NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

By Haris Zargar

A key objective of India’s economic liberalisation of the early 1990s was to revitalise the country’s sluggish agriculture sector by integrating the economy into global capitalist systems. These economic changes sought to boost agricultural production by introducing farmers to modern technology and new agricultural practices and allowing greater access to financial credit.

The role of institutions – social, legal, political and economic – was realigned to increase market efficiency and especially aimed at diminishing the role of the government and its regulators. But in the years following market liberalisation, India’s agricultural sector neither experienced any substantial growth nor did it produce the anticipated incentives for farmers. It was instead hit by an unprecedented agrarian crisis that has severely affected people in the farming sector, especially landless labourers and cultivators who are small – farmers with less than 2ha of land – and marginal – farmers with less than 1ha of land.

A 2007 report on agricultural indebtedness commissioned by India’s Ministry of Finance showed a “distinct slowdown” in agricultural growth since the 1990s, despite substantial growth in the economy. Concluding that the agriculture sector was going through a “severe crisis”, the report stressed that swelling input prices, weak support systems and falling profit made cultivation an increasingly risky activity and threatened the livelihoods of farmers.

Photo courtesy of mmamontov.