ABSTRACT Impact of Globalisation on Indian Agriculture This paper emphasizes the impact of Globalisation on Indian Agriculture.

It explains the crisis in Agricultural sector. It also further gives the reasons for the failure of globalization in Agricultural sec. Finally this paper has suggested measures to improve conditions of Agriculture farmers and to improve conditions of Agriculture farmers and promote the growth rate in agricultural sector.

J. anitha !ecturer in "conomics #uaid$e %illath Govt. Arts &ollege.

Impact of Globalization on Indian Agriculture. J .Vanitha !.A.!."hil #.!.G.C$%& Introduction The liberalization of India's economy was adopted by India in ())(. Facing a severe economic crisis* India approached the I%F for a loan* and the I%F granted what is called a +structural ad,ustment' loan* which is a loan with certain conditions attached which relate to a structural change in the economy. The government ushered in a new era of economic reforms based on these conditions. These reforms -broadly called !iberalisation by the Indian media. can be broadly classified into three areas/ !iberalisation* privatization and globalization. "ssentially* the reforms sought to gradually phase out government control of the mar0et -liberalization.* private public sector organizations -privatization.* and reduce export subsidies and import barriers to enable free trade -globalization.. There was a considerable amount of debate in India at the time of the introduction of the reforms* it being a dramatic departure from the protectionist* socialist nature of the Indian economy up until then. 1owever* reforms in the agricultural sector in particular came under severe criticism in the lat ())2s* when 33( farmers in the south Indian state of Andhra 4radesh committed suicide. -The damage done* 3225. The trend was noticed in several other states* and the figure today* according to a leading ,ournalist and activist* 4. 6ainath(* stands at (22*222 across the country. -6ainath* 3227. coupled with this was a sharp drop in agricultural growth from 8.7)9 in ())( to 3.279 in ()):. -Agriculture 6tatistics at a Glance* 3227. This paper see0s to loo0 into these and other similar negative trends in Indian agriculture today* and in analyzing the causes* will loo0 at the extent to which liberalization reforms have contributed to its current condition. It will loo0 at supporting data from three Indian states which have been badly affected crisis/ Andhra 4radesh* %aharashtra and ;erala. Andhra 4radesh's -A4's. experience is particularly critical in this debate because it was headed by &hief %inister 1ence &handrababu <aidu* who pursued liberalization with enthusiasm. been wider and deeper. -6ainath* 3225. Indian Agriculture toda'( A Snapshot Agriculture employs 729 of the Indian population today* yet it contributes only 32.79 to the G=4. -Isaac* 3225. Agricultural production fell by (3.79 in 322>* one

liberalization in A4 has been faster than other states* and the extent of its impact has

of the sharpest drops in independent India's history. Agricultural growth slowed from 8.7)9 in ())( to 3.79 in ()):$())? and to (.(9 in 3223$322>. -Agricultural 6tatistics at a Glance* 3227. This slowdown in agriculture is in contrast to the 79 growth rate of the Indian economy for almost the whole of the past decade. Farmer suicides were (39 of the total suicides in the country in 3222* the highest ever in independent India's history. -@nofficial estimates put them as high as (22*222 across the country* while government estimates are much lower at 35*222. This is largely because only those who hold the title of land in their names are considered farmers* and this ignores women farmers who rarely hold land titles* and other family members who run the farms. -6ainath* 4. Agricultural wages even today are A(.5$A3.2 a day* some of the lowest in the world. -Issac* 3225. Institutional credit -or regulated credit. accounts for only 329 of credit ta0en among small and marginal farmers in rural areas* with the remaining being provided by private moneylenders who charge interest rates as high as 389 a month. -6ainath* 3225. An <66B3 survey in 3225 found that 779 of all farm households own less than one hectare of land. It also found that 8?.79 of all farmer households are in debt. The same year* a report by the &ommission of farmer's welfare in Ahdra 4radesh concluded that agriculture in the state was in an advanced stage of crisis* the most extreme manifestation of which was the rise in suicides among farmers. Given the performance of agriculture and figures of farmer suicides across the country* this can be said to apply to Indian agriculture as a whole. The Crisis facing Indian Agriculture The biggest problem Indian agriculture faces today and the number one cause of farmer suicides is debt. Forcing farmers into a debt trap are soaring input costs* the plummeting price of produce and a lac0 of proper credit facilities* which ma0es farmers turn to private moneylenders who charge exorbitant rates of interest. In order to repay these debts* farmers borrow again and get caught in a debt trap. !et me examine each one these causes which led to the current crisis in Andhra 4radesh* ;erala and %aharashtra* and analyse the role that liberalization policies have played. As was mentioned earlier* A4's experience is particularly relevant in this analysis because of its leadership. !et me explain in detail. &handrababu <aidu* &hief %inister of Andhra 4radesh from ())5$3228* was an IT savvy neo$liberal* and

