Ramesh Chand∗ ∗ Agriculture is described as the backbone of Indian economy, mainly because of three reasons. One, agriculture constitutes largest share of country's national income though the share has declined from 55 percent in early 1950s to about 25 percent by the turn of the Century. Two, more than half of India’s workforce is employed in its agriculture sector. Three, growth of other sectors and overall economy depends on performance of agriculture to a considerable extent. Besides, agriculture is a source of livelihood and food security for large majority of vast population of India. Agriculture has special significance for low income, poor and vulnerable sections of rural society. Because of these reasons agriculture is at the core of socio economic development and progress of Indian society, and proper policy for agriculture sector is crucial to improve living standards and to improve welfare of masses. 1 BROAD CHARACTERISTICS OF AGRICULTURE Agriculture in India is in the hands of millions of peasant households, a bulk of which comprise tiny land holdings with preponderance of owner cultivation. There is hardly any direct government intervention in the production and investment decisions of the farmers but the government does influence the legal, material and economic environment in which farmers operate (Vaidyanathan 1996). Though tremendous progress has been made to exploit irrigation potential in the country still two third of area under cultivation is unirrigated and there is thus heavy dependence of production on vagaries of nature i.e. rainfall. Irrigated areas have experienced sharp increase in productivity level and large part of output at such farms is for market. On the other hand, productivity in unirrigated areas has remained
∗ Professor and Head, Agricultural Economics Unit, Institute of Economic Growth, Delhi.
either stagnant or experienced very small growth and most of the farmers in such areas produce for subsistence purpose. At overall level, agricultural growth remained slow (below 3 percent) in the country. Apart from that, agricultural growth remained confined to a few well endowed pockets which has created regional disparities. 2 PHASES IN AGRICULTURAL POLICY There is a close association between agricultural policy followed in the country and the magnitude and sources of output growth. Based on these, agricultural policy followed during the last five decades can be broadly distinguished in 3 phases. A detailed description of policy followed in each phase is given in Rao (1996) and in this section we have drawn mainly from this paper. The period from 1950/51 to mid 1960s which is also called pre green revolution period witnessed tremendous agrarian reforms, institutional changes and development of major irrigation projects. The intermediary landlordism was abolished, tenant operations were given security of farming and ownership of land. Land ceiling acts were imposed by all the states to eliminate large sized holdings and cooperative credit institutions were strengthened to minimise exploitation of cultivators by private money lenders and traders (Radhakrishna 1993). Land consolidation was also affected to reduce the number of land fragments. Expansion of area was the main source of growth in the pre green revolution period. The scope for area expansion diminished considerably in the green revolution period in which growth rate in area was less than half the growth rate in the first period. Increase in productively became the main source of growth in crop output and there was significant acceleration in yield growth in green revolution period. The main source of productivity increase was technological breakthrough in wheat and rice. The country faced severe food shortage and crisis in early 1960s which forced the policy makers to realise that continuous reliance on food imports and aid imposes heavy costs in terms of political...