The Agricultural Policy And Rural Development Economics Essay

In Indian agribusiness, which continues to supply support for more than half of the population, Washington Consensus-type policies after 1991 have had acute inauspicious effects. The green revolution of the sixtiess and 1970s helped Indian agribusiness get the better of a “ ship-to-mouth ” being and accomplish autonomy in production. This accomplishment was built on a platform of province support ; there were monetary value supports, subsidy supports, recognition supports and selling supports. The interventionist function of the province in the 1970s and 1980s led to the creative activity of a web of institutional support constructions in rural countries. Given the unreformed agricultural economic system with dwindling public investing in critical countries like irrigation, the benefits of these support constructions were distributed unevenly – across harvests, categories and parts. So the cardinal thesis of this paper is part of agricultural policies in rural development and its impact on rural development.


After independency, the chief concern arose in forepart of contrivers to stabilise the Indian agribusiness through assorted agricultural policies across harvests, caste, unequal category, and assorted parts. Late sixtiess brought green revolution to develop agricultural society but its impact was reversed like it increases spread between renters and tillers in rural countries. It besides raised the large inquiry in forepart of us about just distribution of land in rural countries. Over the period of economic reform, agricultural growing rates slowed down significantly. Most significantly, the rate of growing of nutrient grain production slowed down, and fell behind the population growing rates for the first clip after independency. The per capita nutrient grain handiness fell from about 175 kilograms in 1992 to 163 kilograms in 2001. In a state where about half the kids below the age of three are scraggy and more than three-fourth of kids aged 6-35 months are anemic, the decrease in per capita nutrient grain handiness after 1991 has deeply unreassuring deductions[ 2 ]. The batch of husbandmans ‘ self-destructions reported from certain parts of the state reflects the distress province of agribusiness after 1991. Between 1997 and 2006, there were about 150,000 self-destructions by “ husbandmans ” in rural India ( Nagaraj, 2008 ) . So my chief nonsubjective to show this paper is to analyse agricultural policies in development of agricultural society and its preparation in the yesteryear.

Agricultural Policy:

A policy is typically described as a rule or regulation to steer determinations and achieve rational result ( s ) . It can be considered as a “ Statement of Intent ” or a “ Committedness ” . And agricultural policy describes a set of Torahs associating to domestic agribusiness and imports of foreign agricultural merchandises. Governments normally implement agricultural policies with the end of accomplishing a specific result in the domestic agricultural merchandise markets. Outcomes can affect, for illustration, a guaranteed supply degree, monetary value stableness, merchandise quality, merchandise choice, land usage or employment[ 3 ].

Who Are the Farmers Today?

As states industrialize, the proportion of their labour force working in agribusiness diminutions. In 2000, In China, the proportion of the entire labour force employed in agribusiness has declined from about 71 per centum in 1978 to less than 50 per centum, which still amounts to over 400 million people. With an extra 260 million people in India and 200 million in Africa working in farming – in both instances about 60 per centum of their “ economically active population ” – it is clear that the huge bulk of the universe ‘s agricultural population today is in the Third World, or South. This is corroborated by the standard estimation, derived from the FAO ( Food and Agriculture Organization of the United Nations ) , that today “ agribusiness provides employment for 1.3 billion people worldwide, 97 per centum of them in developing states ” ( World Bank 2007 ) . Some of those 1.3 billion qualify as “ husbandmans, ” capable to many fluctuations of what type of husbandmans they are, where, and when: during peak minutes of the one-year agricultural calendar? In good or bad rainfall old ages? Good or bad market old ages? In other words, non all husbandmans are husbandmans all the clip. Many rural people may non measure up as “ husbandmans ” in any strong sense – possibly a bulk in some countryside at some times and over clip – because they lack land or other agencies to farm on their ain history or are engaged in merely “ fringy ” agriculture. Peter Hazell et al define fringy agriculture as “ incapable of supplying adequate work or income to be the chief support of the family. ” They point out that in India, for illustration, the term is used for farms of less than one hectare, which make up 62 per centum of all landholdings but occupy merely 17 per centum of all farmed land. This shows the class of population under marginalized subdivision of the society in which this 17 % of farm land is divided and staying felled in to 38 % of agricultural population which is either belongs to middle, rich or capitalist category. And the marginalized subdivision can be understood through following classs. Footings like “ provincial, ” “ little ” or “ small-scale ” husbandman, and “ household ” husbandman are frequently used interchangeably in ways that are easy con- fusing. This is non merely a semantic issue but has of import analytical issues and differences. The term “ peasant ” normally signifies family farming organized for simple reproduction, notably to provide its ain nutrient ( “ subsistence ” ) . Refering size, some beginnings define “ little farms ” as those with less than 2 hectares of harvest land, while others characterize little farms in the South by low degrees of engineering, trust on household labor and a “ subsistence ” orientation ( that is, “ provincial ” -like properties ) . Therefore, one standard is spacial ( farm size ) and the other sociological ( type of farming ) .