believed that the way to lead Andhra 4radesh into the future was through technology and an IT revolution. 1is zeal led to the first ever state level -as opposed to national level. agreement with the Corld Dan0* which entailed a loan of @6= ?>2 million -A@= ( billion. in exchange to a series of reforms in A4's experience with liberalization is critical. The )ebt Trap and the Role of *iberalisation The =ebt trap/ 1igh Input costs Seeds( The biggest input for farmers is seeds. Defore liberalization* farmers across the country had access to seeds from state government institutions. For example* A4's A466=&> produced its own seeds* was responsible for their Euality and price* and had a statutory duty to ensure seeds were supplied to all regions in the state* no matter how remote. The seed mar0et was well regulated* and this ensured Euality in privately sold seeds too. -the damage done* 3225. with liberalization* india's seed mar0et was opened up to global agribusiness li0e %onsanto* &argill and 6yn Genta. Also following the deregulation guidelines of the I%F* (8 of 38 units of the A466=&'s seed processing units were closed down in 322>* with similar closures in other states. This hit farmers doubly hard/ in an unregulated mar0et* seed prices shot up* and fa0e seeds made an appearance in a big way. 6eed cost per acre in ())( was Fs.:2 -A@= 3. but in 3225* after the dismantling of A466=& and other similar organizations* the price ,umped to Fs.(222 -A@= 3?.* a hi0e of (83?9* with the cost of genetically modified pest resistant seeds li0e %onsanto's DT &otton costing Fs.>322 or more per acre* -A@= )(. a hi0e of >5559. -6ainath* 3225. DT &otton is cotton seed that is genetically modified to resist pests* the success of which is disputed/ farmers in Andhra 4radesh and %aharashtra now claim that yields are far lower than promised by %onsanto* and there are fears that pests are developing resistance to the seeds. -%enon G Jayaraman* 3223. "xpecting high yields* farmers invest heavily in such seeds. Also DT &otton and other new seeds guarantee a much lower germination rate of 759 as opposed to a )29 rate of state certified seeds. 1ence >59 of the farmer's investment in seeds is a waste. -6ainath* 3228. output is not commensurate with the heavy investment in the seeds* and farmers are pushed into debt. The abundant availability of spurious seeds is another problem which leads to crop failures. "ither tempted by their lower price* or unable to discern the

difference* farmers invest heavily in these seeds* and again* low output pushes them into debt. "arlier* farmers could save a part of the harvest and use the seeds for the next cultivation* but some genetically modified seeds* 0nown as Terminator* prevent harvested seeds from germinating* hence forcing the farmers to invest in them every season. +ertilizer and "esticide( Bne measure of the liberalization policy which had an immediate adverse effect on farmers was the devaluation of the Indian Fupee in ())( by 359 -an explicit condition of the I%F loan.. Indian crops became very cheap and attractive in the global mar0et* and led to an export drive. Farmers were encouraged to shift from growing a mixture of traditional crops to export oriented +cash crops' li0e chilli* cotton and tobacco. -The damage done* 3225. These need far more inputs of pesticide* fertilizer and water than traditional crops. !iberalisation policies reduced pesticide subsidy -another explicit condition of the I%F agreement. by two thirds by 3222. Farmers in %aharashtra who spent Fs.)2 an acre -A@= 3.5. now spend between Fs.(222 and >222 -A@= 3?.5 H ?5. representing a hi0e of (2229 to >>>>9. Fertilizer prices have increased >229 -6ainath* 3225. "lectricity tariffs have also been increased/ in Andhra 4radesh tariff was increased 5 times between ())? and 322>. -6eeds of ruin 3225. 4re$liberalisation* subsidized electricity was a success* allowing farmers to 0eep costs of production low. These costs increased dramatically when farmers turned to cultivation of cash crops* needing more water* hence more water pumps and higher consumption of electricity. Andhra 4radesh being traditionally drought prone worsened the situation. This caused huge* unsustainable losses for the Andhra 4radesh 6tate "lectricity Doard* which increased tariffs. -This was initiated by &handrababu <aidu in partnership with Dritain's =FI=8 and the Corld Dan0.. Also* the fact that only >)9 of India's cultivable land is irrigated ma0es cultivation of cash crops largely unviable* but export oriented liberalization policies and seed companies loo0ing for profits continue to push farmers in that direction. -Isaac* 3225.. The )ebt Trap( *o, price of -utput Cith a view to open India's mar0ets* the liberalization reforms also withdrew tariffs and duties on imports* which protect and encourage domestic industry. Dy 322(*

