developing countries to agree to the launch of new round. That was the end of the transparency initiated at the WTO. Uninvited government officials who tried to enter the decision making room were asked to leave.

India originally thought that its agriculture would gain from the liberalisation, because it was expected that developed countries would reduce domestic and export subsidies to their farmers. But, those countries have not reduced to the committed levels. Not only they introduced the protection under garb of Green Box (for research and extension, and promotion policies) and Blue Box (income support and or cattle limiting programmes), which are to be treated as non- trade-distorting factors; they also tried to protect from the clauses of sanitary and phytosanitary (SPS) measures.

There are doubts about the liberalisation of the agricultural markets, due to market access

provision in the WTO, whether it would lead to food insecurity in the developing countries, as in the SAP period, as the developed countries dictate which crops are to be grown in the developing countries. This led to the undoing of green revolution in the developing countries as imposed by the developed countries. Thus, in the SAP period, the nation-states of developing countries have lost their autonomy and sovereignty, due to transnationalisation of the state (Nanda,1995).

In the US, on an average, there are 12,000 items of food in raw, processed form in supermarket shelves. Nearly 60.0 percent of these items are wholly or partly tropical to sub-tropical in origin. The same situation is there in other developed countries. These are the non-import-substitutable agricultural products, being imported by developed countries (for synthetic sugar etc.) from tropical and sub-tropical developing countries, for their consumption from

12

morning awakening to retiring at night. This is called a second revolution in life-style and

consumption patterns of developed countries, due to the increasing health consciousness. These products include: beverages like coffee, tea, cocoa and fruit juices; vegetable and fruits in fresh, frozen and canned form; vegetable oils in liquid and hydrogenated forms; lean meat, fish and sea food ; flowers and ornamental plants,; and spices and flavourings; other tropical and sub-tropical products, pharmaceutical cosmetics, cotton and fibre textile to breathe the body against synthetics (Utsa Patnaik, 1996).

The developed countries depend on the developing countries for these agri-products for

the reason that they are not capable of producing, owing to the cold climates. As Utsa Patnaik (1993) says:

The only things their agriculture produce is wheat, potatoes, a rather small range of vegetables and fruit, and dairy products in plenty. A lot of the fruit and vegetables they can grow have a very short season and some require expensive hot-house cultivation. So it is in their interest not only to get hold of the purely tropical crops mentioned earlier but also in their snow-bound winter, import their summer varieties (aspagurus, strawberries etc.) which can grow all the year round in tropical climates.

As they can produce wheat and other cereals in plenty, they want to export these food grains to the developing countries and so the latter countries have to produce what they require so as to exchange with their food grains. In fact, the US alone can dominate the world’s food grain market by more than 60.0 percent.

In this connection, Rao (2001) upholds the protection for the countries which have only recently emerged from long periods of colonial rule as they have a long way to go before they can achieve a level playing field vis-à-vis developed countries in regard to infrastructure, technology and skills. He says, “Therefore, institutional arrangements such as WTO are essential for ensuring level playing field so that considerations of comparative advantage can have a free and fair play.”

Let us hope that India may not fall a prey to the developed countries’ trap. However, in

regard to the performance of Indian agricultural exports, Bhalla (2004a) has the following to say:

On the whole agricultural exports in India have shown buoyancy after economic liberalisation and rupee devaluation in 1991. But there are large year-to-year fluctuations in export growth. India’s exports are highly elastic to prices received for exports and have grown faster than world trade when prices are favourable and vice-versa. This has damaged India’s image as a stable exporter as supply declines disproportionately when prices are depressed.

5. Suggested Reforms of Expert Economists – Their Stress on State’s Role

The economic reforms implemented in India, in the context of SAP and globalisation, insisted on withdrawal of the state from economic sphere, thereby increasing the role of market forces. Further, the reforms were simultaneously introduced both in internal and external sectors, whereas it is necessary to undertake reforms in a sequence, first in the internal liberalisation and then in the external liberalisation (Kumar, 1992; EPW Research Foundation, 1994). The development of MNCs undermines the nation state, and the MNCs insist on borderless world (Roy, 1995). But, as Nayak (1996) says “For the poor and the exploited, the state represents the forces of modernisation and progress and offers possibilities of improving the living standards of the population at large.” Kothari (1995) echoes that people want the state to face more challenges to achieve in the economic and social fields but the state retreats in these roles in the context of globalisation.

