Dr. D. Narasimha Reddy, e-mail: nreddy.donthi@gmail.

com

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Indian Agriculture:
Need for Utilisation of Opportunities and Facing Challenges

Introduction

Farming has evolved over thousands of years with the farm as the basic unit of local
community and culture. Its practice was shaped everywhere by geography and the
creative skills of the farmer to be optimally productive.

In India, agricultural sector has been facing increasing problems of resource constraints -
geographical, human, natural and economical resources. Decrease in rainfall is not the
sole reason and is not the deciding factor. Government, for the past fifty years, has been
undertaking several programmes, and has been claiming success. However, persistent
problems in agricultural sector show these claims in a poor light. Claims of crores of
investment in agricultural sector cannot stand the hard scrutiny of reality. Farmers across
the country have been committing suicides. The conditions, which induced the farmers to
commit suicides, are:

1. Vagaries of nature
2. Pests and disease
3. Additional cost of cultivation
4. Improper use of pesticides and chemical fertilisers
5. Private money lending operations
6. Inadequate market returns

For the past many years, all these reasons have been there, affecting agricultural
productivity and the farmers, periodically. Of all these and any other reasons, farmers
have full knowledge of the vagaries of nature, and have been facing such situations for
years together. This is not the first time such a situation of rainfall deficiency has arisen,
nor is it the worst. They are/were and will be psychologically ready for such an
eventuality. Also, farmers have been growing cotton for many years, in all the districts
where suicides have occurred.

Then, what made the difference now? The difference now could be the culmination of the
failure of the government departments, dealing with agricultural R & D, and extension
services, in delivering their responsibility. All the efforts undertaken by the government
have been post-event measures.

Specifically, government's extension services have not discharged their duties properly,
and adequately. In fact, the Integrated Pest Management programme has never been taken
up in the State of Andhra Pradesh, with the rigor it required. This is one programme
whose implementation properly would have made enormous difference in combating the
pests, and thus decreasing the crop production costs.

Integrated Pest Programme (IPM) is actively promoted many international institutions
like FAO and UNDP, across the world. However, its implementation in India has been
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dismal, as per various review missions of FAO and others. There are two Central
Integrated Pest Management Centres (CIPMC) in Andhra Pradesh - one at Guntur and the
other at Hyderabad. Numerous officials have been trained under this programme,
investing millions of rupees. But today, personnel trained in IPM are posted in non-
functional areas, and administrative posts, defeating the very purpose of IPM.
Government has to explain this.

IPM programme was not pursued seriously. This appears to be deliberate, considering the
nexus between the officials of the extension services and the pesticide companies. Such
an unholy alliance has made IPM infructuous. Thus, an ineffective extension service and
an apathetic government made the difference, and not the nature. The consequences of
such long time negligence are being seen now.

Government has also failed in propagating organic farming, which precludes any usage
of chemicals and fertilisers. There have been proven experiments and practices in this
regard.

Government also did not pursue the bio-control methods, developed variously, which
reduce the investment on chemicals and pesticides. This is because of a powerful lobby
of vested interests, which promote the products of pesticides and chemical fertilisers,
through subsidies (overtly) and render extension services ineffective (covertly).

As per New Strategy in the Fourth Five-Year Plan, "Agricultural development has
suffered on account of incomplete planning, particularly at the local levels. The central
fact to be kept in view is that agricultural production lies, almost entirely, in the private,
unorganized sector. Agricultural production is, in consequence, primarily the result of
individual planning or decision taken and effort put in by ... farmers... who control the
actual production process... An agricultural plan becomes a plan in the true sense of the
term and targets acquire real meaning, validity, and sanction, only if the national goals or
broad targets are concretised into a set of specific programmes through village, block,
and district plans and are accepted by the farmers as their own and there is a joint
commitment on the part of the farmers, their institutions (cooperatives and Panchayatraj),
the State governments and the Centre to play their respective roles" (Planning
Commission, 1966: 181).