Phases in Agricultural Policy:

There is a close association between agricultural policy followed in the state and the magnitude and beginnings of end product growing. Based on these, agricultural policy followed during the last five decennaries can be loosely distinguished in 3 stages.

First stage:

The period from 1950/51 to mid 1960s which is besides called pre green revolution period witnessed enormous agricultural reforms, institutional alterations and development of major irrigation undertakings in peculiar countries like north western and western uttar pradesh. The chief aim was to get rid of intermediary landlordism ; tenant operations were seeking to supply security of agriculture and ownership of land but all these aims were non fulfilled due to caste, category and power dealingss in small towns were extremely unequal. Land ceiling Acts of the Apostless were imposed by all the provinces to extinguish big sized retentions and concerted recognition establishments were strengthened to minimise development of agriculturists by private money loaners and bargainers ( Radhakrishna 1993 ) . Land consolidation was besides affected to cut down the figure of land fragments.

Expansion of country was the chief beginning of growing in the pre green revolution period. The range for country enlargement diminished well in the green revolution period in which growing rate in country was less than half the growing rate in the first period. Increase in fruitfully became the chief beginning of growing in harvest end product and there was important acceleration in output growing in green revolution period. The chief beginning of productiveness addition was technological discovery in wheat and rice. The state faced terrible nutrient deficit and crisis in early 1960s which forced the policy shapers to recognize that uninterrupted trust on nutrient imports and assistance imposes heavy costs in footings of political force per unit area and economic instability ( Rao 1996 ) and there was a despairing hunt for a speedy discovery in agricultural production. At this stage fringy and little husbandmans were practising subsistence farming which provides them at least nutrient for their household.

Second Phase:

One pick before the state was to travel for spread of new seeds of high giving up assortments ( HYV ) of wheat and rice. Amidst a serious argument the so Government took bold determination to travel for the import and spread of HYV of wheat and rice which involved usage of fertilisers and irrigation. This pronounced 2nd stage of agribusiness policy in the state. The scheme produced speedy consequences as there was quantum leap in output. Consequently, wheat and rice production in a short span of 6 old ages between 1965/66 and 1971/72 witnessed an addition of 30 million tones which is 168 per centum higher than the accomplishment of 15 old ages following 1950/51.

The biggest accomplishment of new agricultural scheme, besides known as green revolution engineering, has been attainment of self sufficiency in nutrient grains. Since the green revolution engineering involved usage of modern farm inputs, its spread led to fast growing in agro input industry. Agrarian reforms during this period took back place while research, extension, input supply, recognition, selling, monetary value support and spread of engineering were the premier concern of policy shapers ( Rao 1996 ) .

Two really of import establishments, viz. Food Corporation of India and Agricultural Prices Commission, were created in this period in the beginning of green revolution period, to guarantee compensable monetary values to manufacturers, maintain sensible monetary values for consumers, and to keep buffer stock to guard against inauspicious impact of twelvemonth to twelvemonth fluctuations in end product on monetary value stableness. These two establishments have chiefly benefited rice and wheat harvests which are the major cereals and staple nutrient for the state.

This stage brought nutrient ego sufficiency at national degree but non at house hold degree. The ground of this was immense flow of technological and recognition flow in western portion north India like Punjab and western Uttar Pradesh. The consequence of green revolution was limited geographical country but non in whole parts of India. After analysing from Table 1, I conclude that the growing rate between population and agricultural production during period 1960s-1980s is the growing rate of agricultural production is more than population growing rate. At that clip agricultural production was at high in some parts of India but at the same clip rate of poorness in rural countries was remains at 51.3 % ( Source NIRD describe 2003-4 ) during 1977-78. So we can reason that there was no significance of that ego sufficiency.

Third Phase:

The following stage in Indian agribusiness began in early 1980s. While there was clear alteration in economic policy towards delicensing and deregulating in Industry sector, agribusiness policy lacked way and was marked by confusion. Agricultural growing accompanied by addition in existent farm incomes led to emergence of involvement groups and anterooms which started act uponing farm policy in the state. There has been a considerable addition in subsidies and support to agriculture sector during this period while public sector disbursement in agribusiness for substructure development started demoing diminution in existent term but investings by husbandmans kept on traveling on a lifting tendency ( Mishra and Chand 1995, Chand 2001 ) . The end product growing, which was concentrated in really narrow pockets, became broad- based and got impulse. The rural economic system started witnessing procedure of variegation which resulted into fast growing in non nutrient grain end product like milk, piscary, domestic fowl, veggies, fruits etc which accelerated growing in agricultural GDP during the 1980s. This growing seems mostly market driven.

