Article Courtesy : Journal of European Economy

Author : Sundaresan C. S

Agriculture holds the key to India’s growth and development from three angles. It absorbs around 65 percent of the population for employment and livelihood, remains the source of domestic food security and determines the potential growth in GDP. The sector however has been in stagnation since early 1990s. The reasons for this stagnation have been associated with areas like crop mixes, scalability, market linkages and the value chain orientation. Accordingly the government has initiated a new farm policy in 2000.

Irrespective of a gradualism followed in the first phase of farm reforms, the macro policies responded for its positive dynamism in the high value farm sectors. This has made a structural transformation in the production systems of major crops in favor of a market orientation. For instance, India’s agricultural exports have shown positive directions since the new policy interventions. Agricultural exports constitute around 12 percent of the total merchandise exports of India, which is mainly from a basket of high value crops viz, plantations, fruits, vegetables, spices and marine products. Yet the sector is not in its full potential, given issue related to lack of realistic risk mitigation systems and the poor linkages of farms and markets.

India contemplates more realistic and applied economic policies in the second phase of its farm sector reforms (at state level) to create globally competent and sustainable value chains.