Though the pattern of agricultural production is governed by the individual decision of
the farmers, this decision is influenced by the policies and programmes of the
government, through which it creates a information base (particularly on the crops,
seasons, monsoons, agricultural technologies and practices), agricultural input structure
(ranging from seeds, water, fertilizers, and pesticides, to financial resources), investment
priorities, pricing mechanisms, and market scenario. In this regard, Government has
failed in providing an environment, which caters to the requirement, aspirations, and
expectations of the farmers. Its approach, programmes and policies have been hazy, lack
substance, commitment and sincerity also the required reach in their design and
implementation. Governments have not undertaken any positive engagement, programme
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or action, which would enable the necessary acceptance of its programmes or policies
among the farmers.

Presently, farming has become a non-viable sector. It is no longer attractive to invest,
either in terms of capital or efforts, in agriculture. An average farmer is/ has a better
chance of earning a comfortable living, if he/she invests the sale proceeds of the land in a
Bank in the form of a fixed deposit.

Growing rural-urban migration indicates that agriculture is no longer able to provide
employment. Today, large tracts of land are going waste, being abandoned by farmers,
who are unable to procure the necessary resources to farm their land.

Number of landholdings is on the rise, and the size of the most of the landholdings is less
than 3 acres. All the schemes of the government have failed in addressing the problems of
inputs of these small and marginal farmers. Given the climate of `modernisation' and the
kind of institutional support (electrification, borewell irrigation, chemical fertiliser
subsidies, hybridisation of seeds, etc.) provided by governmental agencies, these sections
of farmers were also forced to shift their agricultural practices from low external inputs to
high external inputs. Increasing commercialization had its adverse influence on these
farmers, inducing them to go for commercial crops in the hope of getting remunerative
prices. But the package of commercial crops demands higher capital inputs to meet the
chemical fertilizer and pesticide inputs. In this regard the government cannot but shoulder
the responsibility for its inadequate extension mechanisms and misguided approach that
has proved detrimental to these farmers, in addition to the vagaries of nature.

However, government is cowering behind the extremes of nature. It is widely and reliably
known that nature is unreliable so far as agriculture is concerned. Since ages farmers of
these regions are managing the uncertainty of nature by following sound agricultural
practices, which try to overcome such a dependency, which have evolved over a period of
time. But with the changes introduced in the agricultural practices, through direct or
indirect support of the government, the vulnerability of small and marginal farmers to
natural phenomena increased manifold.

This is where the intervention of the government was needed. However, it is trying to
explain away its responsibility, behind natures variations. The whole structure of
agricultural institutions, departments, agencies and corporations has been established
precisely to protect the farmers from the vagaries of nature. However, this institutional
structure has grossly failed in delivering the goods, their performance has been abysmal,
bordering on negligence, apathy and indifference, steeped as they are in their own petty
bureaucratic procedures, and inane programmes and policies.

All the schemes and programmes of the government have not been able to achieve their
objectives, even to a minimum extent of ten percent. The very fact that Drought-prone
programmes are increasingly being taken up in more number of Mandals every year (872
mandals declared as drought-affected during Kharif 1997) indicates the `success' rate of
these developmental programmes.
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In this regard, there is a need to examine the percentage of expenditure, in all the schemes
and programmes, on administration and salaries and establishment. Hardly ten percent
goes into the actual implementation of the programme.

Agricultural extension education structures have also failed in reaching the `last person'.
Education cannot be limited to one-time meetings or trainings. It has to be a continuous
process. In a country where almost 90 percent of the farmers are small and marginal
farmers, 90 percent of them are illiterate, and a miniscule percent have smattering
knowledge of English, the education and training programmes designed at Central institu-
tions like `MANAGE' can never constitute the discharge of duties of the government.

The procession of Green, White, Blue and other revolutions has benefited only a few,
rich, educated, and not the average farmer community. In fact, by having an undue
influence on the policies of the government, and on the psyche of farmers, these
`revolutions' have been detrimental to the interests of the poor and marginal farmers. The
environmental consequences of these revolutions in terms of soil erosion, loss of green
cover, loss of top soil, pesticide pollution, decrease in soil quality, increase in saline
conditions, depletion and contamination of ground water, etc. have adversely affected the
farmers.