Though green revolution has been widely diffused in irrigated countries throughout the state, the dry land countries have non seen benefit of technological discovery as witnessed through green revolution engineering. Of late, improved assortments of oil-rich seeds and class cereals have provided some chances for productiveness growing in dry land countries. A new stage was started in India ‘s economic policy in 1991 that marked important going from the yesteryear. Government initiated procedure of economic reforms in 1991, which involved deregulating, decreased authorities engagement in economic activities, and liberalisation. Though much of the reforms were non initiated to straight affect agribusiness sector, the sector was affected indirectly by devaluation of exchange rate, liberalization of external trade and disprotection to industry. Then came new international trade agreement and WTO, necessitating opening up of domestic market. Initially there were strong apprehensivenesss about the impact of trade liberalization on Indian agribusiness which subsequently on turned out to be existent menace for several trade goods produced in the state.

All these alterations raised new challenges and provided new chances that required appropriate policy response. Besides, last two decennaries had witnessed chiefly monetary value intercession that had a really limited coverage, and at that place was a kind of policy vacuity. Because of this, there was a strong force per unit area on the authorities to come out with a formal statement of agribusiness policy to supply new way to agriculture in the new and emerging scenario. In response to this, authorities of India announced New Agricultural Policy in July 2000.

New Agricultural Policy:

The challenges confronting Indian agribusiness can be grouped in four classs associating to ( 1 ) growing ( 2 ) sustainability ( 3 ) efficiency and ( 4 ) equity. There are besides other of import concerns like nutrient security, support, employment, betterment in criterion of life of agricultural population. Addressing these challenges requires attempts on several foreparts like inducement construction, substructure, engineering, market development, extension, ordinances, input supply, occupancy etc. New agribusiness policy should turn to above challenges through attempts in abovementioned countries and besides supply way to the hereafter of agribusiness in the state.

After coming of new agricultural policies after 1990s that involved Neoliberal schemes which were made to concentrate on agricultural production. But the conditions of land keeping form in rural countries were extremely unequal harmonizing to table 2 and 3. This scheme even created a large spread in footings of production of large husbandmans and little husbandmans. Another policy alteration was to increase recognition inflow among husbandmans in rural countries besides developed in-between category husbandmans to upper category husbandmans. The fringy and little husbandmans were non privileged of this policy due to several grounds as they have limited agricultural production can be called as ingestion oriented production, low buying power, less mechanised agricultural patterns, low societal position within society, less control over natural resources like H2O. The schemes were made at that clip by seeing agricultural production and export quality high output harvests. This resulted that the seeds of these harvests had high value in market and merely large and in-between category husbandmans were able to purchase these seeds and they made dual net income by exporting the production. This chance was non availed by little or fringy husbandmans. Another carelessness of agricultural policies, I find that these policies were non made to extinguish socio-economic differences among husbandmans in agricultural society of India.

Recent Enterprises:

Several important enterprises have already been taken in recent old ages by the authorities to change by reversal the downward tendency in agricultural production and to happen sustainable solutions for beef uping the husbandmans ‘ support and income. Some of these of import enterprises include: ( I ) Bharat Nirman ; ( two ) National Rural Employment Guarantee Programme ; ( three ) National Horticulture Mission ; ( four ) Expansion of Institutional Credit to Farmers ; ( V ) Constitution of the National Bee Board ; ( six ) Constitution of the National Rainfed Area Authority ; ( seven ) Constitution of the National Fisheries Development Board ( NFDB ) ; ( eight ) Watershed Development and Micro Irrigation Programmes ; ( nine ) Reforms in Agricultural Marketing and Development of Market Infrastructure ; ( x ) Revival of Cooperative Sector ; ( xi ) Agri-business Development through Venture Capital Participation by the Small Farmer Agri-business Consortium ; ( twelve ) Reform and Support for Agriculture Extension Services ; ( xiii ) National Rural Health Mission ; ( xiv ) National Food Security Mission ; ( xv ) Rashtriya Krishi Vikas Yojana to incentivise the provinces to put more in agribusiness ; ( xvi ) Integrated Food Law ; ( xvii ) Legislative Framework for Warehousing Development and Regulation ; ( xviii ) Protection of Plant Varieties and Farmers ‘ Rights ( PPVFR ) Act, 2001 ; ( xix ) National Bamboo Mission and ( xx ) Knowledge Connectivity through Common Service Centres ( CSC ) and IT initiatives.