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Thus, the role of the state in economic development stands unbeaten. The reforms, being suggested by the expert economists in India, have a role for the state to play, though not explicitly understood. It is not that they entirely oppose market friendly reforms. What they want

is that first preliminaries are to be fulfilled, by setting things right at domestic front through

cautious and careful internal liberalisation. In this section, we deal with reform agenda put forth by three expert economists, viz: C.H.Hanumantha Rao (C.H.H.Rao), G.S.Bhalla and V.S.Vyas.

It is emphasized that the reform agenda suggested by these economists is quite different

from the agenda of SAP policies and these suggested policies are in the interest of the people of this country. Now we describe briefly their suggested reform agenda.

5.1 C.H.Hanumantha Rao’s Suggested Reforms

His views are mainly dependent on Rao (1998, 2001 and 2003).

He rebutted the argument that the complementarity between public and private investment is invalid and supported the public investment in agriculture in key areas. For low public investment in capital formation, the major reason he sees in fiscal compression, the other reason being the failure to reduce high input subsidies. He thinks that the 1990s deceleration in agricultural growth is due to lack of public investment and effort, and so “ the major effort on the domestic front for ensuring viability of Indian agriculture has to be focused on rising productivity by stepping up public investment, by accelerating the evolution and adoption of cost reducing technologies.” Therefore, he wants to rise public investment in agricultural research and extension, as it is hovering around 0.49 percent in agricultural GDP, which is required upto 1.00 percent. Further, he wants that economic and social development of the poor is to be achieved through productive employment and human development, i.e by labour intensive growth in rural areas (Rao, 1998, 2001).

For the farmers suicides the major reason is the failure of extension, “the squeezing of

assistance to the states by the central government for extension services has led to the virtual breakdown of extension machinery.” As no public extension is available, the resource-poor and gullible farmers are becoming victims of exploitation by unscrupulous traders and money lenders in selling spurious materials (Rao, 2003). In fact, The Deccan Chrnicle, dated. 04-02-05 and 05-02-05, in its case studies of Atmakur Mandal, Warangal District in AP, published exactly the same type of exploitation meted out by the local traders and dealers in the sale of such spurious seeds.

In regard to the MSP prices for rice and wheat, they should be intended to provide an

element of insurance against precipitous fall in prices, and in such a case it should be preferably based on the average paid-out cost, while procurement price should be set by the market conditions in competition with the private trade. But, recently, the difference between MSP and procurement price has been obliterated. In regard to food security, he says that the streamlining of MSPs etc. should be done gradually, because the sudden and drastic change in the existing system of pricing and procurement of food grains carry the risk of undermining food security. So the objective should be to consolidate the food security so far achieved. As one of the ways of off-loading the surplus stocks of food grains with FCI, he advocated for the issue of 5 to 10 kgs of grain per month free, to the parents of child labour, to compensate them for the loss of children’s earnings to send their children to school. The major and medium irrigation already covers 60 percent of the potential of 58.5 m.ha and 78 percent of the minor irrigation potential of 81.4 m.ha has already been exploited

14

and so it is important to take steps for efficient and productive use of available irrigation, and for this achievement , water users associations (WUAs) should be given devolved powers through Participatory Irrigation Management (PIM). He says that subsidies on water from canals and electricity for pumping water from ground water sources caused severe deterioration of the system due to the neglect of their maintenance in addition to becoming fiscally unjustifiable. Therefore WUAs and PRI bodies are to be fully empowered and induced to charge and collect water and electricity rates from the consumers either by volumetric or flat rate basis. He accepts that reduction in subsidies on nitrogenous fertilisers and other fertilisers caused reduction in consumption, which led to imbalance in NPK ratio. He also believes that the subsidies on nitrogenous fertilisers perpetuates inefficiencies in domestic fertiliser industry, on the one hand and their excessive use would lead to the soil degradation. So he suggests a system of fertiliser subsidy by which a fixed quantity of fertilisers sufficient for one or two hectares may be subsidized for all the farmers, if necessary through input stamps, requiring them to purchase the remaining quantities in the market at going prices. In regard to credit facilities, for 40 percent of credit needs, farmers are depending on private money lenders. Mostly marginal and small farmers depend on the informal source. By applying the experience of successful SHG movement in India, the groups of marginal and small farmers may manage the credit needs in the land-saving activities, such as animal husbandry, dairying, horticulture, agro-forestry etc. Market friendly aspects

He believes that SAP reforms leads to improve terms of trade for agriculture. He

insists on removal of restrictions on agricultural trade, marketing and processing. That is, he advocates for the review and revamping of Essential Commodities Act (ECA), Agricultural Produce Marketing Act (APMS) and the Small Scale Industry (SSI) reservation and so on to allow the entry of private sector in marketing, storage and processing. He does not like the government to dispose of a good part of the large amounts of grain at a price almost half its ‘economic cost’ as such market operations at huge discounts drove out the private sector from grain trade.

