ABSTRACT
This chapter attempts to understand the linkage between trade liberalization and agricultural production through the mediating impacts of trade composition changes and price movements. Starting from a detailed account of agricultural trade policy reforms since 1991, it goes on to present evidence on the shifts in the crop-mix in Indian agriculture along with the aggregate trade patterns pertaining to agricultural commodities. The subsequent analysis of changes in the composition of agricultural export and import baskets in the two and a half decades of economic liberalization, as well as that of the international and domestic price movements of selected crops, is used to draw some preliminary conclusions about the longer term impact of trade liberalization on Indian agriculture. While there is evidence of increased production in the case of the major export crops, it is found that domestic prices for the majority of India’s top agricultural exports remain lower than their export prices. Thus farmers may not have been the major gainers even for export crops with thriving international demand. It is therefore suggested that the institutional arrangements in the Indian agricultural marketing system that prevent farmers from obtaining remunerative prices need a long-overdue restructuring. Moreover, regulation of agricultural trade will continue to be of critical importance given that the vast majority of Indian farmers are net buyers of food.