Review of few agricultural programmes under new agricultural policies:

Bharat Nirman:

This programme has titled as a concern program for rural substructure which clearly shows that this programme is truly benefitted those who have entree and control over agricultural production. Because little or fringy husbandmans are non able to gain even two times nutrient for their household from agribusiness so how far these rural substructures like electricity, route will traveling to profit them. Even these rural substructures will make displacement from farming to pay labor in large husbandmans from where at least they can gain two clip nutrient for their households. Due to this rural substructure large and in-between category husbandmans get more benefitted by increasing their production at subsidised electricity and H2O from authorities agricultural policies.

Mahatma Gandhi National Rural Employment Guarantee Programme:

Mahatma Gandhi National Rural Employment Guarantee programme came in 2005 for 100 yearss occupation assurety in rural countries. It provides support for laborers by making assets in village country. But its negative impacts of this programme now a yearss is many fringy husbandman and little husbandman left their agribusiness and go labor for acquiring at least 100 yearss employment. But this switching creates defeat and dissatisfaction about agricultural production.

Rashtriya Krishi Vikas Yojana ( RKVY ) :

Rashtriya Krishi Vikas Yojana ( RKVY ) came in 2007. The chief aim of this programme of this programme is to incentivize the provinces that increase their investing in Agriculture and allied sectors. If we see the recent informations in below tabular array. Then we find that the increasing load of labour force on a easy catching arable land country leads to increasing figure of retentions with lower size. Over the period 1960-61 to 2003, the figure of retentions doubled from 51 million to 101 million, while the country operated declined from 133 million hectares to 108 million hectares ( Table 2 ) . This has resulted in a crisp diminution in mean size of keeping and turning marginalisation. Added to this is the fact that despite land reforms, the landholding form continues to be skewed ( Table 3 ) .

Table 2

Certain Key Characteristics of Operational Retentions








( 17th )

( 26th )

( 37th )

( 48th )

( 59th )

1. Number of operational retentions ( 1000000s )






1.1 Percentage addition





2. Area operated ( million hectares )






3. Average country operated ( hectares )






Beginning: NSSO, Some Aspects of Operational Land Holdings in India, Various Rounds.

Table 3

Changes in the Size Distribution of Operational Holdings and Operated Area:

( 1960-61 to 2002 -03 )

Class of Retentions

Percentage of Operational Retentions

Percentage of Operated Area


( 17th )


( 26th )


( 37th )


( 48th )


( 59th )


( 17th )


( 26th )


( 37th )


( 48th )


( 59th )
























































All Sizes











Beginning: NSSO, Some Aspects of Operational Land Holdings in India, Various Rounds.

Agricultural Policies and Rural Development:

The present position

It is usual to gestate the results of development procedures in footings of betterments in growing, equity, efficiency of resources use, and public assistance of all subdivisions, peculiarly the hapless. For the intent of this subdivision, the undermentioned empirical opposite numbers selected as the critical ends to judge the present position of agribusiness and rural development.

Agricultural growing and Diversification

Development with equity comprising:

Development of backward countries

Long term sustainable development

Poverty Decrease

Agricultural Growth And Diversification:

While there is strong grounds of a rise in agricultural growing rate since independency compared to stagnancy before, the rate has remained below the degree regarded every bit critical for the overall growing of Indian economic system at the one-year rate being planned, that is, 8 % or more per annum.

Get downing with the early 1970, output additions have been the major beginning of agricultural growing, but this procedure seems to be decelerating down at present.

Instability in growing in doing periodic break in the economic system and its growing and development procedures.

With globalisation, variegation is come ining in a new stage of value add-on and production for foreign markets. This stage needs new engineerings, new of making concern, modern substructure, and new institutional agreements. Too many things need to done in excessively small clip!


It should be a affair of serious concern that despite high precedence given to agriculture for over the last three decennaries, its growing rate remains below the degree indispensable for development of Indian economic system. Unless this restraint is overcome and India gets ready rapidly for the new stage of variegation, there would be considerable uncertainness about the chances for Indian economic system in immediate old ages in front. Another statement sing growing and development is about whose development we are speaking about the 38 % agricultural population who is already control over land. It is besides challenge for authorities ‘s recent policies under which programmes like Expansion of Institutional Credit to Farmers, Rashtriya Krishi Vikas Yojana, Watershed Development and Micro Irrigation Programmes etc. are functioning merely to those husbandmans who have land, recognition and power. Other husbandmans who have become landless due to increase in input cost of agricultural production. There are no programmes that can elate these husbandmans if present so it is non implemented decently.

