Correct Option
The correct option is 1 only
Explanation
The economic reforms of 1991, characterized by Liberalisation, Privatisation, and Globalisation (LPG), significantly impacted the structural composition of the Indian economy. While the reforms primarily targeted the industrial and service sectors, they had specific, often adverse, implications for the agricultural sector.
Statement-wise Analysis
- Statement 1 is Correct: During the reform period, public investment in the agriculture sector-specifically in infrastructure such as irrigation, power, roads, market linkages, and research and extension-witnessed a decline. The withdrawal of the state from active investment is considered a major reason for the stagnation and deceleration of agricultural growth during this period.
- Statement 2 is Incorrect: The reduction or removal of fertiliser subsidies led to an increase in the price of fertilisers. Consequently, the cost of production for farmers increased, rather than decreased. This severely affected small and marginal farmers.
- Statement 3 is Incorrect: The reforms introduced policy changes such as the reduction of import duties on agricultural products and the removal of minimum support prices for certain crops to align with global markets. This encouraged a shift in production from food grains for the domestic market to cash crops for the export market (e.g., cotton, jute). Thus, the shift was towards the export market, not away from it.
Key Takeaway
Key Takeaway: The 1991 economic reforms negatively impacted agriculture through reduced public investment in infrastructure and increased input costs due to subsidy cuts. Furthermore, liberalisation induced a shift in cropping patterns from domestic food security crops to export-oriented cash crops.