5.2 G.S. Bhalla’s Suggested Reforms

Bhalla (2004a) deals with the policy implications of globalisation for Indian agriculture in its opening up.

He says that though it was expected that the reforms of 1991 and globalisation process under WTO after 1995 would benefit the agricultural sector of India, those reforms failed to bring about the expected benefits to the Indian peasantry. Deceleration of agricultural growth is attributed to the slow down of the public investment in agriculture. As he says:

Experience of the 1980’s and 1990’s should teach the Indian policy makers that public investment in rural infrastructure continues to be of paramount importance. It can be complemented but not fully replaced by private investment. Hence, there is a need to accelerate public investment in agriculture.

The serious concern is about the deceleration of yield growth rates of many crops.

Therefore huge investment in research and technology, which has been neglected for some time,

15

is required. Dependence for seed on MNCs is costly and unreachable to small and marginal farmers and hence resources are to be provided for research within the country.

Agricultural employment or its diversification into non-farm sectors also would

depend on the agricultural growth. If trade liberalisation by the developed countries would turn into a reality, India has

huge potentialities for increasing agricultural exports; but realizable only if large investment in processing, power, communications, marketing, transport and other infrastructure is made.

If the small and marginal farmers including landless labour also have to share the

potential benefits of growth and increase in exports, a pro-active policy should be designed to involve them in innovative institutions like integrated cooperatives like mother dairy, and other cooperatives; contract farming etc. 5.3 V.S.Vyas’s Suggested Reforms

His ideas are gathered from Vyas (1999, 2001 and 2004). He opposes those who insist that the foodgrains can be imported by the foreign

exchange earned in exports other than foodgrains. He reminds that the five developed countries, viz: the US, France, Canada, Australia and Germany, dominate in foodgrain exports. In fact, those countries together accounted for 73 percent of the total wheat exports in the triennium ending 1995. He cautions us about the political implications of dependence on the imports of foodgrains. In this connection, he maintains:

So long as the other ‘commercial crops’ do not generate measurable foreign exchange surplus, over and above the cost of imports of agricultural inputs the country cannot afford to divert foreign exchange resources to imports of foodgrains, most of which have to be bought from the developed countries, sould not be underestimated. The post-Pokhran sanctions have once again reminded us that we are living in a

unipolar world in which one country has a decisive voice (italics mine).

Export-oriented agriculture is fairly capital-intensive when we have to involve in exporting ‘dynamic commodities’, like fruits, vegetables, dairy products, flowers, fish products, etc., because they need substantial investment in infrastructure, starting from roads and communications to the warehouses and cold storage facilities, together with the investment in human resource development. Government has to definitely share the burden of investment.

He recommends the unfreezing of tenancy so that it is beneficial for both the lessors

and lessees, by introducing safeguards to ensure that investment in land by the tenant is compensated and that the land owner does not lose his/her ownership.

Due to pressure from vocal and organized large farmers’ lobby, all types of farm

expenditure, incurred or imputed, were added to the cost of production, to become Cost-C or more than Cost-C (if management also imputed), instead of taking ‘paid out’ or variable costs, for the purpose of fixing the MSP. The distinction between procurement prices and MSP was first blurred and later abolished, all quantities of foodgrains, mainly cereals, offered for sale by the farmers were procured at the enhanced ‘minimum support’ prices. It is needed to protect only variable costs, so that procurement can be carried out on commercial lines. As regards input subsidies, they have to be reduced by phasing out by (a) placing a cap on existing subsidies, (b) announcement of a time bound programme of phasing out input subsidies.

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However in respect of relieving agrarian distress in the country, he suggests a three pronged strategy to save the situation from further deterioration:

(i) Mitigating risks for the poor: More general programmes such as poverty alleviation programmes, and programmes to strengthen backward regions; and specific programmes - to mitigate risks, such as MSPs, crop insurance, the National calamity Fund, safety nets for indigent and handicapped people and so on - are to be provided. (ii) Investment in strengthening land and water resources: As public investment in agriculture slowed over the 1990s, canal irrigation has not increased and maintenance of canal irrigation is eroded. The private investment in ground water irrigation has already overexploited so that water tables are going down. The degraded land is higher in the states with a larger share of rain-fed agriculture. For remedial measures public investment is needed. (iii) Strengthening supportive institutions: Institutional support in research, extension, credit and marketing is of paramount importance for reducing the vulnerability of poorer sections, especially small and marginal farmers. To form cooperatives and SHGs and for their proper functioning government encouragement is needed. In areas where farmers affected by heavy indebtedness, legislation prohibiting usurious moneylending should be enacted and made effective or formal rural financial institutions have to take over the loans from private sources, and waival of interest or even principal amount borrowed from RFIs is to be considered.