2. Development with equity comprising:

Developing Backward Areas:

Agricultural gained prominence in policy devising with the beginning of green revolution in the late sixtiess. The focal point remained more on the comparatively limited countries suited for spread of the green revolution, ensuing in disregard of the huge countries with different sorts of growth-cum-development potency than that available in green revolution countries.

As a effect, outputs remained dead in legion pockets even when agribusiness as a whole was turning. Over clip, these pockets accounting for big countries in sum have become more hard-core backward countries in demand of a different attack and scheme than those which worked so good in green revolution countries. While there is much talk, there are few marks of any significant advancement being made by the policymaker in reorienting policies in the way needed by the backward countries.

Owing to these pockets, growing of Indian agribusiness remains low in rate and unstable over clip. Continuing disregard of these countries would do it about impossible for India to raise the gait at which its agribusiness grows and diversifies.


The barrier in development of backward countries arises non so much from deficiency of engineerings, resources, and financess, as from the weak political committedness at the top and absence of establishments to trip the local enterprises and leading for development. The attempts to get the better of this barrier remain half hearted and sporadic.

Long term sustainable development:

Land and H2O are the two critical resources whose conversation and optimal usage signifier the indispensable foundation for sustainable development. The Indian policies in relation to land and H2O have been a combination of disregard and uncontrolled overuse. It is as if the policymaker treats land and H2O as free goods there are legion good intending Torahs to conserve and modulate land and H2O usage.


It is necessary to take immediate stairss, acknowledging the gravitation of the appropriate crisis. Agrarian construction is become exploitatory system now a yearss so if I talk about sustainable development in agricultural society so we foremost understand the relation of assorted husbandmans categories along with their caste and besides power dealingss within them. The major challenge emerges is the equal distribution of land, H2O, cowss and recognition. These four stuff resources are the base of agricultural production.

3. Poverty decrease:

Policies for poorness decrease seek to better the conditions of the hapless through direct intercession. In the long tally, nevertheless, poorness would hold to be eliminated by making equal economic room for the hapless in the chief watercourse economic system. Therefore, poverty decrease policies are like fire-fighting steps, assisting the hapless until they find room in the mainstream. These policies these policies have a good record though the differences about Numberss among poorness research workers make it hard for even experts to be certain about the existent accomplishment. More of import, these policies have provided alleviation but the procedure of soaking up of the hapless in the mainstream economic system seems to be doing small advancement.


The recent stricter norms to measure poverty-like the Human Development Index ( HDI ) -reveal a far more blue image of poorness than that presented by the Below Poverty Line ( BPL ) statistics. The present poorness decrease policies can make is small to better this image though what small they do still of import plenty to be analyzed for pulling lessons for the hereafter. The policies for cut downing are failed at execution degree because harmonizing to Tendulkar Committee the BPL population is 37.2 % in 2004-5 and in rural countries it is 41.8 % of entire BPL population. So I can come across in rural countries it is more disputing for poorness decrease programmes under agricultural policies.


The reform procedure in India after 1991 significantly weakened the institutional support constructions in agribusiness. The protection offered to agriculture from predatory imports was removed, ensuing in a autumn in monetary values of many trade goods. As portion of financial reforms, major input subsidies were brought down comparative to the size of the agricultural economic system. Public capital formation in agribusiness continued to fall, and the growing of public outgo on research and extension slowed down. The enlargement of rural recognition was halted, reopening the doors for the informal sector. Public resources were sought to be channeled off from nutrient harvests and towards high-value export-oriented harvests. Regulated markets came to be treated as obstructions to efficient selling.

A reversal of neo-liberal policies in agribusiness has become perfectly indispensable to resuscitate the support systems of rural families in India. However, I would wish to reason here that opposition to neo-liberalism can be successful merely if the battle is basically linked to the battle to decide the old agricultural inquiry. The strength of the opposition to neo-liberalism in India would go on to depend on the mobilisation of hapless provincials and agricultural laborers around demands that straight relate to their material conditions of life and work. Leting for diversenesss, it remains the instance that stoping favoritisms based on category, caste and gender in India depends critically on weakening the material footing of the landlord- and upper caste-hegemony in the small towns. Imperialism has non changed this basic world of the Indian small town.


I am thankful to my usher, Mr. Rohit Jain who inspires me with her experiences in motions. And I besides thankful to Mr. Manoj Joseph who gave us orientation about seminar presentation and bill of exchange format ; to my friends who participated in my subject treatment through which I came to cognize assorted dimensions about Agricultural Policies and Rural Development.