Karnataka J. Agric. Sci.

, 22(4) : (927-928) 2009

Liberalisation and its impacts on India's imports and exports of agricultural commodities
Until June 1991, India followed a very restrictive
economic policy characterized by exclusion of the private sector
from many important industries. Monopoly or dominance of
public sector in a number of important industries and sectors,
entry and growth restrictions on private, particularly large
enterprises and limited role and stringent restrictions on foreign
capital and technology. As a result, India faced liquidity crisis in
1991. The balance of payment situation had deteriorated so
sharply and the foreign exchange reserves had fallen so low
that, the possibility of default in payment was imminent. The
fiscal situation has deteriorated sharply. The budget deficit as
well as overall fiscal had sharply increased, contributing on the
one hand to large increase in money supply, and on the other
side to sharp increase in interest payments. The fiscal deficit of
the center and the states taken together, which was about 7.5 %
of the GDP in the late 70's, had increased to about 11 percent by
1991. The interest payments in the central Govt. budget has
become the single largest expenditure item rising from 2 percent
of GDP in 1980 -81 to nearly 4 percent of GDP in 1990-91. The
country thus lead to a review of economic policy and forced
unavoidable changes in it. The economic liberalization ushered
in June 1991 changed the scenario very substantially.
The government had undertaken wide ranging
measures to promote exports even prior to 1991, but even then
the coverage of imports by export earnings was quite low. In
1990-91 this coverage ratio was only 66.2 percent and lead to
massive trade deficit (Mishra and Puri, 2001). However, during
the six .years from 1993-94 to 1999-2000 export earnings
accounted for 75.3 percent of the value of import. This significant
change in the trade balance position seems to have been realized
on account of various export promotion measures, which the
government has undertaken recently. Apart from the systems if
Exims crips and liberalized exchange rate mechanisms, which
were short lived, the government has undertaken a variety of
export promotion measures under the Exim Policy (1992-97). The
important measures introduced are the establishment of export
oriented units for promoting exports from the agricultural and
allied sectors, simplification of export promotion capital goods
scheme, introduction of export promotion capital goods scheme
for the service sector, adoption of a more rational and convenient
criterion for recognition of export houses/ trading houses/ star
trading houses, broadening of areas of activity in export
processing zones, duty free import for exports under the advance
licensing scheme and creation of an exporters grievances cell in
the ministry of commerce to facilitate action on problems being
faced by exporters.
The present study has been undertaken to study the
impact of liberalization and export policies on India's export and
import of agricultural commodities.
For the purpose of the study the secondary data were
complied from vanous publications and through internet. The
analysis is based on time series data for the last II years. For the
analysis or data the techniqucs likc indcx numbcrs, cocflicicnt
or variation, and semi-log trend analysis were employed.
The coefficient of variation ( CV) was used to know
the variation in imports and exports over the years.
exports over the years.
Coefficient of variation = Standard deviation x 100
Mean
The index numbers were calculated on the chain base
method so as to account for the changes in the export and
import of agricultural commodities. The base year for calculating
index numbers has been taken as the average of 3 years viz.,
1990-91, 1991-92 and 1992-93(TE 1992-93).
The index numbers where calculated by the formula
I = Xi x 100
Xo
Where Xi = Value of export / import of agricultural commodities
in current year.
Xo = Value of export/ import of agricultural commodities
in base year
The trend analysis was carried out using linear model,
exponential model and semi-log models to analyse the trend

Table 1. Indian imports and exports of agricultural commodities and their share to the total imports and exports (Rs. in crores )
Sl. Year Agril Total % of Agril Agril. Total % of agril.
No. imports national imports to Exports national exports to
imports national in exports exports total exports
1. 1990-91 1205.86 43170.82 2.79 6012.76 32527.28 18.49
2. 1991-92` 1478.27 47850.84 3.09 7838.13 44041.81 17.80
3. 1992-93 2876.25 63374.52 4.54 9040.30 53688.26 16.84
4. 1993 -94 2327.33 73101.01 3.18 12586.55 69748.85 18.05
5. 1994-95 5937.2 1 89970.70 6.60 13222.76 82673.40 15.99
6. 1996-97 6612.60 138919.88 4.76 24161.29 118817.32 20.33
7. 1997-98 8784.19 1541 76.29 5.70 24843.45 130 100.64 19.10
8. 1998-99 14566.48 178331.69 8.17 25510.64 139751.77 18.25
9. 1999-00 6066.73 21 5528.53 7.45 25313.66 159095.20 15.91
10. 2000-01 2030.36 226773.47 5.31 28909.30 202509.76 14.28
927
Karnataka J. Agric. Sci., 22(4), 2009

