IMPACT OF ECONOMIC REFORMS ON PRODUCTION AND PRODUCTIVITY OF

AGRICULTURE

Devender Dommati*

Affiliations
*
Assistant Professor, Department of Economics, Nizam College, Osmania University, Hyderabad-500029,
Telangana, India.
ABSTRACT

Agriculture is a way of life for majority of farmers in India and has influenced significantly
socio-economic development of the people of this country. Indian agriculture has undergone
tremendous change since independence. The orientation to agriculture has shifted from
subsistence agriculture to commercial agriculture. Agriculture continues to be a major
contributor to the national income, although its share has declined from 50 per cent during
independence to 14 per cent in 2012. Nearly two-thirds of the population of the country depends
on agriculture for their livelihood and growth of the overall economy depends largely on the
performance of this sector. Indian economy remained largely closed until the early 90’s. The
initiation of economic reforms in 1991 has brought out major changes in the policy frame work.
There was a considerable debate in the country at the time of introducing these reforms.
Although no direct reference was made to agriculture, it was argued that new policies like
change in exchange and trade policy, devaluation of the currency, gradual dismantling of
industrial licensing system and reduction in industrial protection would benefit agriculture trade
by turning the terms of trade in favor of agriculture. This in turn was supposed to promote export
leading to agricultural growth. The economic reforms period further coincided with the
establishment of WTO which made obligatory for the member countries to re-orient their
domestic and external trade polices consistent with WTO agreements. Thus the new economic
policy needs and changes in the international scene. The export-import policy underwent a sea
change since 1992; the main feature of the policy was that the trade was made free except for a
short negative list of import and exports. The agricultural imports and exports in the country used
to be regulated through quantitative restrictions such as quotas and licenses. As result of the new
policy most of the quantitative restrictions on the agricultural trade flow have been removed.
There was some reduction in tariff and channeling of trade through the Government has been
stopped except for export of onions and import of cereals, pulses and edible oil.
KEYWORDS
Impact; Economic Reforms; Production; Productivity; Agriculture.

JEL CLASSIFICATION
B30, B0, G1, G4, Z0.
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