agri policy mysore final-copy ii

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AGRICULTURAL POLICY IN INDIA: A POLICY MATRIX IN A FEDERAL SYSTEM R S Deshpande Rajeev Gandhi National Fellow, ICSSR Institute for Social and Economic Change, Bangalore

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This is a lecture I delivered at Mysore University Academic Staff College. The lecture takes into account the entire experience on agricultural policy of mine.References are purposefully not given as the readers can gwt to me.

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  • 1. AGRICULTURAL POLICY IN INDIA: A POLICY MATRIX IN A FEDERAL SYSTEM R S Deshpande Rajeev Gandhi National Fellow, ICSSR Institute for Social and Economic Change, Bangalore

2. CONTOURS OF POLICY Agricultural as a State Subject State Specific Policies Sub-Sectoral Policies Agro-Climatic Regional Policies (i) Agro-Climatic Region-Planning Commission (ii) Agro-Climatic Region-NARP 3. AGRICULTURAL POLICY AND FEDERALISM Agricultural Policy of most of the nations is under stress of reforms & regional responses Agricultural Policy in India has a strong state dependence India never had a formal, comprehensive Agricultural Policy since independence No consultation with lower level bodies or farmers organisations for agricultural schemes of the states. Intervention in agriculture by different levels of government is suo moto 4. DIRECTIONS OF THE AGRICULTURAL POLICY Was there any Agricultural Policy Riverine Policy Frame Bold Features of this frame i. Development Infrastructure ii. Area Specific Programmes iii. Technological/Institutional iv. Problem Specific Programmes v. Trade Centred Growth 5. OVERVIEW OF AGRICULTURAL POLICY CONCERNS First Phase Pre Independen ce up to 1947 Problems inherited from Colonial Rule Second Phase 1947 to 1966 Food Security Community Development Third Phase 1967-1979 Tech-Institutional Changes Fourth Phase 1980-1990 Two distinct phases i. Distribution fallouts of technological change ii. Environmental fallouts Fifth Phase 1990-2001 Liberalisation and complying to the WTO regime. Sixth Phase 2001 onwards Adjusting to the WTO norms and making Indian agriculture globally competitive 6. THEORY OF POLICY MAKING Sartaz Aziz 1990 OECD Parlberg Robert 1996 & 1997 Srinivasan T N 1972,1998,2000 Lasswell, 1956;Hill 1984; Hall 1993; Jordan, 1994; Coleman et al 1997 7. HALL (1993) PUTS THREE ORDERS OF POLICY CHANGES i. Changes imply tampering with the current setting of the policy instruments (e.g.. Changes that are occurring in the domestic policy to meet the WTO requirement ) ii. Replacing the policy initiative by the other with or without any in-house evaluation (The Agriculture Document 2000 or the policy changes that occurred in Canada during 1988) iii. A Complete departure in the policy goals following theoretical or ideological framework involving the state and political actors. (Like the shift towards opening of international trade from earlier strictly guarded trade policy) 8. Harold Lasswell Lists six steps in Policy formulation I. Recognizing a policy Problem II. Identifying the Nature of the Problem III. Call for Alternatives IV. Rank them all on the scale of welfare gain and ease of operation V. Make predictions about risk and consequences VI. Come to a decision combining qualitative and quantitative investigation 9. GENERALIZED MODEL OF POLICY FORMULATION National or State Political Ideology Federal / Central Polity Provincial/ State Polity Parliament and Related Institutions* Provincial Legislature and Related Institution* Governing Structure Advisory Bodies Interest Groups Feed Back Mechanism Policy Bodies Provincial and Central or Federal 10. POLICY MAKING : AN INTERNATIONAL PERSPECTIVE European Union: CAP emerged as the package of rules and regulations to eradicate food shortage in Europe. With the unions enlargement the Union agreed to the latest round of reforms in June 2003 French Agricultural Policy: Implementation of new management tools and instruments like the Farm Territorial Contract . Canadian Agriculture: A better-organized framework developing policy. Five elements of the Policy framework are i. Business risk management, ii.Food safety and food quality, iii. Science and Innovation, iv. Environment and v. Renewal 11. UNITED STATES United States Farm Policy: A series of policy steps coinciding with the problems confronted by the country. The four important phases are i) 1785-1890: Concern was land distribution ii) 1830-1914: Focus was productivity improvement iii) Between 1870 and 1933: Simultaneously some regulations on markets and improvement in infrastructure iv) Since 1924: Direct government interventions to provide farm income support v) Trade as an Engine of control (1924-1980)and Protective Agri Sector 1980-2001. 