Table 2. Index numbers of India's imports and exports of agricultural

commodities
Sl. No. Year Imports Exports
1. 1990-91 65.06 78.80
2. 1991-92 79.76 102.72
3. 1992-93 155.1 8 118.47
4. 1 993-94 125.57 164.95
5. 1 994-95 320.33 173.29
6. 1996-97 31 7.79 267.32
7. 1 997-98 356.77 316.64
8. 1998-99 473.93 325.58
9. 1999-00 785.91 334.32
10. 2000-01 866.81 331. 74
C.V (%) 73.93 46.48 Fig.1.Trends in India's import and export of agricultural commodities

Table 3.Trends in India's imports and exports of agricultural commodities
Sl. Particulars Intercept b-coefficient Trend growth cR2
No. rate (%)
1. Imports 4.06 0.26 26.00 0.92
2. Exports 4.37 0.16 16.00 0.91
growth rate. The semi-log function was finally selected to explain
the trend due to its superiority over the others in terms of
coeffcient of multiple determination (R2).
The semi-log model is log Y = a + bt
Where Y = Index numbers of value of export/ import of
agricultural Commodities. .a = Constant, t = Time in
years, b = Regression coefficient. and in this model the growth
rate will be (b x 100) in terms of percentage.
The table 1 reveals the India's import and exports of
agricultural commodities and share in India's total exports and
imports. It is observed from the table that, the share of agricultural
imports in India's imports were very less even through the total
imports were more. This may be due to large import of the other
goods and services. Further, this was largely influenced by
India's self-sufficiency in food production fronts.
Similarly, the annual share of agricultural exports were
more around 15 percent in the total value of exports, buts its
share was found decreasing over the years. This might be due
to increase in export of the goods and services like software,
hard wares etc.
It is observed form the Table 2 that, the agricultural
imports increased in almost all the years, except in two years
(1993-94 and 1995-96). Similarly, the agricultural exports increased
in almost all the years except in 1999-2000. This indicates that,
there was a positive impact of liberalization on agricultural
exportsand imports. It is also clear from the Table that there is
more variation over the years in imports of agricultural
commodities (73.93 %) than their exports (46.48 %). Thus, the
liberalization measures lead to more stabilized exports than
imports.
The trend analysis was carried out to get insight into
the India's long-term trends in exports and imports of agricultural
commodities (Table 3) The imports increased at the rate of 26
percent, where as the exports of agricultural commodities showed
an increasing trend but this increase in export is less faster than
imports (Fig 1.). These results revealed that the liberalization
policy of India in 1991 and WTO had positive impact on export
and import of agricultural commodities .
The results showed that, this policy had positive effect
both on imports and exports. However, the gap between imports
and exports have been widening therefore, the government
should work out strategies to increase its exports and decrease
the gap. The government to promote exports may adopt the
following strategies like
* Improvement of post-harvest technology,
* Improvements in agricultural productivities
* Increase the irrigation potentials:
Encourage the farmers to adopt least-cost production
methods to reduce cost of cultivation through strengthening of
extension services and to Provide necessary infrastructural
facilities at the regional level to promote farm ex ports

Department of Agricultural Economics, SURESH S. PATIL

College of Agriculture, Bheemarayangudi, Karnataka, India. SHRIPAD VISHWESHAR
GIRISH N. KULKARNI
(Received : September, 2006)
References

Dandekar Y. M. 1985, Introduction to seminar on database and
methodology for the study of growth rates in Agriculture. Indian
J. Agric. Econ., Yol 35 : I.
928
Mishra, S. K and Y. K. Puri, 2001, Indian Economy, Himalaya Publishing
House, New Delhi, pp. 304 - 327.
Sadhu, A.N and Amarjit Singh, 2000, Fundamentals of Agricultural
Economics, H.P.H ; pp. 541-550.