Answer in about 150 words: Discuss the impact of liberalization on agriculture sector in India. (2026, 10 Marks)
The 1991 reforms largely bypassed agriculture. Licensing, tariffs and finance were reformed, but the APMC mandis, the Essential Commodities Act, MSP and input subsidies stayed as they were. Openness reached farming mainly through trade, so farmers took on world-market risk without a freer domestic market.
Gains
- Trade integration: the WTO Agreement on Agriculture (1995), and the removal of quantitative restrictions by 2001 after India lost a WTO dispute, opened export markets. Agricultural exports reached about $52.55 billion in 2025-26 (Commerce Ministry). India is now among the world’s largest rice exporters.
- Private technology: Bt cotton, approved in 2002, more than doubled cotton output within a decade. Private seed, horticulture, dairy and poultry grew fast.
- Market reforms: contract-farming provisions, e-NAM (2016) and AgriStack’s digital farmer registry have widened access to buyers, although much of the recorded trade still stays within a single mandi.
Costs
- Public investment fell through the 1990s and was replaced by input subsidies. Agricultural growth slowed from the mid-1990s and recovered only after 2004-05.
- Price volatility: cheap edible-oil imports reversed the oilseed gains of the 1980s, and cotton and cash-crop farmers faced world price swings. A. R. Vasavi reads farm suicides as a window on this post-1991 exposure.
- Stalled structural change: agriculture’s share of output fell, but it still employs 43% of workers (PLFS 2025). Growth moved to services, not factories, so no mass exit from farming followed.
The political limit
- Rob Jenkins argues that reform advanced “by stealth” in elite arenas. The three farm laws of 2020 were an open attempt to extend it to agricultural markets. They provoked the Samyukt Kisan Morcha’s year-long protest and were repealed in November 2021.
- Trade remains contested. India stayed out of RCEP in 2019. Its recent FTAs shield dairy, and the India–US interim framework of February 2026 keeps staples and dairy outside concessions, yet farm unions still protested at Kisan Ghat in July 2026.
Perspectives
- Market liberals such as Jagdish Bhagwati and Arvind Panagariya argue that agriculture suffered from too little reform: controlled markets, leasing curbs and subsidies that distort prices.
- Critics such as Utsa Patnaik blame deflationary policy and import exposure for falling rural demand.
Conclusion
Liberalisation brought agriculture exports and technology but not transformation. Its benefits went mainly to commercial, irrigated growers, while risk passed to smallholders. The unfinished tasks are public investment, recorded tenancy and price-risk insurance, together with non-farm jobs, not just more market freedom.