6. Conclusion

The economic reforms in India were introduced in 1991 under the influence of the Fund-

Bank policies of SAP, in the context of changing national and international political scenario and the impending approval of the Dunkel Draft on the eve of formation of the WTO. After more than a decade, it is time now to take the stock position of the impact of reforms. However, our concern is limited to agricultural sector only. Impact on Agricultural Sector

Agricultural GDP decelerated (at 1980-81 prices which is more relevant for comparison) from 3.94 percent in P-I, the pre-reform period (1980-81 to 1990-91), to 1.95 percent in P-II, the post-reform period (1990-91 to 1998-99), although the GDP and per capita GDP showed good performance.

Growth of overall crop production dropped from 3.19 in P-I to 1.96 percent in P-II (1990-

91 to 2000-01), while the yield growth also declined from 2.56 to 1.09 percent. In most of the major crops, the production and yield growth decelerated. In sugarcane production growth remained constant, but productivity growth decreased. There is a dismal failure in respect of cotton whose yield growth came down from 4.10 percent to –0.94 percent.

In agricultural capital formation, the share of public investment fell substantially, which

is matter of serious concern, which led to stagnation in research and deficiency in extension. Agricultural employment growth decelerated from 2.40 to 0.02 percent at the level of

overall economy (R+U) and in rural economy, it fell from 2.19 to 0.19 percent . Thus agricultural sector lost its abode for absorption of rural labour force.

As regards consumption pattern, there was shift towards non-food grain products within

food consumption, due to increase in per capita incomes. Even the bottom 30.0 percent

17

population, for whom there is some elasticity of demand with respect to total per capita consumption, did not demand food grains, in respect of the quantum of gap in demand above the supply from the PDS, for the reason that issue prices increased (from the FCI).

Farmers suicides occurred in a few states to the extent of some thousands among the

cotton, chilly and groundnut growers, as no systematic extension and credit facilities were available to them.

The immediate impact fell on fertiliser subsidy and reduction in fertilisers subsidy

particularly for nitrogenous fertlisers, on the one hand, and phosphatic and potassic fertilisers, on the other, in a disproportionate manner, resulted in the adverse NPK ratio, leading to environmental disorder.

The MSP prices for rice and wheat went up due to political instability during 1996-99; as

the lobbying of rich farmers worked well due to repeated elections. Opening of rice and wheat trade did not perform well, due to fluctuations and falling

prices. Edible oil imports increased from 1995-96 onwards, due to failure in maintaining market intelligence, and though the bound level of tariff rate is as high as 300 percent, the tariff reasonably had not been hiked. However, the withdrawal of domestic support to the oil seed growers led to the import of edible oils in the post 1994-95 period.

WTO’ s Role

WTO’s performance in the recent past throws doubts on its ability to stand for the free

and fair trade in agriculture, as the developed countries are trying to show Green and Blue box subsidies as non-trade-distorting subsidies. Further developed countries are trying to govern imports from developing countries, by the sanitary and phytosanitary (SPS) clauses, which is an indirect protection to their farmers.

Reforms Suggested by Expert Economists-Their Insistence on State’s Role

In the reforms carried out in India, there has been wrong sequence. Further, liberalisation

process was started simultaneously in both internal and external sectors. This has led to failures in agriculture and other sectors. If they have to be corrected, sector-wise domestic problems are to be solved through state’s role in specific areas and decreased role in some other sectors, as suggested by the expert economists of the profession.

