Economic Development In India, India’s Economic Progress, Achievements

Evolution of Policy – India

The British colonial government of India did not pursue an active policy of agricultural development despite modest efforts to formulate a policy (see The British Raj, 1858-1947, ch. 1). One such effort was the appointment in 1926 of the Royal Commission on Agriculture, which made some recommendations for improving agriculture and promoting the welfare of the rural population. Most of the commission’s recom-mendations were deferred because of the Great Depression of the 1930s. One outcome, however, was the establishment of the Imperial (later Indian) Council of Agricultural Research in 1929. During World War II, disruptions in international trade also led the government to initiate the Grow More Food Campaign. The government adopted its first agricultural policy statement in the wake of famine in Bengal in 1943. The policy objectives included increased production of food grains, use of better methods of production, improved marketing, better prices for the producers, fair wages for agricultural labor, fair distribution of food, increased production of raw materials, and improvements in research and education. This statement was the basis of many of the policies adopted soon after independence, especially in the First Five-Year Plan, when the central government was committed to giving priority to agricultural production to increase the food supply in the country.

The prolonged neglect of agriculture in India meant that there was almost no growth in the agricultural sector. From 1891 to 1946, output of all crops grew at 0.4 percent a year; the rate for food grains was only 0.1 percent per year. The land tenure system led to exploitative agrarian relations and stagnation (see Land Tenure, this ch.). Farmers had little incentive to invest, and despite great strides in foreign agricultural technology, Indian agricultural technology stagnated. Specifically, there were few improvements in seeds, agricultural implements, machines, or chemical fertilizers.

At the time of independence in 1947, agriculture and allied sectors provided well over 70 percent of the country’s employment and more than 50 percent of the gross national product. Agricultural development was a key to a number of national goals, such as reducing rural poverty, providing an adequate diet for all citizens, supplying agricultural raw materials for the textile industry and other industries, and expanding exports. In the mid-1960s, the goal of self-reliance was added to this list. The central government has played a progressively more important role on the agricultural front by providing overall leadership and coordination, as well as by providing a significant part of the financing for agricultural programs. However, the primary responsibility for the design and implementation of agricultural programs, in accordance with the constitution, remained with the states in the late twentieth century.

India’s agricultural growth strategy after independence evolved over three distinct phases. In the first phase, roughly covering the period through the Second Five-Year Plan, agricultural growth rested on removing basic socioeconomic constraints through land reform, change in the village power structure, reorganization of the rural poor into cooperatives, and better citizen participation in planning. The initial assumption was that changing the land tenure system by abolishing the zamindar system–a method of revenue collecting and landholding developed during the Mughal and British colonial periods–would stimulate agricultural output (see The Mughal Era; The British Empire in India, ch. 1).

The second phase occurred during the Third Five-Year Plan (FY 1961-65). The continuing shortages of food in the 1960s and the consequent crises convinced planners that raising agricultural output, especially food grains, was essential for political stability and independence from foreign food aid. Self-sufficiency in food-grain production and development of an adequate buffer stock through procurement became clearly defined goals in the mid-1960s. Keeping in mind the variety of socioeconomic and agroclimatic differences, the government adopted an area-specific approach, and emphasized programs such as the Intensive Area Agricultural Programme and the Intensive Agricultural District Programme.

The third phase in India’s economic development is identified predominantly as the Green Revolution. This phase relied on better seeds, more water via irrigation, and improved quantity and quality of fertilizer during the Fourth Five-Year Plan (FY 1969-73), the Fifth Five-Year Plan (FY 1974-78), and the Sixth Five-Year Plan (FY 1980-84). The Green Revolution was successful in meeting the goals of self-sufficiency in food-grain production and adequate buffer stocks by the end of the 1970s. Production was more than 100 million tons in 1978 and 1979. Imports were negligible, and the year-end buffer stocks from 1976-79 averaged more than 17 million tons. After 1980 buffer stocks fell below 10 millions tons only once, in 1988.

In the mid-1990s, the major goals of agricultural policy continued to be self-sufficiency in food staples and adequate food supplies at affordable prices for consumers. Expanding cereal production continued to be a major objective because of the population growth rate of almost 2 percent per year. The budgetary share of agriculture, together with irrigation and flood control projects, remained almost constant in the first six plans, varying between 21 percent and 24 percent.

The Eighth Five-Year Plan (FY 1992-96), as conceived in the early 1990s, not only aimed at continued self-sufficiency in food production, but also included plans to generate surpluses of some agricultural commodities for export. It also aimed at spreading the Green Revolution to more regions of the country with an emphasis on dryland farming.