When the Doha global trade negotiations collapsed in July, many countries shared the blame. But one of the more surprising culprits was India.
With inflation over 12 % for some commodities, removing agricultural trade barriers would surely have helped get cheaper food to India’s millions of poor citizens, says an article by Salil Tripathi in Prospect magazine .
Essentially Indian politicians fear that liberalizing agriculture will expose their farmers to catastrophe if food prices collapse. Agricultural sector is hugely inefficient. Land holdings are small and productivity is low. Over 100,000 Indian farmers have committed suicide in the past decade because of crop failure. The government’s response has been to announce a major bailout for farmers in the budget, amounting to £7.5bn so far. The money will go towards granting fresh credit and writing off bad debts.
But financial relief without strings will destroy India’s emerging credit culture. The fundamental problem is that many of India’s farmers will never make a proper living on the land that they have. Indian agricultural policies fail to recognize this, assuming instead that farmers will always remain farmers. A shift in policy thinking is urgently required. Thanks to economic reforms, 100m Indians have been lifted out of absolute poverty since 1991. And their fortunes were not transformed by agriculture, which represents barely a fifth of India’s GDP, even though two thirds of Indians call themselves farmers.
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