Agriculture is the process of producing food for people, fodder for cattle, fiber and
many other desired products by the cultivation of certain plants and the raising of
domesticated animals (livestock). Agriculture being the maximum pursued occupation
in India Both pre and post-independence. It plays an important role in its economy.
Around 60% of the people in India depend upon agriculture for their livelihood. In fact,
about 17.4% of our GDP today is contributed by the agricultural sector. Green
revolution, ever green revolution and inventions in bio technology have made
agriculture self-sufficient and also surplus production. The export of agricultural
products such as fruits, vegetables, spices, vegetable oils, tobacco, animal skin, etc. also
add to forex earning through international trading.
1. Share in National Income
2. Largest Employment Providing Sector
3. Contribution to Capital formation
4. Providing Raw Material to agro-based industries.
5. Market for Industrial Products.
6. Food for the ever-increasing population
7. Influence on internal and external trade and commerce
8. Contribution in government budget Source of Government Revenue
9. Greater competitive advantages
10.Need of labour force.
11. Role of Agriculture in Economic Planning
Land reforms mean equitable redistribution of land with the aim of increasing
productivity and decreasing poverty. It refers to the redistribution of land from the few
who have to the many who are landless or own far too little.

Agriculture is the process of producing food for people, fodder for cattle, fiber and
many other desired products by the cultivation of certain plants and the raising of
domesticated animals (livestock). Agriculture being the maximum pursued occupation
in India Both pre and post-independence. It plays an important role in its economy.
Around 60% of the people in India depend upon agriculture for their livelihood. In fact,
about 17.4% of our GDP today is contributed by the agricultural sector. Green
revolution, ever green revolution and inventions in bio technology have made
agriculture self-sufficient and also surplus production. The export of agricultural
products such as fruits, vegetables, spices, vegetable oils, tobacco, animal skin, etc. also
add to forex earning through international trading.
1. Share in National Income
2. Largest Employment Providing Sector
3. Contribution to Capital formation
4. Providing Raw Material to agro-based industries.
5. Market for Industrial Products.
6. Food for the ever-increasing population
7. Influence on internal and external trade and commerce
8. Contribution in government budget Source of Government Revenue
9. Greater competitive advantages
10.Need of labour force.
11. Role of Agriculture in Economic Planning
Land reforms mean equitable redistribution of land with the aim of increasing
productivity and decreasing poverty. It refers to the redistribution of land from the few
who have to the many who are landless or own far too little.

Outcomes of landowning systems during the colonial era
1. Extreme peasant indebtedness due to sky-high tax rates.
2. Creation of a class of a rich few who mostly exploited the poor peasant.
3. Peasants lived in constant fear of eviction.
4. Poverty was entrenched into the farmer class.
5. Through discriminatory tariff policy, the British Government purposefully
destroyed the handicrafts.
6. Forest land encroachment and tribal evacuate from their natural occupation and
leave them with more devasted condition.
7. These systems created, at the time of independence, a class of landlords who
owned large swathes of land and 7% of the landowners owned 54% of land. In
contrast, only 6% of land was owned by 28% of land owners with marginal and
sub-marginal holding.
Land reforms refer to the regulation of ownership, operation, leasing, sales, and
inheritance of land. Land is the basis of all economic activity and for a largely agrarian
society like India; This carries a lot of import. Indian rural society is symbolised by a
rich landowning minority (zamindars/landlords) and an impoverished landless
majority (peasants). Therefore, land reforms are a vital step towards economic and
social equality. Economic reforms exposed the economy to the new and emerging
realities, such as, land acquisition and leasing, food-related issues and the agricultural
India towards the issue of land reforms—a clear three step policy looks emerging:
1. Mapping land carefully and assigning conclusive title,
2. Devising a fair but speedy process of land acquisition, and
3. Putting in place a transparent and effective land leasing policy.
Objectives of land reforms after independence
1. Redistribution of land across society so that land is not held in the hands of a few
2. Land ceiling to disburse surplus land amongst small and marginal farmers.
3. Removal of rural poverty and institutional discrepancies.

4. Abolition of intermediaries.
5. Tenancy reforms.
6. Increasing agricultural productivity.
7. Consolidation of land holdings and prevention of land fragmentation.
8. Developing cooperative farming.
9. To ensure social equality through economic parity.
10.Tribal protection by ensuring their traditional land is not taken over by
11. Land reforms were also for non-agricultural purposes like development and
1. Abolition of Intermediaries
The age-old exploitative land tenure systems of the Zamindari, Mahalwari and
Ryotwari were fully abolished. By 1956, Zamindari abolition acts were passed in many
states. As a result of this, about 30 lakh tenants and share-croppers acquired
ownership rights over a total of 62 lakh acres of land all over the country.
2. Tenancy Reforms
1) Regulation of rent
The fixed and rational rate of rent could be paid by the share-croppers to the
land owners;
2)Security of tenure
The share-cropper could feel secure about his future income and his economic
3)Ownership right
The right given to tenants so that the landless masses (i.e., the tenants, the
share-croppers) could get the final rights for the land they plough— “land to the

3. Reorganisation of Agriculture
1. Redistribution of land among the landless poor masses after promulgating
timely ceiling laws—the move failed badly with few exceptions, such as West
Bengal, Kerala and partially in Andhra Pradesh.
2. Consolidation of land could only succeed the regions of the Green Revolution
(i.e., Haryana, Punjab and western Uttar Pradesh) and remained marred with
many loopholes and corruption.
3. Cooperative farming, which has a high socio-economic moral base, was only
used by the big farmers to save their lands from the draconian ceiling laws.
4. The National Land Records Modernisation Programme (NLRMP), started in
2008, aims at updating and digitising land records by the end of the Twelfth
1. Digitisation will help enormously in lowering the costs of land transactions,
eliminate legal uncertainty and intermediary.
2. Easier and quicker land transaction will help medium and small enterprises.
3. Prohibitor land leasing norms raises the cost to rural-urban migration, as
villagers are unable to lease their land, and often have to leave the land untilled
or leave a family member behind to work on the land. Lifting these restrictions
can help the landless (or more efficient landowners) get land from those who
migrate, even while it will allow landowners with education and skills to move to
industry or services.
4. Compulsory registration of leaseholds and of the owner’s title would provide
tenants and landowners protection. For such a leasing market to take off, owners
should be confident that long-term tenancy would not lead to their losing
ownership. With a vibrant leasing market, and clear title, there should be little
reason for not strengthening ownership rights.
5. For large projects with a public purpose, such as the National Industrial and
Manufacturing Zones, which will facilitate the setting up of small and medium
enterprises, large-scale land acquisition may be necessary.

Drawbacks of land reforms
1. Unlike other countries Land in India is considered a symbol of social prestige,
status and identity.
2. Lack of political will which was required to affect land reforms and make it a
successful programme.
3. Rampant corruption in public life, political hypocricy and leadership failure
4. There are still many small and marginal farmers in India who pray to the
clutches of moneylenders and continue to remain indebted.
5. Rural poverty still exists.
6. Land ceiling varies from state to state.
7. Many plantations were exempt from land ceiling act.
8. Many people own huge tracts of land under ‘benami’ names.
Land reforms also include agrarian reforms which deal with measures to improve the
productivity of land especially agricultural land. This includes the Green Revolution.
To fix the various loopholes in the land reforms, the recommendations of the Central
Land Reforms Committee were implemented.
1. The ceiling was lowered according to the crop pattern. It was brought to 54 acres
for inferior dry land.
2. For purposes of law, family of five was made one unit.
3. Land distribution was given priority particularly to the landless peasants, SC and
ST communities.
Current scenario:
The government was responsible for the acquisition of land which it did under the
Land Acquisition Act of 1894. This law, being archaic and inadequate to address
farmers’ concerns was replaced by the Right to Fair Compensation and Transparency
in land Acquisition, Rehabilitation and Resettlement Act of 2013. In 2015, the
government proposed a few amendments to the law and introduced the Right to Fair
Compensation and Transparency in land Acquisition, Rehabilitation and Resettlement
(Amendment) Bill of 2015, which came into effect as an ordinance.

The following points highlight the top ten features of New agricultural strategy of India.
They are:
1. Consolidation of land holdings and Development of agricultural land,
2. Improved Variety of Seeds, mechanization, manures and use of HYV seeds.
3. Greater Intensity of Cropping
4. Extension of Irrigation
5. Modern Farm Machinery
6. Role of Public Institutions
7. Package of Inputs
8. Guaranteed Minimum Prices
9. Agricultural Research and Education
10.Plant Protection Measures.
The term Green Revolution refers to the technological breakthrough in of agricultural
practices. During 1960’s the traditional agricultural practices were gradually replaced
by modern technology and agricultural practices in India. Initially the new technology
was tried in 1960-61 as a pilot project in seven districts. It was called as the High
Yielding Varieties Programme (HYVP).
1. The HYV Seeds: These seeds were popularly called the ‘dwarf’ variety of seeds.
These seeds were non-photosynthetic, hence non-dependent on sun rays for targeted
2. The Chemical Fertilizers: The seeds were to increase productivity provided they
got sufficient level of nutrients from the land. a high concentration fertilisers, were
required, which could be given to the targeted seed only— the only option was the
chemical fertilisers—urea (N), phosphate (P) and potash (K).
3. The Irrigation: For controlled growth of crops and adequate dilution of fertilizers,
a controlled means of water supply was required. It made two important
compulsions—firstly, the area of such crops should be at least free of flooding and
secondly, artificial water supply should be developed.