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Tables

Table-1: Cotton - Production, Exports and Imports (Lakh bales of 170 Kg each)

Year Opening Supply Demand

Stock Production Import Total Mill Non-mill Exports Total

Conspn Conspn

1977-78 12.4 71.0 3.2 86.6 66.2 2.0 0.0 68.2

1978-79 18.4 79.3 0.3 98.0 70.5 2.5 2.7 75.7

1979-80 24.7 76.5 0.0 101.2 72.0 2.5 5.5 80.0

1980-81 25.6 78.0 0.0 103.6 76.8 3.4 7.0 87.2

1981-82 16.4 84.0 0.5 100.9 73.5 4.0 3.7 81.2

1982-83 24.8 83.0 0.0 107.8 75.0 4.7 7.0 86.7

1983-84 25.4 75.2 0.0 100.6 80.1 4.7 3.5 88.3

1984-85 16.0 101.5 1.0 118.5 86.5 4.7 1.8 93.0

1985-86 28.8 107.0 0.0 135.8 86.6 5.1 4.5 96.2

1986-87 39.5 95.0 0.0 134.5 95.0 5.5 14.5 115.0

1987-88 20.0 90.0 3.0 113.0 92.0 5.5 0.4 97.9

1988-89 18.7 106.0 2.3 127.0 98.0 6.0 0.8 104.8

1989-90 22.0 135.8 0.0 157.8 104.5 6.5 13.7 124.7

1990-91 33.0 117.0 0.0 150.0 108.0 7.5 11.9 127.4

1991-92 22.6 119.0 3.0 144.6 103.1 8.0 0.8 111.9

1992-93 32.8 138.0 1.2 171.9 112.8 12.2 13.8 138.8

1993-94 33.2 121.5 3.0 157.7 114.0 13.0 3.9 130.9

1994-95 26.8 138.5 5.9 171.1 119.4 15.7 1.1 136.1

1995-96 35.5 169.2 0.5 205.2 148.8 17.0 8.5 174.3

1996-97 39.2 177.9 0.3 217.4 150.4 19.8 16.8 187.0

1997-98 30.4 158.0 4.1 192.5 143.2 15.8 3.5 162.4

1998-99 30.0 163.0 7.9 200.9 145.5 17.9 1.0 164.4

1999-00 36.5 156.0 22.0 214.5 159.0 14.4 0.7 174.1

2000-01 40.5 140.0 22.0 202.5 160.3 12.6 0.6 173.5

2001-02(P) 29.0 156.0 16.0 201.0 161.0 12.0 2.0 175.0

Sources:

1. Government of India (1998), CACP Report 1998-99 - upto 1996-97 p.232

2. Government of India (2001), CACP Report 2000-01, for 1997-98 and 1998-99, p.278

3. Government of India (2003), CACP Report 2002-03, for 1999-00 and 2000-01, p.183

4. From 1995-96 onwards, the period is October- September, and prior to that it was September-August

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Table-2: Exports and Imports of Pulses

Year Exports Imports

Quaantity Value Unit value Quaantity Value Unit value

1980-81 1.09 0.35 321.10 172.96 29.76 172.06

1981-82 0.95 0.34 357.89 128.07 44.34 346.22

1982-83 1.71 0.87 508.77 102.36 36.68 358.34

1983-84 6.37 0.36 56.51 227.90 82.85 363.54

1984-85 3.79 2.56 675.46 235.39 100.70 427.80

1985-86 0.57 0.46 807.02 431.44 189.06 438.21

1986-87 5.37 4.77 888.27 624.79 233.66 373.98

1987-88 9.18 6.41 698.26 612.40 272.02 444.19

1988-89 10.10 11.50 1138.61 755.56 1190.01 1575.00

1989-90 13.14 15.98 1216.13 469.90 228.35 485.95

1990-91 15.11 17.93 1186.63 1273.43 481.17 377.85

1991-92 25.78 39.04 1514.35 312.61 255.27 816.58

1992-93 34.31 53.44 1557.56 382.62 334.38 873.92

1993-94 43.60 73.59 1687.84 628.04 566.86 902.59

1994-95 50.71 90.41 1782.88 554.14 592.63 1069.46

1995-96 61.36 131.81 2148.14 485.61 685.57 1411.77

1996-97 55.15 131.58 2385.86 654.81 890.34 1359.69

1997-98 170.76 360.80 2112.91 1008.15 1194.67 1185.01

1998-99 103.90 223.03 2146.58 563.53 708.81 1257.80

1999-00 192.17 419.65 2183.74 252.82 358.25 1417.02

2000-01 244.26 537.58 2200.85 350.57 500.06 1426.42

2001-02(P)

Quantity : '000 tonnes

Value : Rs. Crores

Unit Value : Rs. Per quintal

Sources: 1. Government of India (1998), Report of CACP 1998-99, p.402 - upto 1996-97

