Agrarian Crisis after Reforms

High input Costs: The biggest input for farmers is seeds. Before liberalisation, farmers across the country had access to seeds from state government 9.8 institutions. The institutions produced own seeds and were responsible for their quality and price. With liberalization, India’s seed market was opened up to global agribusinesses.

Also, following the deregulation many states government institutions were closed down in 2003. These hit farmers doubly hard: seed prices shot up, and fake seeds made an appearance in a big way.

Cutback in agricultural subsidies: Farmers were encouraged to shift from growing a mixture of traditional crops to export oriented ‘cash crops’ like chill, cotton and tobacco. Liberalisation policies reduced the subsides on pesticide, fertilizer and elasticity.

As a result, prices have increased by 300%. However, the prices of agricultural goods have not increased to that extent.

Reduction of import duties: With a view to open India’s markets, the liberalization reforms also withdrew tariffs and duties on imports. By 2001, India completely removed restrictions on imports of almost 1,500 items including food. As a result, cheap imports flooded the market, pushing prices of crops like cotton and pepper down.

Paucity of credit facilities: After 1991 the lending pattern of commercial
banks, including nationalised bank drastically changed. As a result, loan was not easily adequate. This has forced the farmers to rely on moneylenders who charge exorbitant rate of interest.

Trade Reforms

Trade Policy Reforms: The main features of the new trade policy as it
has evolved over the years since 1991 are as follows:

Free imports and exports: Prior to 1991, in India imports were regulated. From 1992, imports were regulated by a limited negative list. For instance, the trade policy of 1 April 1992 freed imports of almost all intermediate and capital goods. Only 71 items remained restricted. This would affect the domestic industries.

Export and Import Policy: The Government of India, Ministry of Commerce and Industry announced New Foreign Trade Policy on 01st April 2015 for the period of 2015-2020.

Salient Features of “EXIM POLICY (2015-2020)”:

• The new EXIM policy has been formulated focusing on increasing in exports scenario, boosting production and supporting the concepts like Make in India and Digital India.
• Reduce export obligations by 25% and give boost to domestic manufacturing supporting the “Make in India” concept.
• As a step to Digital India concept, online procedure to upload digitally signed document by CA/CS/Cost Accountant are developed and further mobile app for filing tax, stamp duty has been developed. Repeated submission of physical copies of documents available on Exporter Importer Profile is not required.
• Export obligation period for export items related to defence, military store, aerospace and nuclear energy to be 24 months.
• EXIM Policy 2015-2020 is expected to double the share of India in World Trade from present level of 3% by the year 2020. This appears to be too ambitions.

There is no doubt that the Indian economy recorded ample achievements in some sectors after new economic policy. If the size of an economy provides the first impression of a country’s political and economic strength, then India has indeed grown since 1991. In dollar terms, India’s GDP crossed the $2-trillion mark in 2015-16.

Currently, the country is ranked ninth in the world in terms of nominal GDP. The GDP growth rate of India is very much appreciated. This growth is also due to changes in accounting system.

That is why the increased GDP growth rate has failed to alleviate the miseries of the common people and to reduce the socio, economic and environmental imbalances. The basic problems of unemployment, poverty, ill-health, and inequalities remain unsolved.