4. Credit, Storage, Marketing/Distribution: For farmers to be capable of using
the new and the costlier inputs of the Green Revolution, availability of easy and
cheaper credit was a must. Green Revolution with softer loans coming from the
World Bank—India being the biggest beneficiary.
Achievement of Green Revolution
1. The major achievement of the new strategy was to boost the production of major
cereals viz., wheat and rice. India was depending on the US for the food grain.
The US by using Public Law exported wheat to India. Indians were waiting for
the ships to sip their food. On the other hand, India lost lots of minerals. The US
could strategically exploit Indian mineral resources at cheapest price for
manufacturing missiles and weapons, which gave job opportunity for larger US
youth and largely contributed to US GDP. But now India is food surplus,
exporting food grains to the European countries.
2. The Green revolution was confined only to High Yielding Varieties (HYV)
cereals, mainly rice, wheat, maize and jowar.
3. This Strategy was mainly directed to increase the production of commercial
crops or cash crops such as sugarcane, cotton, jute, oilseeds and potatoes.
4. Per hectare productivity of all crops had increased due to better seeds.
5. Green Revolution had positive effect on development of industries, which
manufactured agricultural tools like tractors, engines, threshers and pumping
6. Green Revolution had brought prosperity to rural people. Increased production
had generated employment opportunities for rural masses. Due to this, their
standard of living had increased.
7. Due to multiple cropping and more use of chemical fertilizers, the demand for
labour increased.
8. Financial resources were provided by banks and co-operative societies. These
banks provided loans to farmer on easy terms. The New Agricultural strategy
was also called by various names. Modern agricultural technology, seed –
fertilizer – water technology, or simply green revolution.

Weaknesses of Green Revolution
1. Indian Agriculture was still a gamble of the monsoons.
2. This strategy needed heavy investment in seeds, fertilizers, pesticides and water.
3. The income gap between large, marginal and small farmers had increased. Gap
between irrigated and rain fed areas had widened.
4. Except in Punjab, and to some extent in Haryana, farm mechanization had
created widespread unemployment among agricultural labourers in the rural
5. Larger chemical use and inorganic materials reduced the soil fertility and spoiled
human health. Now organic farming is encouraged.
Second Green Revolution
The Government of India had implemented ‘Second Green revolution’ to achieve
higher agricultural growth. The target of Second Green Revolution was to increase 400
million tons of food grain production as against about 214 million tons in 2006-07.
This is to be achieved by 2020. In agricultural sector, the growth rate of 5% to 6% has
to be maintained over next 15 years. There may be changes in these statistics.
Requirements of Second Green revolution:
1. Introduction of Genetically Modified (GM) seeds which double the per acreage
production. Contribution of private sector to market the usage of GM foods.
2. Government can play a key role in expediting irrigation schemes and managing
water resources.
3. Linking of rivers to transfer surplus water to deficient areas.
1. Minimum support price
MSP is the minimum price paid to the farmers for procuring food crops.MSP is
announced by the Government at the beginning of the sowing season. They are
recommended by the Commission for Agricultural Costs and Prices (CACP) and
approved by Cabinet Committee on Economic Affairs. For calculating MSP, the
CACP considers factors such as cost of production, change in input prices, market
price trends, demand and supply.

2. Minimum Export Price
MEP involves “fixing a floor price” below which an exporter shall not sell the
product to an overseas customer. Usually imposed on commodities such as “onion
and basmati rice”, it hopes to restrict export volumes, curtail domestic prices and
enhance forex earnings. While the government fixes a MEP from time to time.
3. Market Intervention Price Scheme
Market Intervention Price Scheme (MIP) is a price support mechanism
implemented by central government on request of State Governments for
procurement of perishable and horticultural commodities in the event of a fall in
market prices.
4. Buffer Stocks Operations
The government maintains buffer stocks of Food grains (rice/ wheat) and other
commodities (pulses) procured by its agencies via MSP or other procurement
schemes to check sudden price rise of commodities and any such other
5. Public Distribution System
The Distribution of subsidized food to poor Indian is at the core of India’s food
security system. It is operated through the TPDS and managed by the FCI, which is
also responsible for procurement and buffer stocks of grains.
The Public Distribution System (PDS) evolved as a system of management of scarcity
through distribution of food grains at affordable prices. Over the years, PDS has
become an important part of Government’s policy for management of food economy in
the country.
Working under:
1. PDS is operated under the joint responsibility of the Central and the State
Governments. The Central Government, through Food Corporation of India (FCI),
has assumed the responsibility for procurement, storage, transportation and bulk
allocation of food grains to the State Governments. The operational responsibility

including allocation within State, identification of eligible families, issue of Ration
Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with
the State Governments.
2. Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene
are being allocated to the States/UTs for distribution. Some States/UTs also
distribute additional items of mass consumption through the PDS outlets such as
pulses, edible oils, iodized salt, spices, etc
PDS in 1960s
Public distribution of essential commodities was in existence in India during the interwar period. However, PDS, with its focus on distribution of food grains in urban
scarcity areas, had emanated from the critical food shortages of 1960s. PDS had
substantially contributed to the containment of rise in food grains prices and ensured
access of food to urban consumers. As the national agricultural production had grown
in the aftermath of Green Revolution, the outreach of PDS was extended to tribal
blocks and areas of high incidence of poverty in the 1970s and 1980s.
Revamped Public Distribution System (RPDS)
The Revamped Public Distribution System (RPDS) was launched in June, 1992 with a
view to strengthen and streamline the PDS as well as to improve its reach in the farflung, hilly, remote and inaccessible areas where a substantial section of the poor live.
It covered 1775 blocks wherein area specific programmes such as the Drought Prone
Area Programme (DPAP), Integrated Tribal Development Projects (ITDP), Desert
Development Programme (DDP) were being implemented and in certain Designated
Hill Areas (DHA) which were identified in consultation with State Governments for
special focus.
Food grains for distribution in RPDS areas were issued to the States at 50 paise below
the Central Issue Price. The scale of issue was up to 20 kg per card. The RPDS included
area approach for ensuring effective reach of the PDS commodities, their delivery by
State Governments at the doorstep of FPSs in the identified areas, additional ration
cards to the left out families, infrastructure requirements like additional Fair Price

Shops, storage capacity etc. and additional commodities such as tea, salt, pulses, soap,
etc. for distribution through PDS outlets.
Targeted Public Distribution System (TPDS)
1. In June, 1997, the Government of India launched the Targeted Public
Distribution System (TPDS) with focus on the poor. Under the PDS, States were
required to formulate and implement foolproof arrangements for identification
of the poor for delivery of food grains and for its distribution in a transparent
and accountable manner at the FPS level.
2. The scheme, when introduced, was intended to benefit about 6 crore poor
families for whom a quantity of about 72 lakh tonnes of food grains was
earmarked annually.
3. The quantum of food grains in excess of the requirement of Below Poverty Line
(BPL) families was provided to the State as ‘transitory allocation’ for which a
quantum of 103 lakh tonnes of food grains was earmarked annually. Over and
above the TPDS allocation, additional allocation to States was also given. The
transitory allocation was intended for continuation of benefit of subsidized food
grains to the population Above the Poverty Line (APL) as any sudden withdrawal
of benefits existing under PDS from them was not considered desirable. The
transitory allocation was issued at prices, which were subsidized but were higher
than the prices for the BPL quota of food grains.
4. Keeping in view the consensus on increasing the allocation of food grains to BPL
families, and to better target the food subsidy, Government of India increased
the allocation to BPL families from 10 kg to 20 kg of food grains per family per
month at 50% of the economic cost and allocation to APL families at economic
cost w.e.f. 1.4.2000.
Antyodaya Anna Yojana (Aay)
To make Targeted PDS more effective the Government had launched the Antyodaya
Anna Yojana in December 2000.The objective of the scheme was to identify the
poorest households among the BPL category and to provide each of them with the

