Market-Driven Agricultural Growth: Contrasting Experiences in Punjab and Rajasthan

India has experienced a remarkable transition in recent decades, from chronic food deficits in the 1960s to national food surpluses on average today, despite a more than doubling of the population. This has been accompanied by an equally dramatic reduction in poverty; from about 60 percent of the population in the 1960s to less than 30 percent today. Poverty and malnutrition still persist at unacceptably high levels, but this is due to insufficient access to income rather than the ability of the agricultural sector to feed the entire population. But even as one battle has been won the agricultural sector is challenged by a rapidly changing market situation, continuing high rural poverty levels and rural underemployment, and serious water management problems that require a significant response if rural areas are to continue to prosper. This paper discusses the challenges in detail and their implications for the public policies and investments needed if the agricultural sector is to continue to play a major role in India’s economic and social development. To bring greater focus to the discussion, particular attention is paid to the experiences and challenges facing Punjab and Rajasthan. These two states have historically been among the more progressive in India, but now seem to be lagging in adjusting to the challenges facing their agricultural sectors.