The revolution has never been participatory, and transparent. The pricing mechanism
that was established by these `revolutions' has all along benefited the middlemen, traders
and industrialists enormously. The agro-processing industry is orientated towards export-
oriented products, and limited to tomato ketchup, etc., which have no usage or value to
average Indian and an average farmer. No agro-processing industry has been able to
provide remunerative prices to the agricultural produce it has been dealing with.

The irrigation potential created after, Independence, has been only 1/3 rd of what was
done before, even going by the government statistics. In the last forty years, despite huge
investments, the percentage of agricultural land brought under irrigation remains far
below the targets, expectations and requirements. Further, within the potential created,
there has been a decline in the utilization of irrigation facilities. Tail end areas of the
command area never receive the water owing to mismanagement and governments
inability to assure social justice and equity. Irrigation utilization has remained lesser than
50 percent of the actual claims of the irrigation potential. Command areas of various
projects have been shrinking, even before the completion of the projects. Heavy siltation
in the reservoirs, lack of development of command area (in fact, command areas have
never been demarcated properly) and lack of priorities in irrigation investments has put
the irrigation `benefits' out of the reach of millions of farmers.

Political considerations rather than the needs and requirements of the situation have
governed irrigation investments. In fact, a former Engineer has gone on record, saying
that irrigation investments are governed by the jungle law: the stronger getting the larger
share, if not entirely.

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It is clear that Indian agriculture is in a policy-caused crisis.

Policies

In the last fifteen years, since liberalization, government has taken several policy
measures with regard to regulation & control, fiscal policy, export & import, taxation,
exchange & interest rate control, export promotion and incentives to high priority
industries. Food processing and agro industries have been accorded high priority with a
number of important relief and incentives. Wide-ranging fiscal policy changes have been
introduced progressively. Excise & import duty rates have been reduced substantially.
Many processed food items are totally exempt from excise duty. Custom duty rates have
been substantially reduced on plant & equipments, as well as on raw materials and
intermediates, especially for export production.

The Agricultural Development Strategy was revised in 1999, as the national strategy on
sustainable agriculture and rural development (SARD). The Strategy is essentially based
on the policy on food security and alleviation of hunger. However, a regionally
differentiated strategy, based on agro climatic regional planning which takes into account
agronomic, climatic and environmental conditions, remains to be adopted to realize the
potential of growth in every region of the country. The thrust of such a strategy should be
on ecological, sustainable use of basic resources such as land, water, and vegetation, in
such a way that it serves the objectives of accelerated growth, employment and
alleviation of hunger.

In the Ninth Five Year Plan (1997-2002), an agricultural growth rate of 4.5% per annum
was expected.

Allied sectors such as horticulture including fruit and vegetables, fisheries, livestock, and
dairy will continue to register greater growth during the Ninth Plan period. In the Ninth
Plan, targets will be achieved through a regionally differentiated strategy based on
agronomic, climatic, and environment-friendly conditions. At the macro level, the
agriculture development strategy will be differentiated by broad regional characteristics
of an agro-economic character. The northwestern high productivity regions will promote
diversification and high value crops, and strengthen linkages with agro-processing
industries and exports. The Eastern region, with abundant water, will exploit this
productivity potential through flood control, drainage management, improvement of
irrigation facilities, and improved input delivery systems. The water scarce peninsular
region, including Rajasthan, will focus on efficient water harvesting and conservation
methods and technologies based on a watershed approach and appropriate farming
systems. Ecologically fragile regions, including Himalayan and desert areas, will
concentrate on eco-friendly agriculture.

Animal husbandry and dairying was also targeted for development during the Ninth Five
Year Plan as this sector plays an important role in generating employment opportunities
and supplementing includes of small marginal farmers and landless laborers, especially in
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rain fed and drought-prone areas. The growth value of the output from the livestock
sector is estimated to be 26% of the total value from the agricultural sector.

However, effective control of animal diseases, declaration of disease-free zones,
scientific management of genetic stock resources, breeding, quality feed and fodder,
extension services, enhancement of production, productivity and profitability of livestock
enterprise have to be taken up.