Total 25 kg of food grains per month @ fixed price of ₹2 per kg for Wheat and ₹3 Per
kg for Rice. Individuals in the following priority groups are entitled to an AAY card,
1. Landless agricultural labourers.
2. Marginal farmers.
3. Rural artisans/craftsmen such as potters and tanners.
4. Slum dwellers.
5. Persons earning their livelihood on a daily basis in the informal sector such as
porters, rickshaw pullers, cobblers.
6. Destitute, households headed by widows or terminally ill persons, disabled
persons, persons aged 60 years or more with no assured means of subsistence,
and all primitive tribal households.
Grievance Redressal Mechanism and Monitoring
1. Grievance Redressal Mechanism:
Section 14 of the NFSA provides that every State Government shall put in place an
internal grievance redressal mechanism which may include call centres, help lines,
designation of nodal officers, or such other mechanism as may be prescribed.
2. District Grievance Redressal Officer:
Section 15 provides for a District Grievance Redressal Officer for expeditious and
effective redressal of grievances of the aggrieved persons in matters relating to
distribution of entitled food grains or meals and to enforce the entitlements under
this Act.
3. State Food Commission:
Sections 16 of the NFSA (2013) provide that every State Government shall, by
notification, constitute a State Food Commission for the purpose of monitoring and
review of implementation of the NFSA. The State Commission shall monitor and
evaluate the implementation of this Act, in relation to the State.
4. Social Audits:
Section 28 provides that every local authority, or any other authority or body, as
may be authorized by the State Government, shall conduct or cause to be

conducted, periodic social audits on the functioning of fair price shops, Targeted
Public Distribution System and other welfare schemes, and cause to publicise its
findings and take necessary action, in such manner as may be prescribed by the
State Government.
5. Vigilance Committees:
The NFSA-2013 provides that for ensuring transparency and proper functioning of
the Targeted Public Distribution System and accountability of the functionaries in
such system, every State Government shall set up Vigilance Committees as
specified in the Public Distribution System (Control) Order, 2001, made under the
Essential Commodities Act, 1995, as amended from time to time, at the State,
District, Block and fair price shop levels consisting of such persons, as may be
prescribed by the State Government giving due representation to the local
authorities, the Scheduled Castes, the Scheduled Tribes, women and destitute
persons or persons with disability. The Vigilance Committees are required to
regularly supervise the implementation of all schemes under this Act, inform the
District Grievance Redressal Officer, in writing, of any violation of the provisions of
this Act; and inform the District Grievance Redressal Officer, in writing, of any
malpractice or misappropriation of funds found by it.
Key Objectives
1. Implementation of nation-wide portability of ration cards to lift food
grains from any fair price shop (FPS) across the country, moving towards ‘one
nation one ration card’.
2. Creation of national level data repository- for de-duplication of beneficiary
data (Aadhaar based).
3. Use of advanced data analytics techniques to bring about continuous
1. It will bring more transparency and efficiency in the distribution of
food grains.

2. It will improve the mechanism to identify fake/duplicate ration
cards and provide the option to PDS beneficiaries to lift their entitled food
grains from the Fair Price Shops of their choice at the national level.
3. The scheme will ensure food security of migrant labourers who move to
other states to seek better job opportunities.
1. It provides food security to poor people of India.
2. It helps in alleviating the poverty level of India.
3. It ensures that no person dies because of hunger.
4. It helps in stabilizing food prices.
5. It ensures the availability of food at affordable and subsidized rates.
Limitations of Public Distribution System:
The problems of Public Distribution System have not been undeviating in the nation.
In some states, the administration is weak and dishonest. In these states, deficiencies
regarding huge shortage of stocks, fake supply entries in ration cards, diversion of
commodities for sale to open market and bogus ration cards are recorded. Public
Distribution System suffers from irregular and poor quality of food grain made
available through Fair Price Shops.
In general, the public distribution system has following limitations.
1. Identification of poor by the states is not fool proof. A large number of poor and
needy persons are left out and a lot of fake cards are also issued.
2. Fair Price Shop owner gets fake Ration cards and sell the food grains in the open
3. People do not get the permitted amount of food grains from the Fair price shop.
4. Diversion of Food grains by Fair Price Shops holder and mediator.
5. Many times, good quality food grains are replaced with poor quality cheap food
6. Public distribution system includes only few food grains such as wheat and rice,
it does not fulfil the requirement of complete nutrition.

7. Uneven distribution of Food generations, procurement and distribution. For
example: north eastern states are very far from Punjab and Haryana, from where
wheat is procured. To transport food grains from Punjab to far flung areas in
North east will entail cost and time both.
A subsidy is a benefit given to an individual, business, or institution, usually by the
government. It is usually in the form of a cash payment or a tax reduction. The subsidy
is typically given to remove some type of burden, and it is often considered to be in the
overall interest of the public, given to promote a social good or an economic policy.
Types of subsidies
Agriculture subsidies can also be categorized into direct and indirect farm subsidies
taking account the policy instruments used in providing them.
1.Direct subsidies
Direct subsidies paid direct cash incentives to the farmer. It makes their products more
competitive in the global market. Direct subsidies help to provide the right level of
purchasing power to the farmer and significantly raise the standard of living of the
rural poor. Also check misuse of public funds.
A) Agricultural Subsidy:
Initial year of independence agriculture was totally primitive with small and
fragmented land holdings and India was facing actuate shortage of food grains so to
meet the deficiency of food grains India traditional agriculture to modern technologies.
Agriculture subsidies refer to the governmental financial support paid to the farmers
and agribusinesses to reduce their input expenditures and supplement their income.
Aim of subsidies are two – one is to keep cost of the food grains at minimum and
avoiding food inflation, second is to ensure income security of the farmer. While this
policy has helped a lot to secure food sufficiency, yet it has many unintended negative

B) Food Subsidy
In fulfilling its obligation towards distributive justice, the Government incurs food
subsidies and provision of minimum nutritional support to the poor through
subsidized food grains and ensuring price stability in different states are the
twin objectives of the food security system. Food subsidy is provided to distribute
wheat and rice to the poor and also maintain a buffer stock; the difference between
economic cost of food grains and the issue price is reimbursed to FCI.
2.Indirect subsides
The farm subsidies which are provided in the form of cheaper credit facilities, farm
loan waiver, reduction in irrigation and electricity bills, fertilizers, seeds and pesticides
etc. these subsidies are provided to make farm product more competitive in the global
market. India spends roughly 2% of the GDP in Indirect Subsidies.
Input Subsidies:
Subsidies can be granted through distribution of inputs at prices that are less than the
standard market price for these inputs. The magnitude of subsidies will therefore be
equal to the difference between the two prices for per unit of input distributed.
Naturally several varieties of subsidies can be named in this category.
Fertiliser Subsidy
Distribution of cheap chemical or non-chemical fertilisers among the farmers. It
amounts to the difference between price paid to manufacturer of fertiliser (domestic or
foreign) and price, received from farmers.
Nutrient Based Subsidy
This was introduced in 2010 with objective to promote balanced use of fertilizers and to
limit fertilizer subsidy of the government. Idea was to fix subsidy as per nutrients (in
per Kg) in the fertilizer and leave the determination of price to suppliers. Presently
Urea is not covered under the scheme due to political compulsions. On the other hand,
Potassium and Phosphorous are covered under the scheme and a fixed subsidy as per
content of nutrients is given to suppliers and they change Maximum Retail Price as per
market signals. Secondary and Micronutrients are also covered under the scheme.

Power Subsidy
Electricity is required to draw the groundwater thus Government provides a subsidy
which is equal to the difference between the price paid by the farmer for the usage of
electricity and the actual cost of generating the electricity. As 70 % of countries
agricultural land is Rainfed electricity becomes main input in agricultural produce.
Credit Subsidy
Availability of credit is a major problem for poor farmers as they are cash strapped and
cannot approach the credit market because they do not have the collateral needed
for loans and thus to carry out production activities, they approach the local money
lenders, which leads to their exploitation. Credit subsidy is the difference between
interest charged from the farmer and actual cost of providing credit, some example
include-govt providing interest subsidy on short term crop loans, cost on writing off
bad loans etc.
Infrastructure Subsidy
Transportation facilities, storage facilities, power, information about the market, etc
are important for carrying out production and sale operations, individual efforts to
construct such basic infrastructure are not viable due to long gestation period of
infrastructure projects, thus cost of such Public goods is taken care of by Government.
Advantages of Farm Subsidies
1. Subsidies help in maintaining sustained flow of inputs like fertilizer, irrigation,
electricity, hybrid seeds at reasonable prices to the small and marginal farmers
and at the same time helps in generating employment in the farm sector.
2. Subsidies help farmers from any unusual price shocks.
Issues with Farm Subsidies in India
1. Overutilization of fertilizers in the Green Revolution area (Punjab,
Haryana) due to subsidised agriculture has led to unbalanced NPK Ratio,
increased salinity and reduced fertility of the soil.
2. Farmers in India are incentivized to dedicate more land and water to subsidized
crops (wheat, rice, sugar, etc.) desired by the government and this leads to less

production and higher prices for other items (fruits, vegetables, etc) that
consumers also want to purchase.
3. Unsustainable fiscal deficit- Subsidies are paid at the cost of development
4. Subsidies distort cropping pattern as well.
5. Fertiliser subsidy primarily benefits the fertiliser producers and big farmers.
6. Subsidies reduce the incentive to improve, thus encourage inefficiency.
The FAO, 2018, Food security exists when all people, at all times, have physical and
economic access to sufficient, safe and nutritious food that meets their dietary needs
and to ensure an active and healthy life. The timely availability and affordability of food
are critical for a developing country like India.
Food Security:
The Global Food Security Index (GFSI), 2018considered four core issues of food
1. Affordability,
2. Availability,
3. Quality & safety and
4. Natural resources and resilience.
Its major goal is to assess in a timely manner which countries are most and least
vulnerable to food insecurity. India ranks No.1in Nutritional standards. However,
overall India ranks 76 out of 113 countries.
Food security challenges
1. low GDP per capita,
2. sufficiency of supply,
3. public expenditure on R&D and
4. protein quality.

