IMPACT OF GLOBALIZATION ON INDIAN AGRICULTURE: AN

OVERVIEW OF THE INDIAN ECONOMY

Dr. B. NAGARAJU
Assistant Professor
DEPARTMENT OF DEVELOPMENT STUDIES
Mahatma Gandhi University- Nalgonda

ABSTRACT

The globalization is the process began in1991as a result of new economic policies. The main
feature of this economy is that it work at central level and the states have the right to make
changes in the central policy depending on their requirements, and they are responsible for
making it work. Thus the new system has changed from command economy to federal
economy. Globalization eludes to builds the development of money, inputs, yields, data and
science crosswise over inconceivable geographic ranges. Today the word globalization is
used in the world wide development process. It is now possible to purchase or sell necessary
commodity in each and every corner of the world only because of the means of
communications, development of information technology and transport facilities. Thus, the
concept of globalization is ‘development’. Globalization refers to the process of integration
the domestic economy with the word economy. Globalization refers to integrate the domestic
market with world market in the field of trade of goods and services, technology and labor
etc .Globalization is the process of movement of capital and flow of finance from one country
to other country. Globalization is the new buzz word that has come to dominate the world
since the nineties of the last century. Globalization can be simply defined as “The Expansion
of Economic activities across political boundaries of native states”. Globalization has to
increases the movement of finance, inputs, outputs, information and science across vast
geographic areas. In Indian context it implies opening up the economy to foreign direct
investment and provide entry to Multinational corporations in India. Globalization means an
explanation of market from local level to worldwide. Globalization aims at the integration of
the Domestic Economy with the Global Economy and the optimum utilization of growth
potential. The process of globalization has revolutionized World Agriculture and allied
sectors directed to improve the efficiency productivity and cost competitiveness.
Globalization has brought in new opportunities to developing countries. Greater access to
1|Page
developed country markets and technology transfer hold out promise improved productivity
and higher living standard.
Trade is an essential part of economic development. The establishment of WTO is an
important milestone in the history of international trade. India played an important role in
establishment of GATT and then in establishment in WTO. India became the member of
GATT in 1947 and started to play its part and now it’s an active member of WTO, the
replacement of GATT, which came into effect on 1st January 1995 in Uruguay Round. India
is very favour of governance of international trade which is based on international rules and
regulations. It believes that trade will not only benefit its economy but will also benefit all
134 members. When developing countries were liberalizing and expanding their economies,
they felt the need for better export opportunities. The W.T.O. provides opportunities to the
developing countries to grow and expand their business.

Key Words:-Globalization, Agriculture, Economic reform and Indian policies.

INTRODUCTION:

Indian economy had experienced major policy changes in early 1990s. The new economic
reform, popularly known as Liberalization, Privatization and Globalization (LPG model)
aimed at making the Indian economy as fastest growing economy and globally competitive.
The series of reforms undertaken with respect to industrial sector, trade as well as financial
sector aimed at making the economy more efficient. With the onset of reforms to liberalize
the Indian economy in July of 1991, a new chapter has dawned for India and her billion plus
population. This period of economic transition has a tremendous impact on the overall
economic development of almost all major sectors of the economy, and its effects over the
last decade can hardly be overlooked. Besides, it also marks the advent of the real integration
of the Indian economy into the global economy.
This era of reforms has also ushered in a remarkable change in the Indian mindset, as it
deviates from the traditional values held since Independence in 1947, such as self-reliance
and socialistic policies of economic development, which mainly due to the inward looking
restrictive form of governance, resulted in the isolation, overall backwardness and
inefficiency of the economy, amongst a host of other problems. This, despite the fact that
India has always the potential to be on the fast track to prosperity. Globalization is a process
by which regional economies, societies, and cultures have become integrated through a global
2|Page
network of communication, transportation, and trade. The term is sometimes used to refer
specifically to economic globalization: the integration of national economies into the
international economy through trade, foreign direct investment, capital flows, migration, and
the spread of technology. Globalization as a spatial integration in the sphere of social
relations when he said, “Globalization can be defined as the intensification of worldwide
social relations which link distant locations in such a way that local happenings are
shaped by events occurring many miles away and vice – versa.”
Globalization generally means integrating economy of our nation with the world economy.
The economic changes initiated have had a dramatic effect on the overall growth of the
economy. It also heralded the integration of the Indian economy into the global economy.
The Indian economy was in major crisis in 1991 when foreign currency reserves went down
to $1 billion. Globalization had its impact on various sectors including Agricultural,
Industrial, Financial, Health sector and many others.
NEW ECONOMIC POLICY 1991
 Dr. Man Mohan Singh brought a new policy which is known as Liberalization,
Privatization and Globalization Policy (LPG Policy) also known as New Economic
Policy, 1991 as it was a measure to come out of the crisis that was going on at that
time. The following measures were taken to liberalize and globalize the economy:
 Devaluation: The first step towards globalization was taken with the announcement
of the devaluation of Indian currency by 18-19 percent against major currencies in the
international foreign exchange market. In fact, this measure was taken in order to
resolve the BOP crisis.
 Disinvestment: In order to make the process of globalization smooth, privatization
and liberalization policies are moving along as well. Under the privatization scheme,
most of the public sector undertakings have been/ are being sold to private sector.
 Allowing Foreign Direct Investment (FDI): FDI was allowed in a wide range of
sectors such as insurance, defense industries.
 NRI Scheme: The facilities which were available to foreign investors were also given
to NRI's.
The New Economic Policy (NEP-1991) introduced changes in the areas of trade policies,
monetary & financial policies, fiscal & budgetary policies, and pricing & institutional
reforms.

