01 October, 2020

Subsoil Trickledown

Reforms have bypassed the farmlands, and anachronistic policy has enfeebled the sector

Atul Loke
Subsoil Trickledown
The reforms that took place in 1991 were, in one sense, panic reactions rather than considered actions. The immediate provocation was the fact that India was about to default on its international obligations with reserves down to about one month's imports. The first response was a freeze on imports. Once the immediate crisis was averted, the next main objective was to dismantle the complex system of industrial licensing now referred to derisively as the 'permit raj'.

Yet the reforms left the farm sector largely untouched. For one, agricultural imports continued to be on the banned list. Two, there was no 'permit raj' system in agriculture to be abolished. Three, most of the impact on the industrial sector came through reforms of the Industrial Licensing Act while agriculture is a state subject. Fourth, contrary to popular belief, over 80 per cent of internal agricultural trade is privately owned.

The reforms process got a further direction with the signing of the wto agreement in 1995 which, for the first time, brought the agricultural sector within its ambit. The...


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