Economic Liberalisation and Agriculture in India
A curious aspect of the current liberalisation policies now being implemented with verve, and amidst much debate, in India is that there is almost no discussion about the likely impact on agriculture, barring the short-run concern about a possible monsoon failure and the impact of this on inflation. It is true that with industrial production declining, exports sluggish in the face of a continued rise in external indebtedness, and with inflation rates well above the two-digit level, the already grim economic situation in India, following the stabilisation and structural adjustment policies adopted in July 1991, may turn dramatically worse if, on top of all this, there is a poor monsoon. At the beginning of this year, there was a widespread feeling that it would be miraculous if there were a fifth good monsoon in a row. But, in fact, with the monsoon progressing fairly normally so far after a somewhat delayed start, there is no real cause for panic.
However, there is cause for concern about the food situation in India even if the monsoon turns out to be good because the government's foodgrain stocks, especially of wheat, are now uncomfortably low (because of low procurement and high offtake last year despite a record crop) and have not been replenished adequately this year. This year's wheat procurement needed to be almost 10 million tonnes, 2 million more than last year's actual, to maintain adequate supplies with which to run the Public Distribution System (PDS). But with procurement practically over, this has so far been only around 6.3 million tonnes. Moreover, for one reason or the other, plans to import wheat seem to have been delayed, and only recently has the decision been taken to import 1 million tonnes, which is probably not enough to maintain PDS supplies. Foodgrain prices have already increased by almost 25 per cent in the course of the last twelve months. And how the government deals with the short-run problem of managing the food economy will be crucial in what happens to the economy later this
Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.
Social Scientist, Vd. 20, No. 11, November 1992