2. Government of India (2003), Report of CACP 2002-03, p.245 and 247 -

for 1997-98 onwards

Table-3(a): Growth Rates of GDP and Per Capita Income at 1980-81 Prices

Years GDP GDP Agri Secondary Tertiary Per Capita

Income

1955-51 to 1964-65 4.00 2.65 7.73 4.61 1.69

1967-68 to 1979-80 3.45 2.10 4.43 4.49 1.11

1980-81 to 1990-91 5.46 3.94 6.86 6.58 3.01

1990-91 to 1998-99 6.23 1.95 7.45 8.24 4.30

Table-3(b): Growth Rates of GDP and Per Capita Income at 1993-94 Prices

Years GDP GDP Agri Secondary Tertiary Per Capita

Income

1955-51 to 1964-65 3.94 2.54 6.88 4.76 0.86

1967-68 to 1979-80 3.44 2.05 4.23 4.54 1.23

1980-81 to 1990-91 5.62 3.13 6.96 6.72 3.06

1990-91 to 1999-00 6.19 3.30 6.64 7.97 3.99

Source: G.S.Bhalla (2004a), Tables 7.1(a) and 7.1(b); p.302.

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Table-4: All India Compound Growth Rates of Area, Production and Yield of Major Crops

Crop 1980-81 to 1990-91 1990-91 to 2000-01

Area Production Yield Area Production Yield

Rice 0.40 3.56 3.47 0.81 1.74 0.92

Wheat 0.46 3.57 3.10 1.03 3.27 2.21

Coarse Cereals -1.34 0.40 1.62 -2.07 -0.54 1.18

T. Cereals -0.26 3.03 2.90 -0.06 1.86 1.38

T. Pulses -0.09 1.52 1.61 -0.79 -0.04 0.55

Foodgrain -0.23 2.85 2.74 -0.19 1.66 1.28

Sugarcane 1.44 2.70 1.24 1.87 2.70 0.82

Oilseeds 1.51 5.20 2.43 0.88 1.62 1.04

Cotton -1.25 2.80 4.10 2.33 1.37 -0.94

Non-Foodgrains 1.12 3.77 2.31 1.19 2.41 0.86

All Crops 0.10 3.19 2.56 0.19 1.96 1.09

Source: G.S.Bhalla (2004a), Table 7.2; p.303.

Table-5: Capital Formation in Agriculture

Percent Share Total GCF

Public Pivate in Agri.

Year Total Public Private % of GDP

(Rs. Crs) (Rs. Crs) (Rs. Crs) from Agri.

(At 1980-81 Prices)

1960-61 1668 589 1079 35.3 64.7 5.1

1970-71 2758 789 1969 28.6 71.4 6.7

1980-81 4636 1796 2840 38.7 61.3 9.6

1990-91 4594 1154 3440 25.1 74.9 6.6

1991-92 4729 1002 3727 21.2 78.8 6.9

1992-93 5372 1061 4311 19.7 80.3 7.4

1993-94 5031 1153 3878 22.9 77.1 6.7

1994-95 6256 1316 4940 21.0 79.0 7.9

1995-96 6961 1268 5693 18.2 81.8 9.0

1996-97 6999 1132 5867 16.2 83.8 8.5

(At 1993-94 Prices)

1993-94 13523 4467 9056 33.0 67.0 5.2

1994-95 14969 4947 10022 33.0 67.0 5.4

1995-96 15690 4848 10842 30.9 69.1 5.7

1996-97 16176 4668 11508 28.9 71.7 5.4

1997-98 15953 3979 11974 24.9 75.1 5.4

1998-99 16384 3846 12538 23.5 76.5 5.2

1999-2000 18656 4668 13988 25.0 77.0 5.9

Source: G.S.Bhalla (2004a), Table 7.3; p.305.

21

Table- 6(a): Growth of Workers (Emplmnt): Overal Economy(R+U)

Sector 1993-94 to 1987-88 to 1973-74 to

1999-00 1993-94 1993-94

Agriculture and Allied 0.02 2.18 1.49

Secondary 2.43 1.34 3.60

Tertiary 3.01 4.09 3.99

All UPS Workers 1.03 2.40 2.20

Table- 6(b): Growth of Rural Workers (Employment)

Sector 1993-94 to 1987-88 to 1973-74 to

1999-00 1993-94 1993-94

Agriculture and Allied 0.19 2.19 1.44

Secondary 2.53 0.28 3.60

Tertiary 2.19 3.81 4.14

All UPS Workers 0.66 2.14 1.87

Source: G.S.Bhalla (2004a), Table 7.4(a) and 7.4(b); pp.306-307.