Rural poverty largely exists among the landless and marginal farmers. Access to land,
therefore, remains a key element of the anti-poverty strategy in rural areas. It was
envisaged that the programme of action for land reform in the Ninth Five Year Plan
would include the following: detection as well as redistribution of ceiling surplus land;
upgrading of land records on a regular basis; tenancy reforms to record the rights of
tenants and share croppers; consolidation of holdings; prevention of the alienation of
tribal lands; providing access to wastelands and common property resources to the poor
on a group basis; leasing-in and leasing-out of land will be permitted within the ceiling
limits; and preference to women in the distribution of ceiling surplus land and legal
provisions for protecting their rights on land.

The National Development Committee (NDC) Report has highlighted the importance of
social issues, which have not been addressed in quantitative terms earlier. Role of social
issues and improvement of poverty in disadvantaged group of population is very
important. Animal husbandry, which includes dairy, piggary, poultry, goatary and sheep
farming, is the major occupation of this group of population. The above 5 farming
systems should be developed on the principle of resource based planning, which includes
land, water, agro-climate, labor inputs and financial capability of disadvantaged
community. The livestock farming has to look into all the above facts and more
importantly to economic, environmental, and social factors. Thus, the development of
remunerative farming systems for improving their economic conditions and quality of life
is most important in future.

Seven basic services have been identified for priority attention. Policies and programmes
relating to these areas would be given a thrust in the Ninth five Year Plan. Complete
coverage is expected in a time-bound manner. These services are safe drinking water,
availability of primary health service facilities, universal primary education, provision of
public housing assistance to all shelter less poor families, nutritional support to children,
road links to all villages and habitations, and public distribution system targeted to the
poor.

WTO Regime

The Agreement on Agriculture (AoA), as part of the World Trade Organisation (WTO),
is based on the firm ideological belief that trade liberalization brings net benefits to all
participants. By removing barriers to trade, regional specialization will increase and
regions will specialize in whatever their agriculture can produce more cheaply than
others. It dictates that when products are exchanged, everybody gains because the
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combined cost of production is less than if each region had produced its own. In practical
terms, this means promoting exports and limiting the right of countries to follow a policy
of food self-sufficiency.

The aim of the AoA is to reduce the use of the following three methods that favour
domestic production:

a. Border protection against imported products (the cheapest and most widespread
method used)
b. Internal support measures for domestic producers (mainly used by developed countries
with taxpayers money)
c. Export subsidies (used exclusively by developed countries)

But the US negotiating position claims the right to spend tens of billions of dollars to
compensate farmers for market failures rather than addressing those failures directly. In
2003, over half of the compensation went to less than 2 percent of farmers, again
benefiting only very large businesses. Furthermore, developed countries maintain the
right to continue with several forms of support that are now illegal for any other country
to introduce.

The US, with its chronic overproduction in major commodities, always needs new export
markets, and its policies therefore affect production everywhere. For example, rice, the
staple of most of the poor nations, is grown on around 8,000 farms in the US; half of it in
Arkansas where the biggest 332 rice farms, each over 400 hectares in size, produce more
rice than all the farmers of Ghana, Guinea, Guinea-Bissau, Niger, and Senegal combined.

In 2003, the US's crop of 9m tonnes of rough rice cost farmers $1.8bn to produce.
Farmers received only $1.5bn from rice millers, but were sustained by government
subsidies, which totalled $1.3bn. Between 2000 and 2003 it cost on average $415 to grow
and mill one tonne of white rice in the US, but that rice was exported around the world
for just $274 per tonne and dumped on developing country markets at a price 34% below
its true cost.

Surpluses may also be designated 'food aid' and monetized, i.e., sold on the recipient
country's market to generate cash. Most US programme food aid is sold to recipient
countries through concessional financing or export credit guarantees. The US is nearly
the only country that sells 'food aid' to recipient countries; other donors give it in grant
form, but both strategies reduce prices both for developing country exporters and for
smallholders in importing countries, and deepen and prolong the depression in world
market prices.