India completely removed restrictions on imports of almost (*522 items including foods. -The damage done* 3225. As a result* cheap imports flooded the mar0et* pushing prices of crops li0e cotton and pepper down. Import tariffs on cotton now stand between 2 H (29* encouraging imports into the country. This excess supply of cotton in the mar0et led cotton prices to crash more than 729 since ())5. As a result* most of the farmer suicides in %aharashtra were concentrated in the cotton belt till 322> -after which paddy farmers followed the suicide trend.. -1ardi0ar* 3227.. 6imilarly* ;erala* which is world renowned for pepper* has suffered as a result of 29 duty on imports of pepper from 6AAF&5 countries. 4epper* which sold at Fs. 3:*222 a Euintal -A@= ::(. in ())?* crashed to Fs.5222 -A@= (83. in 3228* a decline of ?(9. As a result* Indian exports of pepper fell >(9 in 322> from the previous year. -6ainath* 3225. &ombined with this* drought and crop failure has hit the pepper farmers of ;erala hard* and have forced them into a debt trap. &lose to 529 of suicides among ;erala's farmers have been in pepper producing districts. -%ohan0umar G 6harma* 3227.. The )ebt Trap( *ac. of Credit facilities and dependence on pri/ate mone' lenders. In ()7)* ma,or Indian ban0s were nationalized* and priority was given to agrarian credit which was hitherto severally neglected. 1owever* with liberalization* efficiency being of utmost importance* such lending was deemed as being low$profit and inefficient* and credit extended to farmers was reduced dramatically* falling to (2.>9 in 322( against a recommended target of (?9. -6eeds of ruin* 3225. A lac0 of rural infrastructure deters private ban0s from setting up rural branches* with the responsibility falling on the government* which has reduced rural spending as a result of its liberalization policies. Fural development expenditure* which averaged (8.59 of G=4 during ()?5 H ())2 was reduced to ?9 by ())?* and further to 79 since then. This at a time when agriculture was going through a crisis proved disastrous for farmers* who turned to private money lenders who charge exorbitant rates of interest* sometimes up to 389 a month. -6eeds of 6uicide* 3225. with input costs and output prices being what they are* coupled with crop failures and drought* they are pushed into debt which is impossible to repay. (3 out of India's 3? states have 529 and higher indebtedness among farm households. Andhra 4radesh has the highest percentage of indebted farm households H ?39. 78.89 of ;erala's farm households

and 58.?9 of %aharashtra's farm households are indebted -<66B* 322>. Indebtedness has been identified as the single ma,or cause of suicides in both Andhra 4radesh* ;erala and %aharashtra. -Analysis of Farmer 6uicides in ;erala* 3227* Cho's suicide is it anyway* 3225* saving small farmers* 3225.. *iberalisation and ho, it +ailed Dranco %ilanovic* a Corld Dan0 economist describes how he believes liberalization helps developing countries achieve growth/ when a country lowers trade barriers* reduces government intervention in the mar0et in order to allow mar0et forces to operate freely* increases competition and attracts foreign investment* it will increase productivity and reduce inefficiency* which will lead to economic growth* and in a few generations* if not less* the poor will become rich* illiteracy will disappear* and poor countries will catch up with the rich. -The damage done* 3225. This argument is an economic rationalist one* which views government intervention with profound suspicion* and has eEually profound faith in unfettered mar0et forces. -Chitwell Euoting Fobert %anne* ())?. Chat %r. %ilanovic neglects to mention* though* is that rich countries which now preach liberalization protected their +infant industries' at the time they began to industrialize* till they were strong enough to compete globally. The @6 government* for example* had a protectionist trade policy in the late nineteenth century to help @6 companies become competitive in the world. Desides* apart from wool* the @6* Germany* Dritain and France were all almost self$sufficient in the raw materials that they needed for industrialization* and too0 off from that platform* a luxury that India and other developing countries do not have. -Issac* 3225. As German economist. Friedrich !ist say* the adoption of these values -of liberalization.I assumes that all countries are at the same starting place* which -as we have seen above. is clearly not the case. -Issac* 3225. in fact* it is this very reason that has brought about the crisis that Indian agriculture is facing today. %ost farmers in India were already in a position of minimum security* with no education system* credit facilities* access to alternative employment* or efficient technology. Their only support was government subsidy and regulation. !iberalisation policies came in and dismantled their only support structure. It halted the sharp reduction in rural poverty from 559 in the ():2s to >89 in the ()?2s. <ot only has the incidence of poverty in rural areas not gone lower than >89 in the ())2s* it has gone to higher levels of 839 in individual years. -Ghosh* 3222..