The measures to ensure food security:
1. Announcing Minimum Support Prices and Central Issue Price.
2. Undertake procurement of food grains through FCI and decentralised
procurement by State Agencies.
3. Maintain buffer stocks.
4. Open market sale of wheat and rice to check inflation.
Issues with MSP and food procurement include:
1. In various states like Punjab, Haryana, Chhattisgarh etc. where MSP
procurement is well established, there arise problems in storage of food grains.
Hence, the government tries to liquidate excess stocks through open market sale
to bulk buyers above the reserve price, which equals the MSP plus the
procurement cost. But bulk buyers prefer wheat over rice.
2. The Exports of food grains by FCI at prices lower than the reserve price would
effectively imply and export subsidy. Moreover, this would expose India to
disputes in the multilateral trade framework.
3. In majority of the states, farmers are unaware of the MSP announcement before
the sowing season. In certain cases, though aware of the MSP, the absence of
procurement centres in the villages, transportation costs, reluctance of mill
owners to buy small quantities from the farmers remain stumbling blocks.
Recent measures
1. MSP and Food grains Procurement:
The Minimum Support Price (MSP) is announced for 22 crops before the sowing
season. In 2018-19, the government raised the MSP of both kharif and rabi crops
to ensure a return of atleast 50 per cent above the cost of production to enhance
farmers’ income.
2. Doubling farmers income 2022
3. Agriculture export policy

Food Subsidy:
Food subsidy comprises of two main components:
1. The first component includes subsidy provided to the Food Corporation of India
(FCI) for procurement and distribution of wheat and rice under the National Food
Security Act (NFSA), 2013 and other welfare schemes and for maintaining the
buffer stock of food grains as a measure of food security.
2. The second component comprises subsidy provided to States undertaking
decentralized procurement. For sustainability of food security operations, the
issue of burgeoning food subsidy bill needs to be addressed.
Computerization of Targeted Public Distribution System (TPDS):
The TPDS is operated under the joint responsibility of the Central and State/UT
Governments. The Central Government is responsible for procurement, allocation and
transportation of food grains upto the designated depots of the FCI. The State
Governments are responsible for allocation and distribution of food grains involving
identification of eligible beneficiaries/ families, issuance of ration cards to them and
supervision and monitoring of functioning of Fair Price Shops (FPSs).
Agricultural marketing covers all the activities in the movement of agricultural
products from the farms to the consumers.
Why It is needed?
Approximately 33% of the output of food grains, pulses and nearly all of the
productions of cash crops like cotton, sugarcane, oilseeds etc. are marketed as they
remain surplus after meeting the consumption needs of the farmers. The agriculture
sector produces raw materials for many of the other industries, marketing of such
commercial products assumes significance. Increased efficiency of the marketing
mechanisms would result in the distribution of products at lower prices to consumers
having a direct bearing on national income.
For a long time, a traditional market system was existent in India like Direct sale to
money lenders and traders, Rural Haats, Mandi and Co-operative marketing.

In 1928, the Royal commission has pointed out the problems of traditional marketing
such as high marketing cost, unauthorized deductions, and prevalence of various
malpractices. This led to the demand of having regulated markets in India.
Regulated Markets
The regulated market aims at the elimination of unhealthy and unscrupulous practices,
reducing market costs and providing benefits to both producers as well as the sellers in
the market. Regulated markets predominate in areas where commercial or nontraditional crops are grown. Cooperative marketing and distribution and banking are
also linked with the regulated markets.
Drawbacks of regulated markets
1. Failure to adopt new innovative market technologies and more restrictive.
2. They have not helped in exchange of market information and scrapped essential
commodities act.
3. They have restricted smooth supply of raw materials for agro producers.
4. They have restricted development of alternative form of markets.
5. They have become too monopolistic in the sense that the authorities do not
permit alternate and competitive markets in an area where there is regulated
After Independence
The post-independence period in the sixties and seventies, most of the states enacted
the Agricultural Produce Market Regulation Acts (APMR Acts). It authorized the States
to set up and regulate marketing practices in wholesale markets. The objective was to
ensure that farmers get a fair price for their produce.
Features of Apmc Act
1. The state is divided into different markets based on geography and many
principals or sub markets established in various parts of the state. Once a
particular area is declared a market area and falls under the jurisdiction of a
Market Committee, no person or agency is allowed freely to carry on wholesale
marketing activities.

2. These markets are managed by the Market Committees constituted by the State
Governments. Market Committee generally composes of 10-20 members who
are either elected or nominated by govt but elections are rare.
3. Market committee authorizes various commission agents or traders to carry out
various procurement and distribution activities related to agriculture produce.
Flaws in APMC system:
Monopoly: APMC process leads to monopolization because:
1. The Market committee authorize many commission agents or traders in market
area to undertaken various activities in APMCs.
2. Now farmers have to sell their agriculture produce only to these commission
agents either through personal relations or through process of auctions.
3. Generally, these agents come together and form cartels to procure produce not
above a specified price, ultimately increase their own profits while reducing the
farmer’s one.
4. The wholesalers and retailers have to buy agriculture produce from only these
agents or traders. Again, they adopt the technique of cartelization to sell the
produce to wholesalers.
The centre set up Shankar Guru Committee in 2001 and also set up an inter-ministerial
expert group to review the system of regulated markets. Consequently, the interministerial task force on agricultural marketing reforms (2002) recommended the
APMC Act be amended to allow for direct marketing and the establishment of
agricultural markets by the private and co-operative sector to provide more efficient
marketing and creating an environment conducive to private investment.
Model APMC Act 2003 – Salient features:
1. It provides for direct sale of farm produce to contract farming sponsors.
2. It provides a provision for setting up “Special markets” for “specified agricultural
3. It permits private persons, farmers and consumers to establish new markets for
agricultural produce in any area.
4. Every market shall levy market fee on sale or purchase of agriculture
commodities which brought from within or outside state.

5. Replaces licensing with registrations of market functionaries and trade at any
market area within state.
APMC have been made specifically responsible for:
1. Ensuring complete transparency in pricing system and transactions taking place
in market area;
2. Providing market-led extension services to farmers;
3. Ensuring payment for agricultural produce sold by farmers on the same day;
4. Promoting agricultural processing including activities for value addition in
agricultural produce;
5. Publicizing data on arrivals and rates of agricultural produce brought into the
market area for sale;
6. Setup and promote public private partnership in the management of agricultural
Many of the states have partially adopted the provisions of the model APMC Act and
amended their respective APMC Acts. Some of the states have not framed rules to
implement the amended provisions Some states have however adopted changes to
create greater competition within the state—popularly known as the Karnataka Model.
National Agriculture Market (NAM)
The motivation for a unified market platform can be traced to the Rashtriya e-Market
Services (ReMS), an initiative of Karnataka State Agricultural Marketing Board with
National e-Markets Limited (NeML), erstwhile National Commodity and Derivatives
Exchange (NCDEX) Spot Exchange.
Features of NAM:
1. NAM is a “virtual” market but it has a physical market (mandi) at the back end
2. NAM creates a unified market through online trading platform both, at State
and National level and promotes uniformity.
3. The NAM Portal provides a single window service for all APMC related
information and services.

4. While the material flow of agriculture produce continues to happen through
mandis, an online market reduces transaction costs and information
However, in order for a state to be part of NAM, it needs to undertake prior reforms in
respect of
1. A single license to be valid across the state.
2. Single point levy of market fee.
3. Provision for electronic auction as a mode of price discovery.
Recent Reforms:
1. The Government came out with the APLM 2017, or the Agricultural Produce and
Livestock Marketing (Promotion and Facilitation) Act. It shifted the focus from
regulation (under APMC), to promotion and facilitation (under APLM), setting the
right tone for Agri-marketing reforms.
2. Ashok Dalwai Committee Report:
1) The Dalwai Committee on Doubling Farmers’ Income in 2022 has pointed out
that the share of farmers in consumer’s price is very low; It generally varies from
15 to 40 per cent. Studies conducted by the International Food Policy Research
Institute and World Bank have confirmed this.
2) The dominant role of middlemen among others is primarily responsible for
farmers not realising a reasonable price for their produce, lowering farm income
and profitability. This was recognised by the 12th Plan’s Working Group on
Agriculture Marketing (2011).
3) The agriculture markets are crowded with middlemen and commission
agents. The commission agents in Delhi charge exorbitant fees ranging from 6
per cent to 15 per cent.
Agriculture in India is highly susceptible to risks like droughts and floods. It is
necessary to protect the farmers from natural calamities. Crop or Agriculture Insurance
covers risks of anticipated loss in yield of various crops. Crop insurance has emerged
the third largest line of business after motor insurance and health insurance following
the launch of the Pradhan Mantri Fasal Bima Yojana (PMFBY).

