16
Two landmark issues which stand out as palpable causes of the
development crisis are (a) the terms of trade turning against agriculture
following the removal of quota restriction under WTO and Indian farm prices
getting aligned with the declining world prices; and (b) fiscal shocks such as
the Fifth Pay Commission recommendations in 1997 leading to cutbacks in
public expenditure on agriculture and “severely weakening the reach of critical
support institutions – notably cooperatives, seed farms and the extension
system” (Planning Commission 2008, p.6). The adverse terms of trade resulted
in stagnation in private investment in agriculture, falling area cultivated
and even slowing down of diversification (
ibid
). The latter contributed to a
sharp decline in public investment. Apart from the immediate problems
of poor monsoon and falling investment, there had been some longer-term
issues pervading the system: “Besides the demand problems, the supply side
problems are: declining public investment; failure to carry out essential reforms
to conserve water and soil; unabated degradation of natural resources, and
weakened support systems due to financial problems of state governments, i.e.,
unresponsive agricultural research, nearly broken down extension, inadequate
seeds production, distribution and regulation etc.,” (Planning Commission
2005, p.197).
Multi-Pronged Steps to Reverse the Depressing Trend: Special Drive after
2004-05
Thus, as a result of the acute need felt for multi-pronged steps to
reverse the depressing trend in agriculture, the agricultural developmental
programmes received a special drive after the
Mid-Term Appraisal of the
Tenth Five Year Plan
(2002-03 to 2006-07) which made a clinical review of the
malaise in agriculture. Therefore, “a substantial correction began to be made
in 2004-05 when the Union Budget in July 2004 increased allocations” for
various departments concerned with the development of agriculture, animal
husbandry and agricultural research and education (Planning Commission,
June 2005, p.189). These allocations were further enhanced by the Planning
Commission by 13% using its additional budgetary support to a level 45%
higher than in 2003-04 (BE)
(Ibid
). This renewed emphasis on agricultural
development got reflected in a number of specific programmes.
First, a major factor in the regaining of agricultural dynamism was
the reforming of the agricultural extension system during 2004-05, which
had otherwise broken down (Planning Commission, June 2005, p.197). The
breakdown of the extension system was due to financial stringency experienced
by the centre and states, particularly after cutbacks in public investments
