“Strategies for
Agricultural Liberalization: Consequences for Growth, Welfare and Distribution”
Citation: Parikh, K. S., N. S. S. Narayana, M.
Panda and A. Ganesh-Kumar. 1995. “Strategies for Agricultural Liberalization:
Consequences for Growth, Welfare and Distribution”. Economic
and Political Weekly, 30(39), pp. A90-A92.
Abstract: This note summarises the results of
a recently completed study which examined the impacts of trade liberalisation,
agricultural input subsidy reductions and safety net programmes for India with
an applied general equilibrium model with nine agricultural sectors, one
non-tradeable non-agriculture sector and one tradeable non-agriculture sector
and with five rural and five urban income classes. The study demonstrates the
importance of accounting for large country effects in rice trade and estimates
the optimal tariff/quota for rice exports for India – which is found to be just
half a million tonnes of net export of rice. The results show that
non-agricultural trade liberalisation is even more important for agriculture
than even agricultural trade liberalisation, both of which help accelerate
growth. The study concludes that a policy package involving trade
liberalisation with moderate residual tariff as permitted under GATT and
agricultural inputs subsidies removal accompanied by targeted safety net
programmes along with stepped up investment in irrigation, with the expected
additional foreign inflows materialising, produces a scenario that is superior
from the point of growth, welfare and distribution and that this can be
financed without raising taxes.