1. Objectives of Crop Insurance Scheme
1. To provide financial support to the farmers in the event of natural calamities,
pests and diseases.
2. To restore the credit worthiness of farmers.
3. To encourage the farmers to adopt progressive farming practices, high value
in-puts and higher technology in Agriculture.
4. Crop insurance could mitigate the risk faced by farmers.
2. Technology’s benefits for crop insurance
1. Better, fast and accurate forecast a. Satellite imagery and weather forecasting
systems, early warning to reduce loss.
2. Data collection and monitoring
i. The use of satellite, drones, mobile cameras etc to get fast and more
accurate data.
ii. Providing insurance in a region according to the data generated by soil
health card
3. Use of IOT (internet of things)
i. Soil sensors can be used to broadcast real-time information on the state
of the soil.
ii. Easy Internet access will allow farmers to learn and implement the latest
4. Improvement in financial services
i. Digitization of primary agriculture credit societies (PACs) and
connecting them through district co-operative banks for easy disbursal of
credit and insurance money.
ii. This will reduce the exclusion and delay of payments to the farmers.
3. Concerns / Challenges
1. Most of the insurance companies show very discouraging performance in
disbursal of insurance claims.
2. Problems that arise when the central and the state governments have to agree
on a subsidy sharing formula.
3. Bureaucratic hurdles in assessment of damage and disbursal of compensation.

4. Insufficient risk coverage, delayed and inaccurate claim assessment, and
5. Average awareness about crop insurance was only 38.8%.
6. Average usage of crop insurance was merely 6.7%
7. Awareness and usage varied widely across states.
Crop insurance related schemes
1915 the pre-independence era, J.S. Chakravarthi had proposed a rain insurance
scheme for the farmers with view to insuring them against drought. His scheme was
based on, what is referred to today as the ‘Area Approach’. Certain princely states like
Madras, Dewas, and Baroda, also made attempts to introduce crop insurance relief in
various forms, but with little success.
Crop insurance schemes:
Pradhan Mantri Fasal Bima Yojana
In April, 2016, the government of India had launched Pradhan Mantri Fasal
Bima Yojana (PMFBY) after rolling back the earlier insurance schemes viz. National
Agriculture Insurance Scheme (NAIS), Weather-based Crop Insurance scheme and
Modified National Agricultural Insurance Scheme (MNAIS).
Premium: It envisages a uniform premium of only 2% to be paid by farmers for
Kharif crops, and 1.5% for Rabi crops. The premium for annual commercial and
horticultural crops will be 5%.
The scheme is mandatory for farmers who have taken institutional loans from banks.
It’s optional for farmers who have not taken institutional credit.
1. Providing financial support to farmers suffering crop loss/damage arising out
of unforeseen events.
2. Stabilizing the income of farmers to ensure their continuance in farming.
3. Encouraging farmers to adopt innovative and modern agricultural practices.

4. Ensuring flow of credit to the agriculture sector which contributes to food
security, crop diversification and enhancing growth and competitiveness of
agriculture sector besides protecting farmers from production risks.
1. Labour is a measure of the work done by human beings. Labour is one of the
four factors of production that drive supply. Labour is the amount of physical,
mental, and social effort used to produce goods and services in an economy. It
supplies the expertise, manpower, and service needed to turn raw materials into
finished products and services.
2. labour is a subject in the Concurrent List under the Constitution of India. The
State Governments are also competent to enact legislations. Ministry of Labour
& Employment, one of the oldest and important Ministries of the Government of
India, is functioning to ensure that it remains focussed on improving life and
dignity of labour force of the country by protecting & safeguarding the interest of
workers, promotion of their welfare and providing social security to the labour
force both in Organized and Unorganized Sectors by enactment and
implementation of various Labour Laws, which regulate the terms and
conditions of service and employment of workers.
1. unskilled labour – They do not require adequate training to work, dailywagers,
manual workers and farm workers.
2. Semi-skilled labour – require some education or training. manufacturing
3. skilled labour- required proper training to work
4. contract labour-Contract Labour is one of the acute forms of unorganized labour.
Under the system of contract labour workers may be employed through
contractor on the contract basis. Workmen shall be deemed to be employed as
“contract labour” or in connection with the work of an establishment when he is
hired in or in connection with such work by or through a contractor, with or
without the knowledge of the principal employer.

5. A third type is slave labour. This is illegal. That’s when the worker is forced to
work for little more than room and board. Child labour is another form of slave
labour. Children don’t really have the ability to make a free choice as to whether
they will work.
In India sector wise labour force
Organised sector
The sector, which is registered with the government is called an organised sector. In
this sector, people get assured work, and the employment terms are fixed and regular.
A number of acts apply to the enterprises, schools and hospitals covered under the
organised sector. Entry into the organised sector is very difficult as proper registration
of the entity is required. The sector is regulated and taxed by the government. There
are some benefits provided to the employees working under organised sector like they
get the advantage of job security, add on benefits are provided like various allowances
and perquisites. They get a fixed monthly payment, working hours and hike on salary
at regular intervals.
Unorganised sector
The unorganised workers mostly engaged as home based workers, street vendors, midday meal workers, head loaders, brick kiln workers, cobblers, rag pickers, domestic
workers, washer men, rickshaw pullers, landless labourers, own account workers,
agricultural workers, construction workers, beedi workers, handloom workers, leather
workers, audio-visual workers and those engaged in similar other occupations, whose
monthly income is Rs 15,000/ per month or less. The Niti Aayog’s Strategy for New
India at 75, released in November 2018, said: “by some estimates, India’s informal
sector employs approximately 85% of all workers”.
Working conditions in Unorganised sector
1. The sector being virtually out of legal protections, the working conditions and
social security for informal workers are understandably poor.
2. The latest Periodic Labour Force Survey (PLFS) of 2017-18 released in May 2019
says, even among the regular wage/salaried workers in the non-agriculture

sector (of the informal sector), 71.1% had no written job contract, 54.2% were not
eligible for paid leave and 49.6% were not eligible for any social security benefit.
3. Employment in Informal Sector and Condition of Informal Employment of 2015
shows that
i. 82% of those employed in agriculture (minus crop and animal husbandry)
ii. non-agriculture sector had no written job contract,
iii. 77.3% got no paid leave and
iv. 69% were not eligible for any social security benefits.
v. They get no leave, no safety equipment, no medical facility or family
welfare support and there is no limit to their working hours. Their wages
are very low.
vi. Even after the Unorganised Workers’ Social Security Act of 2008 came in,
very few (about 5% to 6%) got enrolled for social security benefits.
4. The Minimum Wages Act of 1948 has not been effectively implemented in most
parts of the country. The Economic Survey of 2018-19 says the law does not
cover all wage workers and that “one in every three wage workers in India has
fallen through the crack”.
1. Identification of informal workers which is a massive task,
2. Mobilisation of adequate funds to provide social security and
3. setting up big official machinery, virtually at every village level, to implement the
provisions of new labour codes.
4. growing contractualism in organised sector will “not only destroy the standard of
living of workers but also destroy productivity and industrial progress”.
1.The Employees’ State Insurance (ESI) Act, 1948:
1. To reduce the rate of contribution which means All the employees in the
factories or establishments to which the Act applies shall be insured in a manner
provided by the Act.

2. It is a self-financed comprehensive social security scheme. It functions under
the Ministry of Labour & Employment. It protects the employees against
financial distress arising out of events of sickness, disablement or death due to
employment injuries. ESI provides for direct cash compensation for the above
The benefits
Medical Benefit – Full medical care to the insured person and his family members
with no ceiling on expenditure of the treatment.
Sickness Benefit – In the form of cash compensation at the rate of 70 per cent of
Maternity Benefit – For confinement/pregnancy is payable for 26 weeks, which is
extendable by further one month on medical advice.
Disablement Benefit
1. Temporary disablement benefit (TDB).
2. Permanent disablement benefit (PDB).
3. Dependants Benefit – Paid in the form of monthly payment to the dependants in
cases where death is due to employment injury or occupational hazards.
Other Benefits
1. Funeral Expenses
2. Confinement Expenses
3. Vocational Rehabilitation
4. Physical Rehabilitation
5. Old Age Medical Care
2.Shram Suvidha Portal
Shram Suvidha Portal, launched by the Government on 16.10.2014, caters to four
major Organisations under the Ministry of Labour & Employment, namely Office of
Chief Labour Commissioner (Central), Directorate General of Mines Safety, Employees’
Provident Fund Organization and Employees’ State Insurance Corporation.