3|Page
The salient features of NEP-1991 are:
 Liberalization (internal and external),
 Extending privatization,
 Redirecting scarce public sector resources to areas where the private sector is unlikely
to enter,
 Globalization of economy, and
 Market friendly state.

Agriculture: Economic development of a country in directly related to the growth of

agriculture. Agriculture sector provide the employment opportunity to the peoples .India has
also been striving to develop the country agriculture since independence. Agriculture played
a key role in our planned economy with its advantage of low investment and the base of
industries.
According to George Washington, “I know of no pursuit in which more real and important
services can be rendered to any country than by improving its agriculture, its breeds of useful
animals, and other branches of husbandman’s cares.”
OBJECTIVES:
1. To examine how globalization of agriculture would have an effect on agricultural
production, change efficiencies and influence social issues in India.
2. To evaluate whether all resources and appropriate trade models are in use and
recommend the one that is most appropriate for the sector.
3. And also assess how promising technologies, value addition and domestic reforms
would promote trade and affect efficiencies and recommend solutions for them.
Methodology and Data Sources:
The study is based on the secondary data. The data were collected from various secondary
sources such as Economic Survey, Govt. of India, Books, Journals, Articles, Yojana and
various websites.

Impacts of Globalization of Indian Agriculture:

Experts beloved that globalization will help to balanced development of agricultural sector,
changes would occur in the economic conditions of the farmers, agricultural products would
get proper prices, employments would be available in agriculture, rural industries, cottage

4|Page
industries, small industries would start and farmers would be happy but this belief is going to
be false. According to the policy of WTO India has to reduce import duty by 50% for
agricultural goods till 2008. India has to compete in the field of agriculture in future. Also,
India has to import 5% of the domestic market. Out of Indian population 25% people still
below poverty line and 60% population depend upon agriculture. This proportion in England
2%, in America 3% and in Japan 7% respectively. The share of agricultural income in gross
national income in India 23.6%, in Australia 5%, in Canada 4%, America 3% and England
2% respectively. In India 62% of total agricultural land is depending upon rain water. The
technical developments cannot make because the possessed area of land is very little. So the
production costs are high. The use of chemical fertilizers is very little in India. It is only 84
kg per hector in India. But it is 266 kg per hector, in China, 360 kg in Japan, 519 kg in
Belgium. In India the amount of loan provided for agriculture is also very little. Loan for
agricultural is provided at the rate of 15% to 16% in comparing with the loan provided for
vehicles or houses at the rate of 7% to 8%. The field of watered land in India is 38%. In
China 52%, Japan62%, and in Pakistan it is 72%. Also agricultural product in India is very
little. India is the first in the production of legumes, second in the production of ground nut.
Rice and wheat and third in the production of tobacco. India tea, coffee, rice, wheat, sugar,
tobacco, spice, cashew, sesame, oil, fruits, and vegetables, meat and fishes as well as imports
legumes, milk products, cashew fruits , edible oil, chicken, seeds, etc. The country import 50-
60 lacks tons of edible oil and spends about 15 thousand cores rupees on it. In India out of
total produced agricultural goods 2% goods are processed. In Malaysia 80%, America and
Brazil 80% Philippine 78% and in Brittan there is 70% goods are processed.

In India out of total agricultural product only o.32% expense is done on agricultural research.
In countries the amount of expenditure on the research is 0.60% and in developed countries it
is 7%. It is difficult for India to keep its place is global competition because Indian goods are
low quality and standard, it is high in prices and supply of goods is inadequate and unstable.
But in countries the field of agricultural is supplied with economical help, quota and right of
intellectual wealth Multinational companies are attacking on India’s rural areas. In some
states lands are handed over to the multinational companies because of liberation. These
companies produce cash crops and so that the problem of food can be occur in future.
Developed countries are using dumping techniques to keep their superiority in global market.
Developed countries are selling their agricultural goods on fewer prices than the competitor
and less than its total production cost. It is causing side effects on the developing countries.

5|Page
According to the agreement of WTO it has been decided that the developed countries should
give 5% and developing countries should give 10% grants of total value of their agricultural
goods. But the developed countries like America, European countries, Japan, South Korea,
Canada are given various grants to the agricultural sector. Developing countries have
restriction on their agricultural products like import duties and quota. There is no any
limitation on the grants given by developed countries to the farmers through green box and
blue box. So, developed countries on very low prices. It effects on the agricultural sector and
the farmers of developing countries. Prices of milk, wheat, and maize are coming down in
international market because the countries like America and European countries are
providing economical help to the farmers. In 2000-2001 Indian government allowed to export
40 lakes tons wheat but in the international market the prices of Indian wheat are very high so
India could export only 3 lakes tons of wheat. The chairman of the World Bank once told that
“developed countries give 280 to 300 billion dollars as grants when India gives 45780 cores
as grants. In India the grants are less than 4% of the value of agricultural goods. But the WTO
tells to reduce the grants, for developed countries are not told about grants.

In such conditions it will not be an overstatement to say that the “World Trade Organization”
is to be named as “Developed Countries Trade Organization” India has the right to use
security shell and to charge more import duty. The 39 member’s countries of WTO used it.
India did not use the security shell. If India uses the security shell it will get some of the
advantages and if the restrictions on the grants of developed countries and objects of WTO
are performed properly, India will stable in the competitive market.

The Positive impacts of globalization on Indian agriculture are as under:

 Increase National Income – Receiving the international market for the agricultural
goods of India, there is an increase in farmer’s agricultural product, new technology,
new seeds etc. helped to grow the agricultural product.
 Increase in employments – While exporting agricultural products it is necessary to
classify the products, its standardization and processing, packing etc. The industries
depending on agriculture are stored and it made on increase in employments.
 No need to reduce the grants – According to the condition of agricultural agreement
limit for grants is decided 10% of the production value for the developing countries.
But the economical grants we are received less than 10% so there is no need of
reduction.

6|Page
  Increase in the share in trade – Because of the conditions of WTO all of the
countries get the same opportunities so there is an increase in the export of
agricultural products.
 Increase in the export of agricultural goods – The prices of agricultural goods is
higher in the international market than Indian markets. If the developed countries
reduced grants, they have to increase in the prices. So there will be increase in the
export in Indian market and if the prices grow, there will be profit.

The Negative impacts of globalization on Indian agriculture are as follow:

 Grants distributed on large scale by the developed countries – Before the
reduction in grants by WTO, developed countries had distributed grants on large
scale. They had grown the amount of the grants on large scales in agriculture during
1988-1994. So they have not to face many difficulties if there is a reduction in grants.
 Small production field – In India 60% of population depend on agriculture. The
pressure on agriculture is increasing because of the increasing population. Possession
of land is small and so the production cost is higher. There is also the problem of
standard etc. So there are unfavorable impact occur on Indian agriculture.
 Intellectual property right: - Intellectual property right cause unfavorable impacts
on Indian agriculture. Multinational companies can easily enter in the field of
agriculture and it will be bad for the margin farmers.
 Increasing production expenditure and low cost of goods – farmers are being
bankrupt because of growing production expenditure, costly seeds, on the one side
and reducing prices of goods on the other side. He doesn’t let out of it and so he is
committing suicide. This can be one of the impacts of agricultural agreement.

Economic Impact of globalization in India

 Multilateral agreements in trade, taking on such new agendas as environmental and
social conditions.
 New multilateral agreements for services, Intellectual properties, communications,
and more binding on national governments than any previous agreements.
 Market economic policies spreading around the world, with greater privatization and
liberalization than in earlier decades.

7|Page
  Growing global markets in services. People can now execute trade servicesglobally --
from medical advice to software writing to data processing, that couldnever really be
traded before.

Impact on Financial Sector

Reforms of the financial sector constitute the most important component of India’s
programme towards economic liberalization. The recent economic liberalization measures
have opened the door to foreign competitors to enter into our domestic market. Innovation
has become a must for survival. Financial intermediaries have come out of their traditional
approach and they are ready to assume more credit risks. As a consequence, many
innovations have taken place in the global financial sectors which have its own impact on the
domestic sector also. The emergences of various financial institutions and regulatory bodies
have transformed the financial services sector from being a conservative industry to a very
dynamic one.

