Taxes and Subsidies on Agricultural Producers as Elements of Intersectoral Transfer of Resources: Magnitude of the Transfer and Search for Policy Options

Public policies in many diverse fields have implications for the transfer of resources between sectors. Administered agricultural prices, taxes, subsidies, an overvalued currency and protection provided to producers are examples of some of the policies that have been used by many governments in mobilizing resources for development. From the vantage point of assessing the past performance and development prospects of the agricultural sector, it is useful to have an idea about the direction and extent of the resource transfer from this sector. The knowledge of the policy instruments used to bring about the transfer is also important. While the size of the transfer is a measure of the overall incentives being provided, the tools used for the transfer have unique implications for efficiency, equity and growth outcomes. The purpose of the paper is confined to: (i) an estimation of the magnitude of the transfer for the period 1972-73 to 1986-87; and (ii) identification, in broad terms, of the direction that the restructured public policies may take.