The main features of the Portal are as follow:
1. Allotment of Unique Identity i.e. Labour Identification Number (LIN) for
effective, efficient and real-time governance in Labour Administration
2. To bring transparency and accountability in enforcement of labour laws through
Online Inspection System and Filing of Online Inspection Report
3. Common Online Registration and Filing of Self-Certified and Simplified Single
Online Annual Return for multiple labour laws to ease the complexity of
4. Unified ECR under EPFO/ESIC to encourage compliance by reducing
transaction costs and promoting ease of business.
3.Pradhan Mantri Shram Yogi Maan-Dhan Yojana:
PM-SYM is a voluntary and contributory pension scheme that will engage as many as
42 crore workers in the unorganised sector. Introduced by labour ministry during 2019
interim budget.
1. The unorganised sector workers, with income of less than ₹15,000 per month
and who belong to the entry age group of 18-40 years, will be eligible for the
2. Those workers should not be covered under New Pension Scheme (NPS),
Employees’ State Insurance Corporation (ESIC) scheme or Employees’
Provident Fund Organisation (EPFO).
3. He or she should not be an income tax payer.
Minimum Assured Pension: Each subscriber under the scheme will receive
minimum assured pension of ₹ 3000 per month after attaining the age of 60 years.
In case of death during receipt of pension: If the subscriber dies during the
receipt of pension, his or her spouse will be entitled to receive 50 percent of the
pension as family pension. This family pension is applicable only to spouse.
In case of death before the age of 60 years: If a beneficiary has given regular
contribution and dies before attaining the age of 60 years, his or her spouse will beentitled to continue the scheme subsequently by payment of regular contribution or
may even exit the scheme.
4.Software Application for Monitoring and Disposal, Handling of
Apprehended / Existing Industrial Dispute (SAMADHAN) Portal:
SAMADHAN is an Online Portal devised to introduce the workers to an easy w ay of
filing their dispute with the appropriate Conciliation Officer, encouraging
transparency, speedy justice and trust by workers on the Government. The system is so
designed that it would integrate all the role players (viz. Workman, Conciliation
Officer, Appropriate Government and CGITs) in the dispute under one roof i.e. on
Labour Code on Wages:
By simplifying, amalgamating and rationalizing the relevant provisions of the
Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus
Act, 1965 and the Equal Remuneration Act, 1976, The new bill which introduced in the
parliament know as New code on wage bill 2019.
5.Atal Bimit Vyakti Kalyan Yojana (ABVKY)
Under ministry of labour and unemployment
Implementing Agency: Employees’ State Insurance Corporation (ESIC).
Timeline: The Scheme has been made effective from 01-07-2018. The scheme is
implemented on pilot basis for a period of two years initially.
In case the Insured Person (IP) is rendered unemployed, the scheme provides relief to
the extent of 25% of the average per day earning during the previous four contribution
periods to be paid up to maximum 90 days of unemployment once in lifetime of the IP.
The eligibility conditions of the scheme:
1. The Insured Person should have been rendered unemployed during the period
the relief is claimed.
2. The Insured Person should have been in insurable employment for a minimum
period of two years.
3. The Insured Person should have contributed not less than 78 days during each of
the preceding four contribution periods.

4. The contingency of the unemployment should not have been as a result of any
punishment for misconduct or superannuation or voluntary retirement.
1. A web portal called ‘PENCIL’ for effective implementation of the National Child
Labour Project, (NCLP).
2. PENCIL portal: Platform for Effective Enforcement for No Child Labour an
electronic platform for no child labour in the country is being developed by the
Labour Ministry. PENCIL portal has five components
1. Child Tracking System,
2. Complaint Corner,
3. State Government,
4. National Child Labour Project
5. Convergence.
7.The National Child Labour Project
NCLP Scheme initiated in the in 1988 to rehabilitate working children by
eliminating all forms of child labour through identification and withdrawal of all
children in the Project Area from child labour, preparing children withdrawn from
work for mainstream education along with vocational training. NCLP has been revised
expanded and aligned to the new legislative provisions.
The legislative changes have been accompanied by creation of additional institutional
mechanisms at the district, state and national level for identification and rescue, along
with revamping the rehabilitation scheme and a centralized database for case to case
monitoring and accountability.
Legal Status
Our constitution has many articles directed toward their interests
1. Article 23 forbids forced labour,
2. Article 24 forbids child labour (in factories, mines and other hazardous
occupations) below age of 14 years.
3. Article 43A was inserted by 42nd amendment – directing state to take steps to
ensure worker’s participation in management of industries. (Gandhi ji said that

employers are trustees of interests of workers and they must ensure their
Rural Credit in India
1. Rural economy growth generally depends on the funds, from one interval to
another interval, to understand high-rise productivity in non-agriculture and
agriculture areas. The interval gap from sowing the seed to the understanding of
post-production revenue is comparatively long, the farmers lend money from
different fronts to match the primary investment on fertilizers, seeds, tools, and
other personal expenses.
2. Post-independence, traders and moneylenders took advantages of poor peasants
and landless workers by lending money to them on huge-interest rates and also
influencing their accounts and trap them.
3. In the year 1969, India started social banking and different agencies who could
provide funds to satisfy the requirements of rural credit. Later in the year 1982,
National Bank for Agriculture and Rural Development (NABARD) was formed as
an apex body to regulate and organize all the financial activities concerning rural
financial system. This becomes more concrete when the Green Revolution came
into begin and changed the credit system of the country, resulting in a
productive lead of rural credit.
4. Today, rural banking includes a set of various financial institutions, particularly,
regional rural banks (RRBs), cooperatives, commercial banks, Self-Help group,
and land development banks. They assign sufficient credit at cheaper interest
Types of Rural Credit
1. Short Term Loan/CreditA short term loan is one kind of rural credit that is taken to hold a brief private or
business capital requirement. It is that type of credit, that requires a borrowed
principal amount and interest percentage to be repaid at a given date, the course of
which may be maximum up to one year. A short-term loan is a worthy but

expensive option, particularly for small companies or basically for start-ups who
are still not qualified for a credit line from a bank.
2. Medium-term Loan/CreditMedium-term loans are the loans that have a repayment duration between two to
five years or less than 10 years. Medium-term loans are an excellent option for
small firms who are looking for a traditional way of credit with a set repayment
duration and anticipated amounts. The loan amount an individual receive may
differ based on cash flow, credit rating, and various other factors.
3. Long term Loan/Credit
The repayment duration of the long-term loan is usually 5 to 20 years or even more
in a few exceptional cases. In any business, long-term finance is essential, to create
permanent assets that will return over a period of time. Especially in the
Agriculture sector, long-term investment comprises of land levelling, fencing,
sinking well, permanent repairs on land, acquisition of heavy machinery such as
tractor, etc. All the long-term investments suggested above need large numbers of
funds. Although they have considerable potential to give profits in the future,
private farmers do not have their own money to make such costly investments
because either they have no savings or have very little savings.
Rural Credit is needed for the following reasons:
(1) Long Gestation Period
Gestation period between the sowing of crop and understanding of income after
agricultural produce and sale is very long. Therefore, the farmer needs to take credit.
(2) To Buy Inputs
Farmers need money to buy seeds, fertilizers, tools etc.
(3) Personal Expenses
They need money for personal expenses like marriage, death, religious ceremonies, to
repay old-debts etc.

Rural indebtedness refers to the situation of the rural people unable to repay the loan
accumulated over a period. Existence of the rural indebtedness indicates the weak
financial infrastructure of our country, in reaching the needy farmers, landless people
and the agricultural labourers. The farmers borrow loan for various purposes like
agricultural operations, supporting the family in the lean season or purchase of
equipment’s in the recent years, expenses on celebrations, liquor consumption and
medicines go on increasing without any limit. Due to lower income, the villagers are
unable to repay the loans or pay the pending interest on the principal amount.
Features of Rural Indebtedness
Nearly three fourth of rural families in the country are in debt. Most of the debts taken
are short term and of unproductive nature. The proportion of debts having higher rates
of interest is relatively high. Most of the villagers are indebted to private agencies
particularly money lenders. The amount of debt is heavier in the case of small farmers.
Cultivators are more indebted than the non-cultivators.
Causes for Rural Indebtedness
1. Poverty of Farmers: The vicious circle of poverty forces the farmers to borrow
for consumption, cultivation and celebrations. Thus, poverty, debt and high rates of
interest hold the farmer in the grip of money lenders.
2. Failure of Monsoon: Frequent failure of monsoon is a curse to the farmers and
they have to suffer due to the failure of nature. Therefore, Farmers find it difficult
to identify good years to repay their debts.
3. Litigation: Due to land disputes litigation in the court compels them to borrow
heavily. Being uneducated
and ignorant they are caught in the litigation process and dry away their savings
and resources.
4. Money Lenders and High Rate of Interest: The rate of interest charged by
the local money lenders is very high and the compounding of interest leads to
perpetuate indebtedness of the farmer.