Table-7: Trends in Shares of Interest Payments, Subsidies and

Surplus of Capital Budget in Revenue Expenditure

Share of Share of Surplus of Share of

Interest Subsidies Capital (Cr-Ce)

in Revenue in Revenue Receipts (Cr) in

Financial Year Expenditure Expenditure over Revenue

Capital Expenditure

Expenditure (Ce)

( %) ( %) (Rs. Crores) ( %)

1988-89 26.36 14.28 4,873 6.16

1989-90 27.66 16.31 1,322 1.43

1990-91 29.24 16.54 7,215 6.85

1991-92 32.32 14.89 9,406 8.44

1992-93 33.49 12.94 6,262 5.11

1993-94 33.97 11.72 21,756 15.34

1994-95 36.08 10.59 30,068 18.71

1995-96 35.77 9.56 19,924 11.18

1996-97 37.42 9.75 19,470 9.69

1997-98 36.40 10.28 47,359 20.41

1998-99 35.98 10.90 67,185 24.05

1999-00 36.23 9.83 66,732 22.39

2000-01 35.75 9.66 73,342 22.53

2001-02 35.65 10.35 101,658 28.06

2002-03 34.59 12.81 105,996 25.59

2003-04 (RE) 34.32 12.32 110,092 23.21

2004-05 (BE) 33.59 11.29 122,574 25.65

Source:

1. Government of India (1997): Union Budget (1997-98), Ministry of Finance, New Delhi.

2. _______________ (2001): Union Budget (2001-02), Ministry of Finance, New Delhi.

3. _______________ (2004): Union Budget (2004-05), Ministry of Finance, New Delhi.

22

Table-8: Variety-wise Exports and Imports of Rice

Year Variety-wise Exports of Rice Variety-wise Imports of Rice

Basmati Parboiled Broken Others Total Basmati Parboiled Broken Others Total

1980-81 440.91 10.72 36.69 239.03 727.35 0.00 0.30 0.00 17.74 18.04

1981-82 548.25 0.05 10.48 313.75 872.53 0.02 0.31 0.28 64.33 64.94

1982-83 343.54 1.04 0.00 108.99 453.57 1.82 1.25 0.09 16.17 19.33

1983-84 175.66 0.00 0.00 0.00 175.66 24.09 107.20 25.18 252.27 408.74

1984-85 243.58 2.98 0.00 1.13 247.69 0.00 46.12 52.32 250.16 348.60

1985-86 244.30 0.52 0.00 0.20 245.02 1.61 13.53 5.14 23.55 43.83

1986-87 244.34 1.86 0.12 1.87 248.19 1.72 0.82 0.01 4.34 6.89

1987-88 355.28 8.53 0.00 24.98 388.79 0.00 1.02 0.00 4.36 5.38

1988-89 314.09 2.37 0.00 33.11 349.57 0.00 175.76 181.91 348.27 705.94

1989-90 386.61 2.90 0.07 32.18 421.76 0.00 202.40 0.00 266.23 468.63

1990-91 232.33 4.90 0.00 267.76 504.99 0.00 15.61 0.00 50.43 66.04

1991-92 266.53 52.18 0.00 359.53 678.24 0.00 8.45 0.00 3.67 12.12

1992-93 324.79 81.10 0.49 174.02 580.40 0.00 0.00 0.00 102.38 102.38

1993-94 527.23 45.57 0.01 194.86 767.67 0.00 0.00 0.00 75.52 75.52

1994-95 442.17 167.47 0.26 280.67 890.57 0.00 29.00 0.00 6.70 6.99

1995-96 373.31 1429.06 17.47 3094.17 4914.01 0.00 0.00 0.00 0.08 0.08

1996-97 523.13 646.46 6.72 1335.66 2511.97 0.00 0.00 0.00 0.00 0.00

1997-98 592.68 964.35 60.26 772.57 2389.86 0.00 0.00 0.00 0.05 0.05

1998-99 597.75 2009.71 73.65 2282.48 4963.59 0.00 6.54 0.06 0.03 6.63

1999-00 638.38 737.25 51.33 469.16 1896.12 0.00 2.20 31.38 1.41 34.99

2000-01 851.72 381.99 1.72 299.05 1534.48 0.00 0.00 0.45 12.75 13.20

Quantity : '000 Tonnes

Sources: 1. Government of India (1998), Report of CACP 1998-99, p.226 and 227 - upto 1996-97

