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Indian Economic Policy

Notes not deprived of a basic minimum essential for livelihood, but in a developing economy like
India, this restructuring and downsizing leading to retrenchment or closure results in depriving
the workers of their livelihood.
3. Neglect of Agriculture — The Major Sin of Economic Reforms
A major criticism of the process of economic reforms is the neglect of agriculture. Data reveal
that foodgrains production increased from 129.6 million tonnes in 1980-81 to 176.4 million tonnes
in 1990-91 resulting in annual compound rate of 3.1 per cent. But during the 18-year period of
economic reforms, foodgrains production increased from 176.4 million tonnes in 1990-91 to 234
million tonnes in 2008-09, indicating an annual average growth rate of 1.6 per cent, which was
lower than the growth rate of population. Complacency on the foodgrains front can certainly
cost the nation very dearly in the coming decade.
Various reasons have been assigned for this situation. Firstly, the reform process has emphasised
the growth of manufacturing and service sectors and thus neglected agriculture.
Agricultural growth has stagnated around 2 percent during the last decade. It was 2.1 percent
during the Ninth Plan (1997-2002) and is estimated to be 2.3 percent during the Tenth Plan
(2002-07). Economic Survey (2006-07) explaining the situation states : “ The structural weaknesses
of the agriculture sector reflected in low level of investment, exhaustion of the yield potential of
new yielding varieties of wheat and rice, unbalanced fertilizer use, low seeds replacement rate,
an inadequate incentive system and post-harvest value ad-dition were manifest in the lack
luster agricultural growth during the new millennium.”
That total investment in agriculture as a percentage of GDP was only 2.8% in 1999-00. It fell to
2.4% of GDP in 2003-04 but improved marginally to 3.34 percent in 2008-09 but again fell to
2.97 percent in 2009-10. While the economy has indicated a sharp increase in investment to
36.5% of GDP in 2008-09. the share of investment in agriculture to a level of 2.97 % of GDP is too
inadequate, more so when cognizance is taken of the fact that agriculture provides livelihood
to 58 percent of population.
It may also be pointed that public sector investment in irrigation, flood control, water harvesting,
rural infrastructure reclamation of degraded lands etc. has a much greater spread effect. In
contrast, private sector investment in tube wells, tractors and harvesters increases the income
of the landowning classes only. It has impacted to reduce employment.
This lack of development of irrigation infrastructure by withdrawing public sector investment
with the hope that the private sector investment will expand irrigation, did not materialise.
This was specially the case in backward states like Bihar, Madhya Pradesh and Orissa, which
indicates ‘very poor growth rates in foodgrains production - even lower than the national
average. Last but not the least, whereas the green revolution states like Punjab, Haryana, Uttar
Pradesh have reached a plateau, the country could not trigger higher yields in backward states.
Dr. G. S. Bhalla and G. R. Singh (1997) in their study have pointed out “a sharp pick-up in
agricultural growth experienced by the East-ern Region has been facilitated by a remarkable
increase in area under irrigation triggered by a substantial private investment in pumpsets and
tubewells.”
If we study the implementation of the Water-Seed-Fertilizer technology (popularly known as
the Green Revolution), then during the decade 1970-71 to 1980-81, irrigated area indicated an
annual average growth rate of 3.6 per cent, which declined to 2.7 per cent during the decade
1980-81 to 1990-91 and further to merely 1.9 per cent during 1990-91 to 1997-98. Since irrigation
is the basic input which helps the fuller utilisation other inputs - seeds and fertilizers, we also
observe declining growth rates in the irrigated area under rice and wheat from seventies to
eighties and nineties. In case of pulses, irrigated area growth experienced a negative growth rate
of the order of 1.5 per cent per annum. A similar trend was observed in the case of extension of
area under HYV in case of paddy and rice. Fertilizer consumption indi-cated a sharp decline from
8.5 per cent annual average growth rate during the eighties to just 3.7 per cent during the nineties.
In this connection, it is relevant to consider the trend in major and minor irrigation. Major
irrigation acts as a supplement to minor irrigation in keeping the water table high, while minor

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