5. Ancestral/Inherited Debt: Most of the rural debts of the present day are
inherited from the past and which increases with the passage of time. An inheritor
is liable to the repayment of the debt only to the extent of the property inherited by
6. Social and Religious Needs: Villagers are mostly bound by the social traditions
and customs, which are considered to be sacred and had to be performed. Some of
these ceremonies are marriage, births, deaths, religious occasions, etc. The
expenditure is usually very high for the performance of these ceremonies. In order
to meet these needs, the villagers take loans. As their incomes are not sufficient
enough, they are not able to repay these loans. Thus, they remain unpaid and
increase with the passage of time.
7. Backwardness of Agriculture: Indian agriculture is an uncertain business. It
virtually depends on unreliable rains for the supply of water. If there are no rains or
untimely rains, the entire crop is lost and the credit invested in the agriculture goes
waste. As a result, the loan taken for the productive purposes also becomes a
burden, leading to indebtedness of the farmers.
Measures to Remove Rural Indebtedness
Several remedial measures includes regulation of money lenders, development of rural
banks, Regional Rural Banks (RRBs), Micro Finance, formation of Self Help Groups
(SHGs), Primary Cooperative Banks and Land Development Banks, Crop Loan
Schemes, Lead Bank Schemes, Micro Units Development and Refinance Agency Bank
(MUDRA).Promotion of subsidiary occupation, off farm employment opportunities,
skill development programmes and so on. However, the interest rate charged plus
transaction cost for poor people and Self- Help Groups are much higher as compared to
that for rich people. For instance, education loan is costlier than car loans.
Regional Rural Banks (RRBs)
Regional Rural Banks came into existence based on the recommendation made by a
working group on rural banks appointed by the Government of India in 1975. RRBs are
recommended with a view to developing rural economy by providing credit and other
facilities particularly to the small and marginal farmers, agricultural labourers, artisans

and small entrepreneurs. RRBs are set up by the joint efforts of the Centre and State
Governments and commercial banks.
Micro Finance
Micro finance, also known as micro credit, is a financial service that offers loans,
savings and insurance to entrepreneurs and small business owners who do not have
access to traditional sources of capital, like banks or investors. The goal of micro
financing is to provide individuals with money to invest in themselves or their
Self-Help Groups (SHGs)
Self Help Groups are informal voluntary association of poor people, from the similar
socio-economic background, up to 20 women with (average size is 14). They come
together for the purpose of solving their common problems through self-help and
mutual help. The SHG promotes small savings among its members. They save small
amounts Rs.10 to Rs.50 a month. The savings are kept with a bank. After saving
regularly for a minimum of 6 months, they lend small amounts to their members for
interest. Based on their performance, they are linked with the bank for further
assistance under SHG Bank Linked Programme (SBLP) started in 1992. It is a holistic
programme of micro-enterprises covering all aspects of self-employment, organization
of the rural poor into self Help groups and their capacity building, planning of activity
clusters, infrastructure build up, technology, credit and marketing. The main objective
of this programme is to bring the beneficiaries above the poverty line by providing
income generating assets to them through bank credit and government subsidy.
Major Features of SHGs are
1. SHG is generally an economically homogeneous group formed through a process
of self-selection based upon the affinity of its members.
2. Most SHGs are women’s groups with membership ranging between 10 and 20.
3. SHGs have well-defined rules and by-laws, hold regular meetings and maintain
records and savings and credit discipline.
4. SHGs are self-managed institutions characterized by participatory and collective
decision making.

Mudra bank:
It is a public sector financial institution which provides loans at low rates to
microfinance institutions and non-banking financial institutions which then provide
credit to Micro, Small and Medium Enterprises (MSMEs). It was launched on 8th April
The principal objectives of the Mudra bank
1. Regulate the lender and the borrower of microfinance and bring stability to the
microfinance system.
2. Extend finance and credit support to Microfinance Institutions (MFI) and
agencies that lend money to small businesses, retailers, self-help groups and
3. Register all MFIs and introduce a system of performance rating and
accreditation for the first time.
4. Offer a Credit Guarantee scheme for providing guarantees to loans being offered
to micro businesses.
5. Introduce appropriate technologies to assist in the process of efficient lending,
borrowing and monitoring of distributed capital.
World Trade Organization
The WTO was established in 1995 as a successor to the GATT. It is a new international
organization set up as a permanent body and is designed to play the role of watch dog
in the spheres of trade in goods and services, foreign investment and intellectual
property rights. The Dunkel Draft, formulated by Arthur Dunkel, its Secretary General
became the base for WTO. Every two years, the member countries’ Commerce
Ministers Conference are being organized to discuss and settle the important souls and
trade related matters.
Objectives of WTO
The basic aim is to expand international trade and bring about economic prosperity by
liberalizing trade restrictions.
1. To ensure reduction of tariff and other barriers.
2. To eliminate discrimination in trade.

3. To facilitate higher standard of living.
4. To facilitate optimal use of world’s resources.
5. To enable the LDCs to secure fair share in the growth of international trade.
6. To ensure linkages between trade policies, environmental policies and
sustainable development.
WTO Agreements
Agreement on Trade Related Intellectual Property Rights (TRIPs)
Intellectual Property Rights include copy right, trademarks, patents, geographical
indications, trade secrets, industrial designs, etc. TRIPS Agreement provides for
granting product patents instead of process patents. The period of protection will be 20
years for patents, 50 years for copy rights, 7 years for trade marks and 10 years for
layout designs. As a result of TRIPS, the dependence of LDCs on advanced countries for
seeds, drugs, fertilizers and pesticides has increased. Farmers are depending on the
industrial firm for their seeds.
Agreement on Trade Related Investment Measures (TRIMs)
TRIMs are related to conditions or restrictions in respect of foreign investment in the
country. It calls for introducing equal treatment for foreign companies on par with
national companies. TRIMs were widely employed by developing countries.
Restrictions on foreign investment on following grounds are to be removed.
1. No restriction on area of investment.
2. No binding on use of local material.
2. No mandatory exports.
3. No restriction on repatriation of royalty, dividend and interest.
4. No trade balancing requirement, i.e. imports not exceeding exports.
General Agreement on Trade in Services (GATS)
1. GATS is the first multilateral set of rules covering trade in services like banking,
insurance, transportation, communication, etc., All member
2. (Most Favoured Nation) status to all other countries without any discrimination.
Transparency should be maintained by publishing all relevant laws and
regulations over services.

Agreement on Agriculture (AoA)
Agriculture was included for the first time under GATT. The important aspects of the
agreement are Tariffication, Tariff cuts and Subsidy reduction.
Dispute Settlement Body
The Disputes Settlement Body puts an end to procedural delays. It is mandatory to
settle any dispute within 18 months. The disputes are resolved through multilateral
trading system. However, India has lost a huge export earnings because of the
conditions laid out by the Body.
Functions of WTO
The following are the functions of the WTO
1. It facilitates the implementation, administration and operation of the objectives
of the Agreement and of the Multilateral Trade Agreements.
2. It provides the forum for negotiations among its members, concerning their
multilateral trade relations in matters relating to the agreements.
3. It administers the Understanding on Rules and Procedures governing the
Settlement of Disputes.
4. It cooperates with the IMF and the World Bank and its affiliated agencies with a
view to achieving greater coherence in global economic policy making.
Achievements of WTO
The major achievements of WTO are as follows
1. Use of restrictive measures for BoP problems has declined markedly;
2. Services trade has been brought into the multilateral system and many
countries, as in goods, are opening their markets for trade and investment;
3. The trade policy review mechanism has created a process of continuous
monitoring of trade policy developments.
WTO and India
India is the founding member of the WTO. India favour’s multilateral trade approach.
It enjoys MFN status and allows the same status to all other trading partners.

India benefited from WTO on following grounds:
1. By reducing tariff rates on raw materials, components and capital goods, it was
able to import more for meeting her developmental requirements. India’s
imports go on increasing.
2. India gets market access in several countries without any bilateral trade
3. Advanced technology has been obtained at cheaper cost.
5. India is in a better position to get quick redressal from the trade disputes.
6. The Indian exporters benefited from wider market information.
Trade Blocks
Some countries create business opportunities for themselves by integrating their
economies in order to avoid unnecessary competition among them. Trade blocks cover
different kinds of arrangements between or among countries for mutual benefit.
Economic integration takes the form of Free Trade Area, Customs Union, Common
Market and Economic Union.
Free trade area
It is the region encompassing a trade bloc whose member countries have signed a freetrade agreement (FTA). Such agreements involve cooperation between at least two
countries to reduce trade barriers. e.g. SAFTA, EFTA.
Customs union
It is defined as a type of trade block which is composed of a free trade area with no
tariff among members and (zero tariffs among members) with a common external
tariff. e.g. BENELUX (Belgium, Netherland and Luxembourg).
Common market
Common market is established through trade pacts. A group formed by countries
within a geographical free movement of labour and capital among its members. e.g.
European Common Market (ECM).

