Agriculture sector appears to be adversely affected by the reform process. Why?
Economic reforms did not benefit the agriculture and the agricultural growth rate has been
declining. Public investment in agriculture sector has been reduced in the reform period due to which irrigation, power, roads, market linkages and agricultural research have suffered. Further, the removal of fertiliser subsidy has led to increase in the cost of production which has severely affected the small and marginal farmers.
Globalisation and membership of WTO has resulted in policy changes such as reduction in import duties on agricultural products, removal of minimum support price and lifting of quantitative restrictions on agricultural products which have increased international competition for Indian farmers making their condition more miserable.
There has been a shift from production for the domestic market towards production for the export market because of export oriented policy strategies in agriculture. This has shifted the focus on cash crops in place of production of foodgrains, which has led to a fall in supply of foodgrains thereby creating pressure on prices of foodgrains.