[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...
[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...
[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...
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V. Shunmugam D.G. Prasad<br />
Chief Economist<br />
Economist<br />
Multi Commodity Exchange Of India Ltd., Mumbai<br />
Commodity Futures: A Catalyst For<br />
Agricultural Development<br />
“Everything else can wait but<br />
not agriculture.”<br />
-Pandit Jawaharlal Nehru<br />
Historically, India has been considered<br />
an agrarian society;<br />
the fact that the basics of our<br />
culture and lifestyle have been derived<br />
from it stands testimony to our historical<br />
dependence on agriculture. Of late, the<br />
relative share of agriculture during early<br />
1990s declined significantly due to its<br />
sagging growth and leaping progress in<br />
the other sectors. Currently, services<br />
sector had become the largest contributor<br />
to the GDP and the agriculture sector<br />
had become the least contributor<br />
with its share of below 20 percent. <strong>The</strong><br />
reality is India cannot afford to neglect<br />
the agriculture sector and back pedal on<br />
reforms related to this sector with about<br />
two thirds of its population still directly<br />
or indirectly dependent on it, especially<br />
with apparent imbalances in the commodities<br />
economy making the policy<br />
choices narrow for the decision makers.<br />
At this point in time the high agricultural<br />
commodities prices combined with<br />
poor supply chain efficiency in the country<br />
affecting all sections of the society<br />
especially with the common man bearing<br />
the brunt of it. Despite the reports<br />
of high commodity prices at the retail<br />
end, farmers today are still complaining<br />
about stagnant prices at the market they<br />
sell. This could lead to the risk of many<br />
shifting their profession, often abandoning<br />
farming activities.<br />
Agrarian Challenges<br />
At the current situation of limited availability<br />
of resources, the country, indeed,<br />
requires a paradigm change from increase<br />
in production to improvement in<br />
the input-use efficiency, to enhance our<br />
competency in the agriculture sector.<br />
Given the current constraints of poor<br />
realization from agriculture and hence<br />
their poor investment in technology and<br />
lack of investment in infrastructure<br />
leading to the operation of a vicious cycle<br />
in the farming sector. This is not to<br />
say that those who command resources<br />
for example the large landholders were<br />
able to overcome the operation of this<br />
vicious cycle with their sheer bargaining<br />
102<br />
THE <strong>IIPM</strong> THINK TANK