SANEI: Ongoing Studies

Agricultural Liberalisation and Rural Transformation: Implications for Rural Poverty in India

More than 64% of India’s population (of 1,027,015,247 as of March 2001) lives in the rural sector. An overwhelming majority of this population derives its livelihood from agriculture. In addition, the majority of the rural poor are also linked to the performance of the agriculture sector. Any policy shift that affects the agriculture sector is therefore likely to have significant impacts on the standard of living of the large majority of the population.

Accordingly the study focuses on the following objectives - a) assessing and estimating the impact of policy changes on the production efficiency in agriculture; b) examining the impact of policy changes on incomes; c) understanding the impact of policy changes on the nature and structure of consumption; d) estimating the impact of policy shifts on the rural labour market; e) to analyse the impact of policy changes on the crop and activity choices in rural areas; f) assessing the impact of policy changes on poverty.

The analysis is based on the data collected from 6 villages located in the tail end of the Kaveri delta in the Nagappattinam district of Tamil Nadu. These villages form 2 clusters. The distinguishing characteristic between the two clusters is the level of water stress. One cluster (which consists of 2 sample villages) has a very high degree of water stress, while the other does not. The data is a panel of 3000 households out of which 1000 are landowners. The remaining 2000 represent, the landless, tradesmen, other professionals, etc. The data was collected over a 5 year period beginning in 1995-1996 and consists of information pertaining to cost of cultivation, income, consumption, problems pertaining to marketing, irrigation, land fragmentation, local prices, etc.

The analysis will be done in two stages. The first stage focuses on the behaviour of the households and examines factors affecting crop choice, factor productivity, poverty, factors affecting poverty, nutrition, etc. The second stage addresses the village as an economic unit and involves a structural functional analysis of issues pertaining to land allocation, potential for exports, ability to evolve into more complex economic systems etc.