Trade talks with the US are embroiled in market access India is ready to allow for agriculture, one of the economy's most protected sectors. The reason for Indian sensitivity over increased risks to farming through trade is well-documented market failure. The structure of India's agriculture does not promote high-yielding crops, and output remains volatile because of climate dependence. Farming is undercapitalised due to small holdings and inadequate public investment in irrigation. Access to tech is limited by private sector investments in soil use. Seed development and productivity growth have to rely on subsidised farm inputs such as fertilisers. Price supports are an inefficient signalling mechanism that leads to unbalanced development of farm output.
Reforms have been in the works for decades. Land use remains the most nettlesome area, partly because it is decided by states. Tied to the issue of land titles are agricultural credit and crop insurance. Irrigation poses its own set of problems through demand for free electricity that chokes investment in power generation. Subsidising fertilisers feeds into India's import dependency and creates second-order effects on sustainability of farming in the country. Inadequate investment in warehousing causes enormous wastage. MSPs for cereals expose India's deficiency in plant protein and vegetable oil production.
There is no single solution. Any prescription does affect a very large segment of the country's population, especially in perception. India is now among the largest producers of a variety of crops. Yet, its yields remain low by international standards. Farmers have internalised their entitlements as successive governments share the wise counsel of eking out incremental gains through reforms. The result is farming has been overshadowed by liberalisation of the rest of the economy. Agriculture is not expected to lead India's export push. But, soon, India's policymakers will have to grapple with how to open up access to a global marketplace for its farmers they are denied.
Reforms have been in the works for decades. Land use remains the most nettlesome area, partly because it is decided by states. Tied to the issue of land titles are agricultural credit and crop insurance. Irrigation poses its own set of problems through demand for free electricity that chokes investment in power generation. Subsidising fertilisers feeds into India's import dependency and creates second-order effects on sustainability of farming in the country. Inadequate investment in warehousing causes enormous wastage. MSPs for cereals expose India's deficiency in plant protein and vegetable oil production.
There is no single solution. Any prescription does affect a very large segment of the country's population, especially in perception. India is now among the largest producers of a variety of crops. Yet, its yields remain low by international standards. Farmers have internalised their entitlements as successive governments share the wise counsel of eking out incremental gains through reforms. The result is farming has been overshadowed by liberalisation of the rest of the economy. Agriculture is not expected to lead India's export push. But, soon, India's policymakers will have to grapple with how to open up access to a global marketplace for its farmers they are denied.
