1. High input Costs:
- The biggest input for farmers is seeds.
- Before liberalisation, farmers across the country had access to seeds from state government institutions.
- The institutions produced own seeds and were responsible for their quality and price.
- India’s seed market was opened up to global agri businesses.
- The deregulation of many state government institutions were closed down in 2003.
- Seed prices shot up and fake seeds made an appearance in a big way.
2. Cutback in agricultural subsidies:
- Farmers were encouraged to shift from growing a mixture of traditional crops to export oriented “cash crops” like chilli, cotton and tobacco.
- Liberalisation policies reduced the subsides on pesticide and fertilizer and elasticity.
- As a result prices have increased by 300%.
3. Reduction of import duties:
- With a view to open India’s markets, the liberalization reforms also withdrew tariffs and duties on imports.
- By 2001, India completely removed restrictions on imports of almost 1,500 items including food.
4. Paucity of credit facilities:
- The lending pattern of commercial banks, including nationalised bank drastically changed.
- As a result, loan was not easily adequate.
- This has forced the farmers to rely on moneylenders who charge exorbitant rate of interest.