The objectives of AOA:

To establish a fair and market-oriented agricultural trading system
To reform trade in the sector and to make policies more market-oriented

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Commitments under this agreement fall under three broad areas:

i. Export Competition
ii. Market access
iii. Domestic support

Commitments under market access include:

Dismantling all barriers other than tariffs
* Quantitative restrictions
* Quotas
* Import restrictions through permits, import licensing, etc

Tariffs only tariffication of agri-trade

Commitments under domestic support, which essentially is aimed at reducing support
include:

Definition of acceptable support to farmers
Definition of unacceptable support to farmers and to reduce the same
Total aggregate measurement of support base years of 1986-88
* developed countries 20% (6 yrs - 1995)
* developing countries 13 % (10 yrs)

In WTO terminology, subsidies in general are identified by boxes which are given the
colours of traffic lights: green (permitted), amber (slow down i.e. be reduced), red
(forbidden).

Commitments under export competition which deal with export subsidies include:

To deal with over production in domestic market
Maintaining high prices for farmers by ensuring export
Only 25 countries out of 148 countries have the right to use Export Subsidies
Developed countries reduce Export Subsidies vol. 21%, Exp.36%
Developing countries 14% and 24% by 2004

Says the official document of WTO: Agriculture trade is now firmly within the
multilateral trading system. The WTO Agriculture Agreement, together with individual
countries commitments to reduce export subsidies, domestic support and import duties
on agricultural products were a significant first step towards reforming agricultural trade.

The negotiations are difficult because of the wide range of views and interests among
member governments. They aim to contribute to further liberalization of agricultural
trade. This will benefit those countries which can compete on quality and price rather
than on the size of their subsidies. That is particularly the case for many developing
countries whose economies depend on an increasingly diverse range of primary and
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processed agricultural products, exported to an increasing variety of markets, including to
other developing countries.

Further substantial reductions in tariffs, domestic support and export subsidies are
prominent issues in the negotiations. In addition, some countries say an important
objective of the new negotiations should be to bring agricultural trade under the same
rules and disciplines as trade in other goods. Some others, reject the idea for a number of
reasons.

By the time of the 20022003 preparations for modalities the discussions have
separated into five headings: export subsidies; export credit, guarantees and insurance;
food aid; exporting state trading enterprises; and export restrictions and taxes.

The discussion since the Uruguay Round has focused broadly on two issues: the high
levels of tariffs outside the quotas (with some countries pressing for larger cuts on the
higher tariffs), and the quotas themselves their size, the way they have been
administered, and the tariffs charged on imports within the quotas.

In 2005, it is important to review the structure and working of the new multilateral
trading arrangements embodied in the World Trade Organization (WTO), with particular
reference to the Agreement on Agriculture (AOA) and the Agreement on Trade Related
Intellectual Property Rights (the TRIPs Agreement), to assess their impact on the Indian
agricultural and food economy, and to suggest new agricultural policies and strategies for
achieving the desired outcomes of trade and economic growth.

The current arrangements for international trade, that have superseded the erstwhile
General Agreement on Trade & Tariffs (GATT), are intended to ensure progress towards
a fair and market-oriented trade regime in the world. This progress is to be achieved by a
time-bound and orderly transition to a system of transparent tariffs, rule-based regulation
of domestic support to the farm sector, minimum market access for agricultural
commodities and sanitary and phyto-sanitary measures.

The experience shows that there has been no level playing field and that the initial
conditions have been arranged to the advantage of the developed countries. An example
of this is the sharp increase in domestic support brought about in these countries around
the base period, with the obvious intention that it should get frozen at a high level
taking advantage of the provisions in the Agreement that facilitate this. Even the
Agreements have been designed and drafted so as to address the priorities of the
industrial countries. Examples of this are the high priority given to protection of
innovations in the TRIPs Agreement and the various exempt categories of subsidies
built into the AOA.

It is thus not surprising that the projected increases in world agricultural trade in general,
and in the share of the developing countries in that trade in particular, have failed to
materialize. Markets have simply not opened up to the extent assumed. India in particular
entered these Agreements early and without adequate preparation, unlike China which
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has already built up a strong share of world trade before applying for membership to
WTO. Indias policy of pegging its minimum support prices high at a time of falling
world grain prices also eroded the competitiveness of its main agricultural products.

