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Even though agriculture
has been the sector least affected by the reforming zeal that overcame
successive government's since 1991, substantial headway has been made in
this sector as well. The Finance Ministry's Economic Survey 1993-94
summarised the case for and the extent of liberalisation of agricutural
trade as follows: "Indian farm products are characterised by extremely low
import content compared to non-farm exportables. Exchange rate
convertibility on the trade account has therefore enabled many farm-based
products to become internationally competitive. Rice, wheat, cotton,
fruits and vegetables and flowers are some of the non-traditional
exportables. Some of the measures initiated recently to accelerate the
growth of agricultural exports are : (i) minimum export price (MEP) on
basmati rice, pepper, guargum, orchids and meat of sheep, goat and buffalo
has been removed; (ii) exports of milk products have been decanalised;
(iii) permission has been granted to freely export superfine non-basmati
rice subject to an MEP which has been reduced to $200 per tonne; (iv)
exports of mustard seeds and rapeseds have been allowed against quota; (v)
exports of wheat products have been decontrolled and exports of high value
durum wheat and of non-FAQ jowar permitted subject to ceiling; and (vi)
cession of sugar exports has been waived and cess on pepper exports
suspended." Since then further advances with regard to liberalisation have
been made, culminating in the sweeping liberalisation implicit in the
Export-Import Policy announced in April this year.
Exports of agricultural products initially appeared to respond to these
moves, rising from $3136 million in 1992/93 to $4023 million in 1993/94,
$4227 million in 1994/95, $6119 million in 1995/96 and $6868 million in
1996/97. This initial post-reform buoyancy in exports led to considerable
optimism about the likely effect of the Uruguay Round agreement on India's
agricultural sector. The stipulations that developed countries should
reduce production subsidies paid to their farmers and roll-back non-tariff
barriers restricting agricultural trade were expected to substantially
benefit India, because of the comparative advantage she had in the area.
It is the persistence of that optimism which underlies the widespread
perception that it would be to India's advantage if there are further
advances made with regard to liberalisation of agricultural trade in the
proposed new Round of trade negotiations.
Such optimism notwithstanding, there are reasons to be less sanguine about
India's agricultural-export potential. To start with, more recently
agro-product exports seem to be slipping, having touched $6633 million in
1997/98 and $5994 million in 1998/99, compared to the peak of $6868
million in 1996/97. Further there are signs that the price advantages that
India
had in the world markets for some commodities like rice and cotton are
diminishing. This is significant because these were the two commodities
which were expected garner major gains from liberalisation. In an early
analysis of the impact of trade liberalisation on agriculture, Deepak
Nayyar and Abhijit Sen argued as follows: "Clearly, as with any
liberalisation, there will be gainers and losers from agricultural trade
in India.
The most obvious way of looking at this is to say that the gainers would
be the producers of crops such as rice and cotton which are currently
priced below world prices and consumers of goods such as sugar and
oilseeds which are currently priced above world prices." (See
"International Trade and the Agricultural Sector" in G.S. Bhalla (ed.),
Economic Liberalisation and Agriculture 1994). While developments in the
rice and cotton trade are questioning this judgement, in areas like
oilseeds and vegetable oils, where India was not internationally
competitive, but moving towards a high degree of self-sufficiency on the
basis of domestic production aided by protection, liberalisation is having
rather devastating consequences. |
