Indian Agriculture and Rural Development: Strategic Issues and Reform Options

Indian agriculture is facing a policy paradox. Although several forecasts of the 1990s predicted that India would be a large importer of grains in the years to follow, in fact from 2001 to 2004 India exported around 30 million tons of foodgrains. It was seeking primarily to liquidate its bulging grain stocks, which reached 63 million tons in July 2002. Whereas India’s agricultural policy is still rooted in the goal of self-sufficiency in grains, consumption patterns are changing fast toward high-value agricultural products such as fruits and vegetables, livestock products, and fish. The policy environment is lagging behind the structural change occurring in India’s consumption and production baskets. On another front, foreign exchange reserves, which had reached a rock-bottom US$1.2 billion in July 1991, climbed to more than US$120 billion by the end of 2004. Nonetheless, despite comfortable food and foreign exchange reserves and reasonably high growth in gross domestic product (GDP) of about 6 percent annually, India still has more than 250 million underfed people (below the poverty line) and high underINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE