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Day 31 – Q 5.What further measures can be taken to liberalise the farm sector? Suggest. What would be its long term implications? Examine.

5. What further measures can be taken to liberalise the farm sector? Suggest. What would be its long term implications? Examine. 

कृषि क्षेत्र के उदारीकरण के लिए और क्या उपाय किए जा सकते हैं? सुझाव दें। इसके दीर्घकालिक प्रभाव क्या होंगे? जांच करें।


Liberalization is any process whereby a state lifts restrictions on some private individual activities. Liberalization occurs when something which used to be banned is no longer banned, or when government regulations are relaxed.


Measures taken to liberalise farm sector:

  • Infrastructure:  Infrastructure development requires public expenditure which is getting affected due to the new policies of fiscal compression. Liberalization of agriculture and open market operations will enhance competition in “resource use” and “marketing of agricultural production”, which will force the small and marginal farmers. 
  • Small and marginal farmers: Encouraging public and private investments to develop infrastructure like cold chains; special attention for north-eastern, eastern and rain-fed states for augmenting scope of access to institutional credit; and rationalisation and targeting of input subsidies towards small and marginal farmers.
  • Irrigation: The government wants to ensure that rural India gets investment, public as well as private, to the tune of Rs 25 lakh crore in five years. It also wants to bring one crore hectares of land under micro-irrigation.
  • Land consolidation: Reform in land leasing laws to promote land consolidation and contract farming; and accelerating the pace of public investment in agriculture and ensure greater efficiency in capital use.
  • Agriculture exports: Agricultural exports are playing an important role in expanding economic activities along with generating employment opportunities.
  • Food processing: To invite foreign capital into this industry the Government has permitted 51 per cent foreign equity partnership and also offered prompt approval of foreign technology transfer to the food processing industry of the country.

Long term implications:

  • Diversification of agriculture: commercial crops, horticulture, floriculture, aromatic plants, medicinal plants can be grown in large. The demand for these products has been increasing considerably. Thus, there is an ample scope for the development of agricultural sector both in terms of increased production and trade.
  • Beneficial to developing countries: The liberalization of agricultural markets will be beneficial to developing countries in the long run; it will force the adoption of new technologies, shift production functions upwards and attract new capital into the deprived sector.
  • Investment from other countries: Liberalised economic environment, efficiency and growth orientation will attract maximum attention to invest more from other countries.
  • More employment: Increasing potentiality of the agricultural sector as emerged from the liberalisation/globalisation wave has set up new trends in horticultural, floricultural and animal product and has created ample opportunities and scope for employment of huge number of population.
  • More subsidies: The volume of subsidies granted to agriculture, in respect of fertiliser, irrigation and electricity charges etc. has been increasing in our country.
  • Institutionalization of agricultural credit: The wave of liberalisation has encouraged the institutional agricultural credit. In the initial stage of post-independence period, Indian farmers were depending too much on unorganised sources of agricultural credit, i.e. on village money lenders, landlords, traders etc.


Commerce and industry ministry came out with a blueprint suggesting a host of long and short-term measures to increase the size of India’s economy to USD 5 trillion by 2025. Agriculture liberalization helps in increasing the revenue generation thus doubling the farmer’s income by 2022 according to ashok dalwai committee.

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