This review of Agricultural Policies in India is one of a series of reviews of national agricultural policies undertaken by the OECD’s Committee for Agriculture (CoAg). The study has been carried out by the Trade and Agriculture Directorate (TAD) of the OECD jointly with the Indian Council for Research on International Economic Relations (ICRIER). It examines the agricultural policy context and the main trends in Indian agriculture. The Review also classifies and measures the support provided to agriculture using the same method the OECD employs to monitor agricultural policies in OECD countries and a growing number of non-member economies, such as Brazil, China, Colombia, Costa Rica, Indonesia, Kazakhstan, the Philippines, Russia, South Africa, Ukraine and Viet Nam. Finally, the study includes a special chapter on the food security policy instruments used in India, with a particular attention to the Targeted Public Distribution System (TPDS). The review is the first stage in a process whereby India will be included in the annual OECD publication Agricultural Policy Monitoring and Evaluation.

India is one of the fastest growing G20 economies, largely reflecting an ambitious reform agenda under implementation since 2014. Against this background, agriculture is a key sector in terms of its contribution to both employment and GDP. Sustained by improved access to inputs such as fertilisers and seeds, as well as better irrigation and credit coverage, production has been increasing on average at about 3.6% annually since 2011. The sector has also been diversifying from grains towards pulses, fruit, vegetables and livestock products, largely driven by evolving demographics, urbanisation and changing demand patterns. India has achieved a significant fall in the proportion of the population that is undernourished, from around 24% in 1990-92 to 15% in 2014-16. Moreover, it has also emerged as a major agricultural exporter of several key commodities, currently being the largest exporter of rice globally and the second largest of cotton.

This chapter presents an overview of the performance of the agricultural and food policies currently applied in India based on the analysis conducted within this review and sets out the possible changes that will make the overall policy set “fit for purpose”; that is, a policy set capable of providing the institutions and incentives that the sector needs to meet the challenges briefly outlined below.

The chapter examines the key issues that have shaped the development of India’s agricultural sector over the last two decades. A brief overview is provided on the political, demographic, macroeconomic and social characteristics of the country. The chapter then evaluates the performance of agriculture in terms of production, productivity and trade; discusses its social impacts in terms of employment, incomes and food consumption; outlines its environmental consequences; and finally analyses structural changes in the sector, including in upstream and downstream sectors.

The chapter describes the evolution of agricultural policies in India since 2000, focusing on current policy settings and institutional structures established to implement such policies. It also presents a quantitative evaluation of support provided through India’s domestic and trade policies, based on the support indicators developed by the OECD (including, among others, the Producer Support Estimate, the Consumer Support Estimate, and Total Support Estimate).

The chapter describes the food security policy instruments used in India, with a focus on the Targeted Public Distribution System (TPDS). Scenarios developed for the purposes of this report examine what would happen over the medium term if the TPDS remains in place compared to a situation where the public grain distribution is gradually and partially replaced by cash transfers. The analysis shows that significant benefits could accrue, across many dimensions of policy performance. As India’s TPDS is also used to support producer incomes, special attention is given to what reforms are needed to ensure producer incomes do not suffer as a result of policy moves to enhance the effectiveness and efficiency of the TPDS.