Citation: Jha, S.,
P. V. Srinivasan and A. Ganesh-Kumar. 2010. “Achieving food
security in a cost-effective way: Implications of domestic deregulation and
liberalized trade in India”. In A. Ganesh-Kumar, D. Roy and A. Gulati (Eds.) Liberalizing
Food Grains Markets: Experiences, Impact and Lessons from South Asia, IFPRI-Oxford University Press, New
Delhi.
Abstract: The food
grains market in India has been characterized by dominant government presence
in pricing, procurement, stocking, transport and distribution. Two implicit but
important objectives of the Indian food policy have been to stabilize food
grain supplies and prices over time through stock policies and across regions
by procuring grains from surplus areas and supplying in deficit areas.
Government intervention in food grains markets did seem to have a positive
effect in the early years of the Green Revolution and helped spread of hybrid
varieties. Consequently, there has been a significant transformation of the
country from being chronically food deficit in the 1950s and 1960s to becoming
self-sufficient by the 1970s and 1980s and turning into a net-exporter since
the 1990s. The 1990s
witnessed some small steps at reforming the food policies of the government. Export controls on food grains were removed, and
quantitative restrictions were replaced with tariffs, though at levels that are one of the highest in the world. On the domestic
front too, the government has more or less removed the restrictions on
interstate movement of commodities. Nevertheless,
several restrictive domestic and international trade policies continue to
affect food grains markets.
This study addresses several questions related to both
international trade and domestic market deregulation in food grains. It
assesses the impacts of international trade liberalization on India based on a
review of the existing literature. With regard to domestic market regulations,
it examines the possible outcome of removing all domestic controls on grain
marketing, especially movement restrictions, centralized procurement including
levy on rice millers and stocking limits on traders on food security. This is
done using a multi-market spatial equilibrium model of the rice and wheat
markets across the states of