AGRICULTURAL REFORMS IN INDIA

Agriculture in India
Largest and one of the most Prominent sector in economy. Agriculture and Forestry, Logging, Fishing accounted for 16.6% of the GDP in 2007. Employs 60% of Indias population. Accounts for 8.56% of Indias exports. About 43% of India's geographical area is used for agricultural activity Decline of its share in the GDP. Monsoons play a critical role in agriculture.

History of Indian Agriculture

By 6th millennium BC, Wheat and some legumes were found in Indus valley. By 4000 BC, wheat, peas, and mangoes. By 3500 BC, cotton and cotton textiles were found in the valley. By 3000 BC, rice and sugar cane had started. By 2500 BC, rice was an important component of the staple diet in Mohenjodaro. By 2000 BC, tea, bananas and apples were being cultivated.

Technological And Institutional Reforms

FOOD SECURITY

Causes for Introduction of New Reforms in Agriculture

Agriculture has been in practised in India for thousands of years. Continued uses of land without well-matched technoinstitutional reforms lead to slow down in the pace of agricultural development. In spite of development in irrigation most of the farmers in large parts of the country still depend upon monsoon and natural fertility of soil. Our population grew at fast rate than agriculture production. There has been a lot of injustice done with farmers with the current prices for their production. Famines, droughts and other disasters ruined the entire crop produced putting farmers in dilemma.

Technological And Institutional Reforms Introduced after Independence

Collective farming was introduced. Land holdings were consolidated Co-operative movement were started in Indian agriculture Zamindari system was abolished, Land reform was introduced in First Five Year Plan. The Green Revolution and related technologies were introduced such as use of HYV of seed, fertilizers, modern machinery and inputs. White Revolution (Operation Flood) was introduced to increase milk production.

Agricultural Movements
Green Revolution
After independence, govt. took steps to increase the food production. Yields per unit area of all crops grew since 1950. In 1970s saw a huge increase in Indias wheat production. Reasons were improvement in irrigation, technology, application of modern agricultural practices and provision of agricultural credit and subsidies. M.S. Swami Nathan is considered as the architect of the Green Revolution.

Agricultural Movements (contd.)

Operation Flood
It was the name of a rural development programme Started by National Dairy Development Board (NDDB) in 1970. Objective was creating a nation wide milk grid. Movement followed the Green Revolution and alleviating poverty and famine levels. India became the largest producer of milk and milk products. Hence, also known as White Revolution of India.

Features Of Comprehensive Land development

Provision for crop insurance against drought, flood, cyclone, fire and disease, establishment of Grameen banks, cooperative societies and banks for providing loan facilities to the farmers at lower rates of interest were some important steps in this direction. Kissan Credit Card (KCC) was introduced for easy availability of inputs. Personal Accident Insurance Scheme (PAIS) are some other schemes introduced by the Government of India for the benefit of the farmers. Special weather bulletins and agricultural programmes for farmers were introduced on the radio and television. The government also announces minimum support price, remunerative and procurement prices for important crops to check the exploitation of farmers by speculators and middlemen.

RURAL CREDIT SYSTEM

Money lenders in India are as old as its villages, agricultural credit cooperatives go back a century, commercial banks have been involved in agricultural loans for nearly 50 years, the regional rural bank network is over 25 years old, and reforms in the banking system were triggered a decade back. Yet, credit flow to small farmers has remained far below needs, both for crop cultivation and for long term requirements such as land development, irrigation and farm equipment as compared to the potential demand. The widespread discontent among farmers has manifested itself in the form of mass voting against incumbent governments as also individual acts of despair such as farmers committing suicide, particularly in States like Andhra Pradesh and Maharashtra.

ARCHITECTURE OF CREDIT SYSTEM:

The basic architecture of the credit system is:

Cooperative credit structure (CCS): The Cooperative Credit Structure caters to both the short term and long term credit need of the rural consumers. The short term credit need of the rural consumers is fulfilled by three institutions, namely, the State Cooperative Banks (SCBs), District Central Cooperative Banks (DCCBs) and the large network of the Primary Agricultural Credit Societies (PACS) in the villages. On the other hand, the State Cooperative Agriculture and Rural Development Banks (SCARDBs) provide long term credit in the rural economy through Primary Land Development Banks, now renamed Primary Cooperative Agriculture and Rural Development Banks (PCARDBs). In Andhra Pradesh and Jharkhand the long term structure has been merged with the short term structure.

National Bank of Agricultural and Rural Development (NABARD): This is refinanced by CCS .These institutions are, however, beset with problems like low recovery percentage (40-60%), inefficient management systems and politicization of the cooperatives due to inadequate laws prevalent in the system. In 2001-02, there were over 98,000 primary agricultural cooperatives and the loan outstanding was Rs 32712 crore. In addition, the cooperative sector also had Rs 14,172 crore of long term loans given for land and water development, tractors, etc.

Commercial Banks:
The involvement of commercial banks in credit to agriculture began after the Gorawala Committee Report in 1954. The State Bank of India was asked to open 400 branches in semi-urban areas and start agricultural lending. The issue became urgent with the onset of the Green Revolution, as the package of high yielding variety seeds and fertilisers required access to credit. The government responded by first directing banks to lend to agriculture, then imposing social control and eventually nationalising the major banks in 1971. This was followed by a major expansion in rural branches and introduction of the Lead Bank scheme and district credit plans. Within the overall quota of 40% priority sector lending, banks were asked to lend 18% of their total advances to agriculture.

Informal Sources:

RBI data reveals that informal sources provide a significant part of the total credit needs of the rural population. The magnitude of the dependence of the rural poor on informal sources of credit can be seen from the findings of the successive All India Debt and Investment Surveys (AIDIS). These show that the share of non-institutional agencies (informal sector) in the outstanding cash dues of rural households has reduced from 83.7% in 1961 to 36% in 1991. As per the latest AIDIS, 1992, formal institutional sources, banks and cooperatives provided credit support to almost 64% of the rural households, while professional and agricultural moneylenders extend credit to about one sixth of the rural Source households.

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