12. INDIAS AGRICULTURAL POLICY: OVERVIEW Gregory 1943; Thakurdas Committee 1947 Maitra 1950; Mehta 1957; Venkatappaiah 1966; L K Jha 1964 Sharad Joshi, 1990; Hign Power Committee 1990; Nadkarni 1993; Govt of Karnataka 1995; Rao V M & Jeromi 2000 RBI Strategic Plan 1998 Govt of India (Devegowda)1999 Govt of India 2000 13. AGRICULTURAL POLICY STATEMENT- JULY-2000 Sustainable Agriculture Food and Nutrition Security Generation and Transfer of Technology Input Management Incentives for Agriculture Investments in Agriculture Institutional Structure Risk Management Managing Reforms 14. REPORT OF TASK FORCE ON AGRICULTURE: 2002 Support to and Protection of Indian Agriculture Actualizing Market Access Opportunities Quality Issues and SPS Measures Trade Policy Reforms Preparedness and Federal Character 15. CROSS CLASSIFICATION OF SELECTED STATES Naturally Well Endowed Regions Naturally Constrained Regions Regions with Significant Impact Punjab; Har; West UP; TN; W Mah.; S WB; MPradesh Gujarat; N Raj; Regions that remained bypassed Assam; Bihar; N WB; Chhat; N Kar; APRayal; Mar- Vid Mah; 16. THE BROAD GROUPS FOR THE PURPOSE OF ANALYSIS Groups Names of States Towards High Commercialisation Punjab,Haryana and Himachal Pradesh Diversifying for Trade Andhra Pradesh, Karnataka and Tamil Nadu Infrastructure for Take-off in Trade Maharashtra and Madhya Pradesh Encashing on Rainfed Crops Gujarat and Rajasthan Need for Diversification Assam and West Bengal Evading Low Productivity Trap Bihar and Uttar Pradesh 17. DISTILLED POLICY FRAMEWORK AND WHAT IT INVOLVES PRODUCTION, STATE INTERVENTIONS,FACTOR MARKETS, INSTITUTIONS; MARKETING,EXTENSION, R & D,PRICE POLICY ISSUES 18. CALCULUS OF POLICY-MAKING: SEVEN IMPORTANT DIMENSIONS Stock of resources and their historic utilisation in the context of growth Historical path of growth and development in the region To locate policy domain of acceptance The information from society for understanding their needs and calculations for future development. Understanding of the constraints The process of policy making from a few broad sub-sectors of the economy Feedback mechanism 19. FIRST PHASE OF POLICY REFORMS Structural Adjustments Trade Policy, Industrial Policy Relaxation in licensing Targeting of PDS & Procurement Credit Policy Financial Sector 20. Rainfed Regions and Bypassed Groups and Crops Product Factor Market Imperfections Value Additions and Market Margin Reduction Safety Net Programmes and Specially Devised Programmes for Rainfed Agriculture Proactive Entry into the new phase of growth Issue of Subsidies in Agriculture MAJOR PROBLEMS 21. POLICY PLATFORM Withdrawal of the State (intervention not protection) from the factor as well as Product market intervention and allowing agricultural sector to perform. Identifying the commodities with competitive advantage in international trade and creating institutional incentive structures for such commodities for boosting up the growth in trade. Creating an institutional setup to help agricultural sector in order to negotiate with the new policy regimes. 22. CONTD. Disseminating information about the forthcoming changes in the sector to the farmers in the language understandable to them. To identify and enlist the natural resource degradation process and create forces with proper incentives to internalize the negative externalities. Address Land Market,Labour Factor Market imperfections With First Priority A proactive price policy, Procurement as a Commercial Operation 23. ISSUES CONFRONTING THE PRODUCTION SECTOR Productivity is fast reaching the achievable optima during the decade. Changes in Crop Composition are quite visible and the policy also favours diversification New technological Breakthrough is needed Relative price trends, distorting the quality of growth Terms of Trade Trade Centered Growth Value Addition to the Product 24. ISSUES CONFRONTING THE FACTOR MARKETS Land Use Pattern: Declining Land Productivity, and Dependence on External Nutrients Land Reforms and the Differential Impact and New Phase Contributions to Total Factor Productivity Sectoral Imbalances due to uneven increases in Cost and Returns Imperfections in the Input Markets 25. CONTD Increasing Trends in Inefficient Use of lands Marginalisation of the Size of Holding Trends in Capital Formation Imbalances in Fertiliser Use Inefficiency in Water Use Increasing Cost of Cultivation Labour Shortages and Wage Trends 26. TRADE REFORMS Stepping up of trade in selected agricultural commodities Encouraging trade in commodities with comparative advantages for the country New trade avenues for non- traditional agricultural exports/regions Info on Quality and SPS requirements for different commodities International market information and market margins 27. BASIC COMPONENTS OF THE NEW POLICY Taking Advantage of Liberalised Forces Competitiveness as the Key Word Keeping Safety Nets and Poverty in Sight Capital and Skill Intensity for the By- Passed Regions and Classes Strengthening the Trade Sector 28. BASIC COMPONENTS OF THE NEW POLICY-II Capital Formation in Agriculture Development of Infrastructure and Market friendliness of Agriculture Input Supply Sector Reviewing Role of State Intervention Peoples Participation not of NGO Quality Need for a National Dialogue 29. HIGH DENSITY CAPITAL INTENSIVE SECTOR Irrigated Agriculture (i) Efficiency of Irrigation (ii) Returns to Irrigation (iii) Negative Externalities (iv) Peoples Control WUAs Capital Intensive Agriculture (i) Horticulture (ii) Floriculture