The impact of economic reforms on agriculture

The impact of economic reforms on a country’s agriculture is immediate and significant. In 1991, India began an economic reform to help its economy, which was in dire straits then.

It was important for India to stabilise the economy and liberalise it to curb escalating inflation. India’s administration rushed through economic changes to liberalise the economy and boost growth.

The private sector’s participation in the Indian economy was promoted, and improvements were made through technological breakthroughs, industrial licensing, and the removal of constraints on the private sector.

The three main aspects of economic and agricultural reforms are liberalisation, privatisation, and globalisation or LPG.

Agriculture is the primary source of income in rural India, and any reforms will have a direct impact on the nation’s economy and vice versa. As the agricultural sector struggles with a variety of resource problems, sustainable agriculture has become increasingly important.

The primary sector of the Indian economy has diversified the least of the three economic sectors, whereas the tertiary sector has varied the most.

Agriculture reform has a significant impact on the following areas:

•       Increase in agricultural products both import and export.
•       Improvements in agricultural technology and rural infrastructure are two areas where progress is being made.
•       Agricultural methods are becoming more prevalent.
•       Agriculture and food security prices are maintained.

According to surveys, small farms contribute 60-70 percent of total agriculture, accounting for 30-50 percent of total agricultural produce in India. Agriculture in India supplies raw materials to a variety of sectors, which account for roughly 21% of total exports and employ 64% of the workforce.

The measures implemented by the Indian government are aimed at achieving the following:

• Doubling the total food output.
• Increasing employment and income opportunities.
• Supplying food to individuals living in poverty.
• Enhancing the promotion of export.
• Agricultural procedures with a high level of sophistication.

Effects of Economic Reforms and the Agriculture Sector 

The effects of economic reforms and the agriculture sector are intertwined. As a result of the green revolution and liberalisation, agriculture’s GDP has increased. For the poor, the rise of globalisation has been a tremendous setback. They were left with no means of securing food. 

Economic changes in India in 1991 were beneficial to the country’s economy’s survival. The 1991 reforms were required to be implemented because of the following reasons:

• The economy was not performing well.
• There was a payment situation that wasn’t favourable.
• Inflation.
• The Persian Gulf War.
• The federal government’s deficit had increased dramatically.

The Three Agricultural Reforms 2020

The Indian Parliament passed three major agricultural reforms to raise farmer income and alter the traditional agricultural standards. The laws have been drafted to eliminate intermediaries between farmers and markets.

The three agricultural laws of 2020 are:

1. The farmers produce trade and commerce (promotion and facilitation) Act 2020.
2. The farmers (empowerment and protection) agreement of price assurance and farm services 2020.
3. Amendment to the Essential Commodities Act, 1955.

The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act 2020

The statute passed by the legislature allows farmers to sell their agricultural produce anywhere in the country and provides an e-commerce platform for this purpose while ensuring neutrality.

The new policy environment will create economic prospects for rural youth, particularly farmers and their children in agricultural trading, as demonstrated in denotified crops and the dairy segment.

Farmers will earn greater pricing for their products as a result of this act. It will contribute to the promotion of “one nation, one market”.

The Farmer’s Empowerment and Production (price assurance and farm services) Act 2020

The purpose of this act is to create a national framework for farming agreements that protects and promotes farmers who work for agri-trade companies, exporters, wholesalers, or large retailers. Farmers will benefit from the new law since it tilts the weight in their favour.

It does away with the complex system of registration, licensing, and other procedures that exist under contract farming rules in several states.

It also assists farmers in experimenting with new modern techniques to improve their yields.

Essential Commodities Act 2020 (Amendment)

Grain, pulses, onions, edible oils, and potatoes have all been included in agricultural food production under the essential commodities act. The central government can limit the supply of the above-mentioned products only in exceptional circumstances like war, natural catastrophes, or famine.

This law prompts farmers to invest in cold storage facilities to maintain the quality of their produce. By establishing pricing stability, the amendment is expected to benefit both producers and consumers.

Conclusion

In 1991, India embarked on an economic overhaul to aid the country’s ailing economy. The reforms aimed at doubling the amount of food produced. As a result of the green revolution and deregulation, agriculture’s GDP has increased. In 2020, three significant agricultural reforms were approved by the Indian Parliament to boost farmer income and change traditional agricultural rules. The bill was designed to cut out intermediaries between farmers and markets. The three bills are the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act 2020, the Farmers (Empowerment and Protection) Price Assurance Agreement, and farm services.