Agriculture sector appears to be adversely affected by the reform process. Why?

Solution

The reforms have not been able to benefit agriculture, where the growth rate has been increasing. The most important phenomenon is the existence of large food stocks in the country, with more than 250 million people below the poverty line. Per capita availability of food grains and nutritional quality have been declining despite mounting stocks of food grains. The prices of food grains are increasing not because of physical shortage of food grains but the policy of curtailing the food grain subsidy and increasing the prices at which food grains were supplied through public distribution system (PDS). Cuts in subsidies given to the food grain producers also raised prices of food grains. The burden of such cuts is passed on to the consumers. The government sets high prices at which consumers cannot afford to buy the food grains because they do not have adequate purchasing power. Higher prices also reduce the demand and the poor consumers are hurt. High procurement prices give farmers the incentive to produce more. To support the high prices, food corporation of India has to buy more and the stocks of food grains rise. When the government reduces the expenditure, irrigation and road linkage facilities also suffer. Research and development in agriculture is also lagging behind. There is a shift from production for the domestic market towards production for the export market. Cash crops are produced for exports at the cost of production of food grains.

Some More Questions From Liberalisation, Privatisation And Globalisation : An Appraisal Chapter

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Liberalisation, Privatisation And Globalisation : An Appraisal

Agriculture sector appears to be adversely affected by the reform process. Why?

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