Discuss the impact of liberalization on agriculture sector in India.

The 1991 reforms were largely an industrial and trade package; agriculture was reformed indirectly and unevenly, which explains why its record is mixed.

Gains.

• Terms of trade improved in the early 1990s as industrial protection fell and the rupee was devalued, raising the relative price of farm output.
• Export opportunity after the WTO Agreement on Agriculture (1995) — India became a leading exporter of rice, and horticulture, dairy and marine products grew faster than cereals.
• Diversification towards high-value crops, and private investment in cold chains, seeds and agri-processing.

Costs.

• Public investment in agriculture fell through the 1990s as fiscal compression met an expanding subsidy bill, so the input subsidy crowded out capital formation in irrigation and research.
• Price and income volatility rose with exposure to world markets, without a corresponding risk-management system; the state responded with episodic export bans that hurt the same farmers.
• Input costs rose with decontrol of fertilizer other than urea, and institutional credit did not keep pace, deepening reliance on informal lenders.
• Agrarian distress became visible through the late 1990s, and small and marginal holdings, which are the overwhelming majority, could not capture the gains of diversification.

The political verdict. The three farm laws of 2020, which would have completed market liberalization, were repealed in 2021 after a year-long protest — evidence that the sequencing failure of the 1990s, reform without a safety net, has left liberalization in agriculture politically unfinished.