However, on the positive side, the participation of a large number of countries in the new
regime, in particular of the developing countries, and the transparent mechanism of
WTOs working, offer the hope of relatively quick redressal of problems through the
mechanisms for resolution of disputes and negotiation of issues whether new or arising
from implementation of the current Agreements.

Agreement on Agriculture (AOA) is treating agriculture as a commercial enterprise rather
than as a way of life with a strong bearing on the food and livelihood security of large
masses of people. It fails to address the needs of large developing countries with a
predominantly agrarian economy like India. Indian agriculture has been largely
subsistence oriented. Production for the marketin the wake of the green revolution--
is a relatively recent phenomenon. The input intensive system of agriculture in irrigated
areas with its market orientation has largely been brought about by the official policy of
always assuring the producer reasonable prices (thus reducing risk) and strict regulation
of the food economy by government, both from the supply and distribution ends.

However, food crops other than wheat and rice, and commercial crops are, by and large,
not covered by these protective and regulatory arrangements. As a result farmers taking
up cultivation of crops other than wheat and rice, especially commercial crops, have been
facing extreme volatility of prices and seasonal fluctuation of returns.

While growers of wheat and rice in the irrigated areas have been overprotected through a
system of assured prices for produce, various input subsidies and restrictions on trading,
two adverse consequences have resulted from such overprotection: diversion of even
marginal lands to rice and wheat crops, and excessive pressure on the subsidized
resources contributing to large-scale environmental degradation. The sharp decrease in
the area under coarse cereals and their production in recent years resulting from such
diversion, and the worsening degradation of forests, have had adverse consequences for
rural nutrition, in particular for the health and livelihood security of rural women. A
stunted agriculture strategy is also no longer sustainable as recent events have shown.

There has been a sharp reduction in the livelihood/employment opportunities for women
in the agriculture, livestock, fisheries and household enterprise sectors.

India has been only a marginal player in world agricultural trade, with a 1% share mostly
accounted for by marine products, spices and plantation crops, despite its impressive
status as a major producer of important crops. Recent surge in large exports is no
indication of any competitive advantage. While costs of production are difficult to
compare across countries, especially on account of the large subsidies given to the farm
sector in the industrial north, our productivity per hectare is among the lowest in the
world for several of the major crops. There is evidence that our system of domestic
procurement and distribution of food grains, as well as the nature of farm subsidies,
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together with the fetters on farm product trading, has greatly reduced any comparative
advantage we might have had in the past.

Current trade policies are promoting overproduction of agricultural commodities causing
damage to wildlife, depleting soil, water, and fossil fuels; and at the same time
compromising food quality, with substantial repercussions on public health. They also
greatly exacerbate global warming in many ways, not least the millions of unnecessary
food-miles added to agricultural commodities. Professor Jules Pretty of Essex University
estimated that the total external costs for conventional agriculture in the UK, paid for by
the taxpayer, added up to 2.34bn for the year 1996.

Indian government policies remain a chief obstacle in the fight against poverty and
environmental degradation, despite its seemingly green credentials on climate change,
and its recent high profile in tackling poverty. That is because the India espouses an
economic model that promotes privatisation and trade liberalisation as the key to
reducing poverty and protecting the environment, although that model has proved to have
the opposite effects.

Transnational corporations (TNCs) are increasingly allowed to gain control of supply
chains and exert a stranglehold on global food security through a process of ownership of
seed, proprietary chemicals, and other inputs, as well as virtual monopoly of food
processing and retail outlets.

As in Europe, these policies will lead to low plant and animal genetic diversity, low
prices, many failing small farms, and environmental degradation, and because TNCs are
geared towards maximising export, similar effects are spreading all over the world.

Need for Policy Changes

What is therefore needed is a drastic re-ordering of priorities for the farm sector which
would include progressive integration of subsidies and regulation of the farm sector, a
switchover to greater crop diversification especially in the rain-fed areas, a relatively
market-sensitive system of procurement and distribution of food grains, offer of
incentives to investment in rural infrastructure, and provision by government or parastatal
agencies of those research, extension, input supply and informational services to farmers
that can be considered public goods and that have remained grossly undersupplied so
far. In making this transition an important focus of attention should be the efficiency of
institutions providing these services.