Economic union
Economic union is composed of a common market with a customs union. The
participant countries have both common policies on product regulation, freedom of
movement of goods, services and the factors of production and a common external
trade policy.
With the operationalization of the provisions of the World Trade Organization (WTO),
the process of globalization commenced in the major parts of the world—the nonmember countries, in the coming few years, also started negotiating for entry into the
club. The sector which has created the highest number of deliberations in the WTO as
well as views and counterviews has been agriculture an area of utmost concern for the
developed and the developing world’s alike. India is no exception to it, better say it has
been among the few countries in the world spear-heading the campaign against the
biased provisions of the WTO concerning agriculture.
The challenges
If the WTO brings high prospects for Indian agriculture, it also brings in some hardboiled challenges in front of it.
1. The first category of challenges pertains to the area of relevant preparations,
investment and restructuring of agriculture. And
2. The second category of challenges are nothing less than a revision in the very
agricultural provisions of the WTO itself (around which today revolves the
success and failure of the organisation itself).
The challenges before the Indian agriculture:
1. Self-sufficiency of Food:
Due to inflow of cheaper food grains from the world it would not remain
economically viable in India to produce them and farmers might incline in favour
of the profitable agriproducts. This will make India heavily dependent upon the
world market for its food supplies, marring its achievement of food self-sufficiency.
This will have serious political and ethical outcomes for India.

2. Price Stability:
Dependence on the world market for the supply of agricultural products and
specially for food grains will never be safe for India. As the international market for
the products is highly speculative and full of variations the price stability will be
always in danger—fluctuations hamper the producers and consumers of agri-goods
in India. It would be very tough to fight dumping of surplus agri goods from other
3. Cropping Pattern:
The cropping pattern of agriculture might take a very imbalanced shape, which will
be highly detrimental to the ecology at large as the farmers will always be in favour
of going for the crops and commodities which have comparative price advantage.
4. Weaker Sections:
The benefits of globalisation may not be neutral to areas, crops and the people.
There will never prevail a certainty as to which area/region or crops or the people
are going to benefit from globalisation in which year. At the same time
globalisation is a process where profits can be made, but it is a market based
concept. Those who are unable to produce due to lack of capital, investment and
entrepreneurship will have no gains from it. They will be net consumers or buyers.
Since India has a vast population of the weaker sections this population will neither
be able to increase its income nor be able to purchase the agri-goods having no
price stability.
5. WTO Commitments:
There are certain time-bound obligatory commitments of India towards the
provisions of the WTO in the area of agriculture, which are highly detrimental to
the people and the economy.
We may see this challenge from two angles
1. According to the agricultural provisions, the total subsidies forwarded by the
government to the sector must not cross 10 per cent of the total agricultural outputs.
At the same time, exemptions to farmers are to be withdrawn—hampering the public

distribution system badly. India’s subsidies are still far below this limit, but
commitments pose a threat to the sovereign decision making.
2. The subsidies to agriculture which are forwarded by the developed countries are
highly detrimental to Indian agriculture and they are very high, too.
The WTO comes into operation, many experts from India and abroad have provided
ways to fight these challenges, which may be summed up in the following way—
1. To fight the challenges related to self sufficiency in food, the price stability and
the cropping pattern a judicious mix of suitable kind of agricultural and trade
policies will be the need of then hour. To the extent agricultural policy is
concerned, India has a limited level of freedom. But the WTO regime does not
allow the member countries to impose higher tarrif or tarrif itself to ward off
cheaper agri-goods from entering the economy—this is the main reason behind
the above challenges. It means it is essential to modify, change or revise the
provisions of the WTO.
2. Similarly, the issue of agricultural subsidies the Boxes need to be equitably
defined so that they do not look biased. Here also the provisions of the WTO
need revision.
3. To fight out this typical challenge, experts suggested that the WTO is not Godgiven. So, the Like-minded nations who face the same kind of crises should
come together and go for a joint effort, from inside the WTO, for the revisions or
relaxations in its provisions.
Agriculture: A key issue for India in the WTO
1. The share of agriculture in the national GDP is a huge 24%
2. About 60% of population is dependent on rural economy for their livelihood.
3. Nearly 60% of cultivable land, that is about 100 million hectares out of 167
million hectares, continues to be vulnerable to the vagaries of the monsoon.
4. The yields of the crops grown in India are still very low when compared with the
yields of crops some of the other countries.

5. Agriculture and agro-based industries in rural areas play an important role in
preventing the migration of the rural population to the urban areas and thereby
reduce the burden on the already over crowded cities.
Issues of concern for India Agriculture is a major issue for India in the
WTO negotiations.
The following reasons emphasize the concerns of India:
1. The farmers in developing countries is directly linked to the level and kind of
subsidy given to the farming sector in the developed world. Exporters of
agricultural produce from developing countries face a protection of four to seven
times higher than the manufacturing sector, while exporting to developed
2. The agriculture subsidies provided by the OECD countries are more than six
times what they spend on official development assistance for developing
3. The distortions in the trade of agricultural commodities, created through the
high level of subsidies in the developed countries, shut out the potentially more
competitive agricultural products from developing countries like India.
WTO And Agricultural Subsidies Ams
1. The subsidies provided by the government to the agricultural sector (i.e.,
domestic support) is termed by the WTO as Aggregate Measure of Support
(AMS). It is calculated in terms of product and input subsidies.
2. The WTO argues that the product subsidies like minimum support prices and
input subsidies (non-product) like credit, fertilizers, irrigation and power will cut
production cost of farming and will give undue advantage to such countries in
their access to the world market—such subsidies are called to cause ‘distortions’
to the world trade. Such subsidies are not permitted in one sense as they have a
minimum permissible limit de minimis under the provisions which is 5 per cent
and 10 per cent of their total agricultural output in the case of developed and
developing countries, respectively. The agricultural subsidies, in the WTO
terminology have in general been identified by ‘boxes’ which have been given the

colours of the traffic lights—green (means permitted), amber (means slow down,
i.e., to be reduced) and red (means forbidden).
The boxes and subsidies
Market Access
All member countries should throw open their domestic market to agricultural imports
by reduction of tariffs and removal of or non-tariff barriers coountries should
Tariffication –to convert non-tariff barriers to tariffs.
Export subsidies
For export subsidy the WTO has provisions in two categories:
1. Reduction in the total budgetary support on export subsidies, and
2. Reduction in the total quantity of exports covered by the subsidy.
Higher reduction commitment for the developed countries and lower for the
developing countries are the provisions. But the developed nations forward such an
inflated support to their agricultural exports that even after the committed reductions
it will be highly price distorting against the agri-exports of the developing countries. It
is therefore opposed by the developing countries.
Green box
1. Green Box is domestic support measures that doesn’t cause trade distortion or at
most causes minimal distortion. Hence, they don’t have any reduction
commitments (non-reducible and exempt). These subsidies are government
funded without any price support to crops. They are implemented as programmes
aimed at income support to farmers without influencing (decoupled) the current
level of production and prices. Green box subsidies are therefore allowed without
limits provided they comply with relevant criteria.
2. The ‘green box’ measures are large in number. They comprise of two support
groups. The first involves public services programmes for example, research,
training, marketing, promotion, infrastructure, domestic food aid or public food
security stocks. The second involves direct payments to producers which are
fully decoupled from production.

Blue Box
Blue box supports are subsidies that are tied to programmes that limit production.
Hence it is an exemption to the general rule related to agricultural support. The Blue
box subsidies aim to limit production by imposing production quotas or requiring
farmers to set aside part of their land. It covers payments directly linked to acreage or
animal numbers (reduction). The blue box measures are exempt from reduction
Amber box
All subsidies which are supposed to distort production and trade fall into the amber
box, i.e., all agricultural subsidies except those which fall into the blue and green boxes.
These include government policies of minimum support prices for agricultural
products or any help directly related to production quantities as power, fertilizers,
pesticides, irrigation, etc. Under the WTO provisions, these subsidies are subject to
reduction commitment to their minimum level—to 5 per cent and 10 per cent for the
developed and the developing countries, respectively, of their total value of agricultural
outputs, per annum accordingly. It means, the subsidies directly related to production
promotion above the allowed level must be reduced by the countries to the prescribed
Sanitary and phytosanitary measures
The provisions of the WTO allow member countries to set their own health and safety
standards provided they are justified on scientific grounds and do not result in
arbitrary or unjustified barrier to trade. The provisions encourage use of international
standards and also include certain special and differential treatment in favour of
developing countries. Though this provision has realised the scope of unjustified kind
of health and phyto-sanitary measures on the developing countries, the developed
nations have been beautifully able to do so by validating their health and related rules
on scientific grounds. Such instances have distorted trade in favour of these countries
and the developing countries’ agriculture has been the real loser.

1. Explain the Objectives and outcome of Land reforms since independence.
2. Write about Advantages and Disadvantages of Green Revolution.
3. Describe short notes about PDS, PDS related schemes and Advantages and
Disadvantages of PDS.
4. What is food security? The Issues and Challenges associated with food security
and explain the Measures to ensure the food security?
5. What is Rural credit? Explain the causes and Measures of Rural indebtedness.

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