In this brief, the authors suggest five areas for action to put rural India on a higher growth trajectory that would cut hunger, malnutrition, and unemployment at a much faster pace than has been the case so far. The five areas for action are interlinked and would best work if pursued in conjunction. The authors emphasize investments with a human face that include and reach out to the rural poor and a reorientation of subsidies toward such investments:
- India should increase investments in rural infrastructure including transport and information technology that connects villages) and agricultural R&D (leading to improved technologies for farmers).
- India should reorient its social safety nets to create more employment in rural areas; help strengthen the human resource base through education, nutrition, and empowerment of women; and build physical infrastructure.
- Water is going to be increasingly scarce. Investing large sums in new mega-irrigation schemes may not be the best course of action, but it is important to complete those in which a lot of money has already been invested.
- India must liberalize its marketing and trade policies to encourage vertical coordination between farms, firms, and forks (supermarkets); facilitate increased flow of rural credit, especially to smallholders, through, say, nonbanking financial intermediaries; and withdraw any special concessions in support of foodgrain policies.
- Trade liberalization in agriculture has the potential to bring rich dividends to developing countries, including India. To realize this potential, India must work toward establishing and strengthening a rules-based multilateral trading system through WTO negotiations.