Long-term agricultural growth and agricultural policy in India and Pakistan

Agriculture plays important roles in economic development, such as provision of food to the nation, enlarging exports, transfer of manpower to nonagricultural sectors, contribution to capital formation, and securing markets for industrialisation. Improvement in agricultural productivity is a key to the realisation of each of these roles and where the importance of agricultural policies lies. Historical records have shown that agricultural productivity has been growing due to the introduction of modern technologies, commercialisation of agriculture, capital deepening, and factor shifts from agriculture to nonagricultural sectors.

This paper, therefore, attempts to associate long-term trends in agricultural productivity in India and Pakistan with changes in political institutions and agricultural policies.

Based on a production dataset that corresponds to the current border of India and Pakistan for the period c.1900-2000, the author investigates whether or not policy and institutional changes have significant effects on agricultural production in India and Pakistan. The author also examines the growth records of total agricultural production, changes in land productivity, and trends in crop mix indices. Through examining the growth records of agricultural production and changes in crop mix indices, the paper draws the following policy conclusions for agricultural policies:

• institutional and policy changes have significant effects on agricultural growth in India and Pakistan
• farmers respond to these changes by adopting new technology with high-yielding potentials and adjusting their land allocation toward high value crops
• the crop concentration indices were at the highest level in the 1990s both in India and in Pakistan, suggesting the effects of liberalisation/deregulation/privatisation policies in agriculture in both countries

To quantify structural determinants of these changes and net effects on the welfare of rural population, further research is still needed, such as analysis of production costs, investigation of minor crops and livestock activities, etc.