The second most popular argument of the economic rationalists in favour of liberalization is that competition will weed out the inefficient* and in the growth that ensues* employment will be provided in other areas of the economy* thus lifting the poor out of poverty. This argument however assumes that the poor will be able to ta0e advantage of the opportunities presented to them. As Fobert Issac says in +The Globalization Gap'* JGlobalization encourages the well posititioned to use tools of economics and politics to exploit mar0et opportunities* boost technical productivity* and maximize short$term material interests. JThis is compounded in India* where the gap between one who is +well positioned' and one who is not can be extreme. Cith a lac0 of investment* chances of generation of rural employment are slim. @nemployment and underemployment are chronic problems in India* with the rate of unemployment being close to (29 in 3228. -6ainath* 3225. 4rimary education in rural areas is mismanaged and bad Euality* and there is no system which helps agricultural wor0ers find alternate employment* or develop alternate s0ills. -&hossudovs0y* ()):. In the face of such obstacles* it is nearly impossible to expect agricultural wor0ers to shift to alternate fields. &oming bac0 to A4* the IT Fevolution spearheaded by &handrababu <aidu attracted companies li0e Google* Amazon* %icrosoft and =ell and created thousands of ,obs. 1owever* given the s0ills and education of most farmers* it is obvious that none of this translated into ,ob opportunities for them. The final argument that supporters of globalization have is the much touted (29 reduction in poverty -72 million decline in poor. in India in the year 3222. 1owever* this figure was challenged by experts. 4overty is defined according to how many people consume less than the nutritional minimum prescribed. -3822 calories for rural areas* and 3(22 for urban areas. ma,or changes in survey design in ()))$3222 not only made the resultant estimates incomparable to previous years +estimates* but an over$estimation of consumption -meaning people were getting enough food* hence were not considered poor. meant a sharp reduction in poverty figures. After experts challenged it* the 4lanning &ommission of India accepted that the figure was inaccurate* and could not be compared to previous years' estimates* hence the (29 drop in poverty is incorrect. Cith ad,usted figures* experts have determined that the decrease in poverty was a mere 3.>9* and that the number of poor increased by nine million in 3223 as compared to ())).

Reasons for the failure of Globalization (. Fich countries which now preach globalization protected their +Infant industries' at the time they have begun industrialized* till they were strong enough to compete globally. Ce* developing countries li0e India never prepared any industry to meet the competition in the Global mar0et. 3. The @6 Govt. had a protectionist trade policy in the late nineteenth century to help @6 companies become competitive in the world. =eveloping countries never made an attempt to adopt the protectionist trade policy. >. The developed countries @6* Germany* France* Dritain were self sufficient in the raw materials that they needed for industrialization. =eveloping countries were not self sufficient in the raw material that they needed for industrilisation. 8. %ost of the Indian farmers will have little security -meager a mount of subsidy. with no education system* without credit facilities* no access to alternative employment. After the reform* the subsidy support was dismantled which has affected the conditions of agriculture farmers. 5. There was +Globalisation Gap' between the one who is well positioned and the one who is not. 7. Globalisation has dividend the ineEuality between the rich and poor in India. Indian farmers wages is Fs.?2K$ per day. India's Fichest person in earning Fs.82 la0h per minute. :. ?. Globalisation has failed to create employment opportunities in India. It has failed to reduce the poverty ratio. 4overty reduction in ())2's much lower compared to the poverty reduction in ()?2's. India has to build the economy strong to gain in Globalisation India could achive high growth rare and gain in Globalisation if it solves the problems which is existing in the economy. The measure to be ta0en are given below