2. Government of India (2003), Report of CACP 2002-03, p.242 and 243 - from 1997-98 onwards

Table-9: Exports and Imports of Wheat

Year Exports Imports

Quaantity Value Unit value Quaantity Value Unit value

1980-81 75.38 14.48 192.09 292.12 75.22 257.50

1981-82 1.41 0.56 3936.04 1389.57 312.73 225.05

1982-83 0.00 0.00 0.00 1756.83 352.82 200.83

1983-84 3.27 1.52 464.83 3038.62 643.36 211.73

1984-85 39.51 11.48 290.56 564.37 131.62 233.22

1985-86 229.61 46.75 203.61 183.14 63.29 345.99

1986-87 221.78 36.02 162.41 119.25 45.85 384.50

1987-88 274.97 37.86 137.69 21.48 9.00 419.01

1988-89 15.80 2.99 189.24 1792.40 433.08 241.62

1989-90 11.79 2.15 182.36 32.63 16.48 505.03

1990-91 139.54 31.17 223.38 63.61 22.52 354.03

1991-92 660.43 145.37 220.11 0.00 0.00 0.00

1992-93 37.73 10.71 283.86 1363.70 710.06 520.69

1993-94 3.88 2.55 657.22 241.70 125.65 519.86

1994-95 92.17 46.15 500.71 0.57 0.40 701.75

1995-96 1091.59 692.93 634.79 8.69 10.71 1232.45

1996-97 1847.77 1205.33 652.32 616.01 405.77 658.71

1997-98 0.00 0.00 0.00 1486.22 989.17 666.00

1998-99 1.76 1.35 767.00 1803.98 1164.92 646.00

1999-00 0.00 0.00 0.00 1366.26 774.47 567.00

2000-01 813.51 415.09 510.00 4.46 2.96 664.00

Quantity : '000 tonnes,

Value : Rs. Crores

Unit Value : Rs. Per quintal

Sources: 1. Government of India (1998), Report of CACP 1998-99, p.399 - upto 1996-97

2. Government of India (2003), Report of CACP 2002-03, p.245 and 247 - for 1997-98 onwards

23

Table-10: Import of Edible Oils

Year Quantity Value Unit value

1980-81 1643.00 682.90 4.16

1981-82 722.60 378.32 5.24

1982-83 495.30 226.27 4.57

1983-84 1372.90 728.00 5.30

1984-85 1141.20 921.07 8.07

1985-86 1036.40 735.00 7.09

1986-87 1473.90 626.00 4.25

1987-88 1944.90 968.77 4.98

1988-89 1083.10 729.70 6.74

1989-90 292.20 210.86 7.22

1990-91 525.80 325.79 6.20

1991-92 226.05 247.79 10.96

1992-93 102.77 166.88 16.24

1993-94 114.36 166.63 14.57

1994-95 346.75 624.24 18.00

1995-96 1061.99 2261.93 21.30

1996-97 1416.79 2929.19 20.67

1997-98 1265.75 2764.67 21.84

1998-99 2621.85 7588.93 28.94

1999-00 4195.64 8045.05 19.18

2000-01 4177.17 5976.53 14.31

2001-02(P) 4213.94 6474.48 15.36

Quantity : '000 tonnes

Value : Rs. In Crores

Unit value : Rs. Per Kg

Sources: 1. Government of India (1998), Report of CACP 1998-99, p.403 - upto 1995-96

2. Government of India (2003), Report of CACP 2002-03, p.389 - from 1996-97 onwards

Table-11: Exports of Fish and Fish Preparations

Value Value of % Value %

Year of Exports of Share of of Share of

Fish and Fish Agri.& Allied Col.2 in Total Exports Col.2 in

Preparations Products Col.3 Col.5

(Rs. Crores) (Rs. Crores) (Rs. Crores)

1960-61 5 284 1.76 646 0.77

1970-71 31 487 6.37 1535 2.02

1980-81 217 2057 10.55 6711 3.23

1985-86 409 3018 13.55 10895 3.75

1987-88 533 3504 15.21 15674 3.40

1988-89 630 3723 16.92 20232 3.11

1989-90 687 4879 14.08 27681 2.48

1990-91 960 6317 15.20 32553 2.95

1991-92 1443 8228 17.54 44042 3.28

1992-93 1743 9457 18.43 53688 3.25

1993-94 2552 13021 19.60 69751 3.66

1994-95 3537 13712 25.79 82674 4.28

1995-96 3381 21138 15.99 106353 3.18

1996-97 4008 24239 16.54 118817 3.37

1997-98 4487 25419 17.65 130101 3.45

1998-99 4368 26164 16.69 141604 3.08

1999-00 5125 25016 20.49 159561 3.21

2000-01 6367 28582 22.28 203571 3.13

2001-02 5897 29312 20.12 209018 2.82

2002-03 6928 33691 20.56 255137 2.72

Source: Economic Surveys for various yerars

24

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