Impact on Export and Import

India's Export and Import in the year 2001-02 was to the extent of 32,572 and 38,362 million
respectively. Many Indian companies have started becoming respectable players in the
International scene. Agriculture exports account for about 13 to 18% of total annual of annual
export of the country. In 2000-01 Agricultural products valued at more than US $ 6million
were exported from the country 23% of which was contributed by the marine products alone.
Marine products in recent years have emerged as the single largest contributor to the total
agricultural export from the country accounting for over one fifth of the total agricultural
exports. Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are the
other prominent products each of which accounts for nearly 5 to 10% of the country’s total
agricultural exports.

Technological & Cultural impact of globalization in India.

 Access to television grew from 20% of the urban population (1991) to 90% of the
urban population (2009). Even in the rural areas satellite television has grown up in
market.
 In the cities Internet facility is everywhere. Extension of internet facilities even to
rural areas.

8|Page
  Global food chain /restaurants has already found a huge market in the urban areas of
India.
 Lavish Multiplex movie halls, big shopping malls and high rise residential areseen in
every city.
Telecommunication and Software Industries are booming in India.
 Entertainment sector in India has a worldwide market. Bollywood movies are
distributed and accepted worldwide. Big international companies (Walt Disney, 20th
Century Fox, and Columbia Pictures) are investing on this sector.
 Famous International brands (Armani, Gucci, Nike, Omega etc.) are investing in the
Indian market with the changing of fashion statement of Indians.

Suggestions:
 To make growth in basic services- It is necessary to develop the standard and scope
of basic services like domestic roads, harbors, modern means of communication,
storages, standard controlling etc. These facilities would be on inspiration for export.
 Finance and Electricity Supply - The electric supply for Indian agriculture is
irregular and insufficient. Also there is lack of finance for the agricultural. It effects
on the standard of production and the expenditure of production. So it is necessary to
apply proper policies to avoid these problems.
 Increasing Productions and export – An implement of import duty is not useful for
long time while facing the international competition. Because if India increase import
duty, other countries increase their grants. So we have to increase our production and
export.
 Planning of Production - It is not good to increase crops only because we get good
prices. But it is necessary to plan the growing of crops so that the prices of good
produced will not reduce.

Conclusion:
India is involved in the global flow. It is necessary to try for increase the share of agricultural
product in exports. It is important to study the problems in the field of agriculture and avoid
them. For example, irregular and insufficient supply of electricity, lack of basic services,
decrease in production, lack of planning in growing crops, lack of finance, dependence of
rain etc. various remedies are to be made for getting proper prices to the products. Processing

9|Page
industries are developed to process on agricultural goods. Farmers should be given training
and guidance to start agricultural relating industries. If these remedies are made then Indian
Agricultural can excite in the globalization.

REFERENCES:
1. Dr. Somasekhar, K., “Impact of Globalisation on Indian Agriculture & Challenges –
A Critical Review., International Journal of Arts Commerce and Literature, Vol 1
Issue 20 February 2013, ISSN 2320–4370.
2. Chandan Sen Gupta, “Conceptualizing Globalization”, Economic and
PoliticalWeekly, August 18, 2001.
3. Thakur, K.S, “Indian Economy after Globalization”, Third concept, June, 1997.
4. Verma, Jag Mohan Singh, “Globalization and Economic Reforms in India”, Third
concept, April, 2001.
5. Narasimha Rao and Anjaiah, “Impact of Globalization on India Agricutlure” in ed.
Vol. Rural Development in India A multidisciplinary Analysis, serials publications,
New Delhi.2005.
6. Yadav, S. S. (2001), "WTO and Its Impact on Indian Agriculture", Yojana, Vol. 45.
7. Kaushik, Sanjay., Bhardawaj Sunil and Rajiv Goyal,“Globalization and Its Impact on
Indian Agriculture in India, International Journal of Advanced Research in
Management and Social Sciences, Vol. 2, No. 1, January 2013,ISSN:2278-6236.
8. Dr.More, Jayaram Budho.,Impact of Globalization on Agriculture, International
Referred Research Journal ISSN-0974-2832 VOL. I ISSUE-17 RNI:
RAJBIL/2009/29954.
9. www.hindustantimes.com
10. www.gradestack.com
11. www.academia.edu
12. www.indiabudget.nic.in
13. Economic Survey 2012-13

10 | P a g e