S0GG1STI-2S 4lans for drought proofing the economy* 729 of the cropped area remains rainfed. To change the fate of the Indian farmers* 82*222 crores should be invested per year for the next 5 years for irrigation schemes. 4roposal of inter lin0ing of river should be implemented. The cumulative rainfall of the country was deficient by >89 from its long period average -4A. of ?) cms measured over a fifty year period of ()8( H )2. Fainfall in India is deficient. Farmers are loo0ing up the s0y for cultivation. 729 f the cropped area remains rainfed. 4lans are to be formulated to ma0e the economy as drought proofing my to change the rate of the Indian farmers* 82*222 crores should be invested per year for the next 5 years for irrigation schemes. 4roposal of interlin0ing river should be implemented. As the demand for water in India is increasing from 7>8 -Dillion cubic metre. in 3222 to ?(> D&% in 322)* our defendence on monsoon will be increasing manifold in the years to come. The monsoon rainfall is the ma,or source of irrigation -:29 water for agriculture* 339 for industry ?9 for urban areas.* yet its ma,or portion is being wasted due to lac0 of water holding capacity in the traditional rain water harvesting structures. The solution to minimize the dependence on the monsoon lies in an effective monsoon governance strategy such as proven fore warning system and rainfall forecasting* institutional set up to ensure timely and assured input H output delivery system including seed system* rural credit* crop insurance. The system of rice intensification* hybrid rice* aerobic rice* zero tillage* direct seeding practices are to be carried out. 4romote Food sustainability/$ After ())2's food production growth rate has been lower than population growth rate and is in danger of food sustainability. Total agricultural production in 322?$2) is estimated to be 33) million tones marginally lower than last years production. "ven though production of rice increased* the fall in production of wheat* course cereals* pulses* oil seeds and cotton seeds has contributed lower than expected farm output in 322?$2).

verritical expansion in case of disbursement of credit/ Bnly the existing farmers had been receiving the farm credit. %any farmers in India has less than one hectares of land. Attempts should be made to bring more farmers under the Institutional credit net loan has been waived to small farmers who own one to 3 hectares and the marginal farmers who own one hectare loan could be received on the basis of cultivable position of land. !oan should be classified as and semiarid* rainfed area. most of our farmers own 8 to 5 hectares of land in semiarid and arid areas and few do not have land so as to utilise institutional credit net. All those who have 8 to 5 hectares of land in arid* semiarid areas and do not have a piece of land should be brought under institutional credit net. R1+1R12C1S Agricultural statistics at a Glance'* Indian Farmers Fertilizers &o$operative !imited* <ew =elhi* August 3228. &hossudovs0y* % ()):* The globalization of poverty/ Impacts of I%F and Corld Dan0 Feforms* Led Doo0s !td.* <ew Jersey G Third world <etwor0* 4enang. Ghosh* J G &handrase0har* &4 3225* +The burden of farmers debt' %acroscan* 6eptember (8* 3225. http/KKwww.indiatogether.orgK3227K,unKopi$cotton.htm Issac* F 3225* +The globalization gap'* 4earson "ducation Inc.* <ew Jersey. !and and !ivestoc0 holdings survey* <66 Forty$"ighth round* ())(* Government of India. %ohan0umar* 6 G 6harma* F; 3227* +Analysis of farmer suicides in ;erala'* "conomic and 4olitcal wee0ly* April 33* 3227. 6ainath* 4 3225* +<o lessons from past mista0es'* The 1industan Times* viewed 8 June* 3227. http/KKwww.hindustantimes.comKnews specialsK farmerscuicideKindex.shtml

6ainath* 4 3228 +6eeds of suicide'* The 1indu* July 32* 3228. 6ainath* 4 3225 +As you sow* so shall you weep' The 1indu* %ay >2* 3225.

6ainath 4 3225* +6pice of life carries whiff of death'* The 1indu* February (>* 3225.

6ainath* 4 3228 +=reaming of water* drowning in debt* The 1indu* July (?* 3228.

+6eeds of ruin'* The Indian "xpress* July >* 3225. The damage done/ aid* death and dogma'* %ay 3225* &hristian Aid. www.christian$aid.org.u0KindepthK525cawee0K&AC932report.pdf Chitwell*G())?* +Chat is economic rationalism'* AD&* viewed June (2* 3227

http/KKwww.abc.net.auKmoneyKcurrencyKfeaturesKfeat((.htmMfn( Chose suicide is it anyway'* Indian "xpress* June 3>* 3225. "conomic Times :.2:.2)