Period of Indian Economic Structural Adjustment and Assam Tea Sector

Pradyut Guha

The IUP Journal of Agricultural Economics, 2012, vol. IX, issue 1, 32-44

Abstract: India’s tea sector has been faced with serious challenges followed by internal and external developments during the last two decades or so. The depressionary trend in various respects of tea sector has been marked in Assam, which has global reputation in terms of output generation and spread of tea cultivation. It was expected that the period of India’s economic liberalization would revive the Assam tea sector. But the reality has been different. There has been a gradual shift in most of the macro variables of tea sector of Assam in particular and India in general, but such changes were only due to trend variable but not due to productivity improvement of land and labor in the state. At the backdrop of this scenario, this paper endeavors to analyze some of the internal factors influencing the production of tea in Assam during the period of economic liberalization. The outcome of the present study reveals that the productivity of land and labor has not significantly improved in the whole period under investigation. Even India’s liberalization period has been unable to influence tea productivity in the state significantly. The trend is also expected to continue in the near future, unless suitable method of cultivation, which ensures higher productivity of either land or labor, is undertaken. A comparative analysis of the performance of tea sector of Assam during pre-liberalization and liberalization periods revealed that there was a structural break after initiation of economic liberalization. Judging from the lower compound annual growth rates during liberalization period compared with pre-liberalization growth rate, the study concludes that India’s liberalization period has been less successful in reviving the Assam tea sector.

Date: 2012
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