ABSTRACT
Since the beginning of economic reforms in 1991, India has been through major changes in the macroeconomic policy framework of the planned economy that existed before the 1990s. However, no direct references were made to the agricultural sector in the reform package, though it was argued that the new macroeconomic policy framework would have profound implications for Indian agriculture for more reasons than one. First, it was expected that changes in exchange and trade policy, devaluation of the currency, gradual dismantling of the industrial licensing system, and reduction in industrial protection would ben efit tradable agriculture by ending discrimination against it and by turning the Terms of Trade (TOT) in its favour.1 Second, these policies together with globalisation would bring domestic farm prices in line with world market prices. This in turn would provide a justification to increase support prices, which will also turn the TOT in favour of agriculture. And third, with the signing of WTO agreements, some contended that India will record faster export growth in agricultural commodities and benefit from favourable prices for farm imports.
