Agriculture: Left Behind in 35 Years of Liberalisation

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Source: Business Standard, 1 October 2026, "Agriculture: Strong reform intentions, but little progress", part of its series on 35 years of the 1991 reforms.
Experts such as Ashok Gulati, Ramesh Chand and Ajay Vir Jakhar say agriculture saw far fewer reforms than industry, trade or finance.
A West Asia war has pushed up fertiliser prices and the subsidy bill, putting pressure on India's fiscal balance, much as the 1991 crisis did.

The 1991 balance-of-payments crisis led to a rupee devaluation of over 40% within three days, lower import tariffs and the end of industrial licensing.
Agriculture gained only indirectly, through a depreciated rupee and lower industrial protection. Montek Singh Ahluwalia says this helped sectors like horticulture.
Direct farm reforms were blocked at the time by the minority government's allies and the Opposition.
Later attempts were limited:

2001-02: wheat, paddy, coarse grains, sugar, edible oilseeds and pulses were freed from the Essential Commodities Act, 1955.
2003: the ban on futures trading in agricultural commodities was lifted.
GM cotton was permitted, and it remains India's only GM crop.
2020: three farm laws on agricultural marketing were passed and later repealed after farmers' protests.

Agriculture is less politically attractive than industry or finance, and specialised expertise is scarce at the top of policymaking.
Agriculture and markets are State subjects, so the Centre has limited room to reform.
China focused on agriculture for its first 10 years of reform. India preferred industrial and service reforms within the Centre's domain.
Influential farming communities resist change, and there is a trust gap between farmers and political leaders.
Governments are in a near-continuous election cycle, so they have little bandwidth for structural reforms.

Agriculture's share in GDP has declined as industry and services grew faster, but labour has not moved out of agriculture at the required pace.
Heavy dependence on MSP and assured procurement shields farmers from market signals. This leads to overproduction of some crops and shortages of others.
Low private investment has hurt storage, trading, value addition and food processing.
Sustainability is under threat from falling groundwater, nutrient-deficient soils and low soil organic carbon.

Pursue "second-generation reforms" in marketing, with State consensus.
Promote crop diversification and gradually reduce dependence on MSP-based procurement.
Attract private investment in cold chains, warehousing and food processing.
Use fertiliser and water efficiently to contain the subsidy burden.
Build farmers' trust through consultation before introducing reforms.