Indian farm sector can become globally competitive through appropriate policies and
strategies to strengthen and improve the performance of the farm sector, by increasing the
total factor productivity and reducing the cost of production.

India has failed to take advantage of even the existing provisions of the Agreements to
strengthen its position in world competition. It is not definitely known to what extent this
failure can be corrected in the legislation. What is clear is that, if the opportunity is not
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utilized now, India will be left behind in the world competition. Nationally appropriate
legislation will require informed and nation-wide discussion which implies preparation
and persistence over time.

While the opportunities for India offered by the Agreements lie in the future, their threats
are immediate. A national consensus is needed on how these threats should be converted
into opportunities, as well as a government with a political will to implement that
consensus. This is the challenge of the hour.

With the strengthening of WTO-led trade regime across the world, it has become
imperative for India to focus on international trade as well. Not to say that this was a
neglected area before, but as Mr. Kamalnath said, trade is not an end in itself, but a
means to economic growth and national development. The primary purpose is not the
mere earning of foreign exchange, but the stimulation of greater economic activity.
1

Trade has become an important means to express policies and approaches of the
governments. Trade has become an end in itself.

In this context, the national foreign trade policy has been announced. Unlike in the past, it
is promised that this would be continuously updated, revised and improved, so as to
reflect the needs of the Indian trade interests. While welcoming this initiative, which
should be taken as a right step in the right direction, one needs to be careful in endorsing
it completely. There are number of issues which impinge on Indian foreign trade, which
may not get a complete answer through the instrument of foreign trade policy, nor the
institutions which have the primary responsibility to implement the foreign trade policy.

Five major issues need to be discussed:

1. Overall performance of Indian Agriculture

There has been a consistent decline in the growth of the agricultural sector since 1990s as
compared to the 1980s. Alongside one also notices that growth of input use in agriculture
decelerated from 3.66 percent per annum in the 1980s to 3.2 percent in the 1990s.

2. Food security and livelihood concerns

Growth of food grain production has gone down by three percent in the 1990s. Prime concern of
India ought to be the attainment of agricultural self-sufficiency. But subsequent to Indias signing
of the World Trade Organisation (WTO), it seems India has ushered in an age where dependence
on external sources is encouraged to meet shortage in domestic requirement.

3. Trade

Export performance of agriculture has gradually become less prosperous over the years. During
1990-91 to 2003-04 agricultural exports were much higher than imports in absolute terms. It was
more than four times of agri-imports. In the latter years it was higher only by one-and-a-half

1
Preamble to the Indian Foreign Trade Policy (2004-09)
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times, and the gap has narrowed down due to increased imports facilitated by the opening up of
the economy.

4. Policy perspectives

Most policies are cut off from reality. The National Agricultural Policy (NAP) was formulated in
2000 with several objectives, the primary one being attainment of a growth rate in excess of four
percent per annum in the agricultural sector and to achieve this growth in a sustainable manner
and with equity. However the policy was formulated with little consideration for the ground
realities. It was prepared when there was declining trend in agricultural productivity,
unsustainable agriculture due to depletion of ground water, growing indebtedness and farmers
suicide.

5. Challenges

Indeed the formidable challenge for India today is how to improve its performance in agriculture
in terms of growth of its output, yield and per capita income. Growth in cereal production is also
a top priority. Clearly there is need for a parallel marketing outlet or channel so that producers
can sell their produce at remunerative prices. However, it is still difficult to conceive of a pan-
Indian policy which will cut across all regional specificities and peculiarities. The agro-ecological
situation can never be ignored. Food security of millions is a top priority and no policy can afford
to ignore this consideration. The long term perspective therefore should not be to import wheat
from where it is cheapest, but rather the approach should be to shrug off dependence on import of
food grains altogether. Or else, Indias long term development is compromised and an all
pervasive dependence is encouraged.