Agricultural Policies in India

image of Agricultural Policies in India

This report assesses the performance of agricultural and food policy in India and calculates a set of policy indicators providing a comprehensive picture of agricultural support. These indicators, developed by the OECD, are already used regularly in the analysis of the agriculture and food sector in 51 OECD countries and emerging economies and are now available for India for the first time.

Government intervention in India is found to provide both negative and positive support to agriculture, with market and trade interventions often depressing prices, while subsidies to fertilisers, water, power and other inputs incentivise their use. This reveals the inherent difficulty in attempting to secure remunerative prices and higher incomes for farmers, while at the same time keeping food prices low for consumers. The report also points to policy-induced pressures on natural resources such as water and soil. Detailed recommendations are offered which, if implemented, have the potential to improve farmers' welfare, reduce environmental damage, alleviate some of the pressure on scarce resources, better prepare the sector for climate change, improve food and nutrition security for the poor, improve domestic market functioning and position India to participate more fully in agro-food global value chains.



Executive summary

India is one of the fastest growing G20 economies, largely reflecting an ambitious reform agenda under implementation since 2014. Against this background, agriculture is a key sector in terms of its contribution to both employment and GDP. Sustained by improved access to inputs such as fertilisers and seeds, as well as better irrigation and credit coverage, production has been increasing on average at about 3.6% annually since 2011. The sector has also been diversifying from grains towards pulses, fruit, vegetables and livestock products, largely driven by evolving demographics, urbanisation and changing demand patterns. India has achieved a significant fall in the proportion of the population that is undernourished, from around 24% in 1990-92 to 15% in 2014-16. Moreover, it has also emerged as a major agricultural exporter of several key commodities, currently being the largest exporter of rice globally and the second largest of cotton.


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