AGRICULTURAL SECTOR IN

INDIA
Why Agriculture is important in India?

 In the transition process of development a country’s

share of agriculture in GDP and employment should
reduce and be the least.

 Then why it is necessary to focus on Agricultural

growth at all?
Reason
 Dependence of Agro-based industries on
Agriculture
 Majority of the population depends on Agriculture
in India
 Food security issues
 Role of Agriculture in the field of International
Trade
Dual Economy through Rural urban
migration
 Agri sector characterized by low productivity
 Nurkse argued that surplus labour in agriculture
should shift to industry which in turn increases both
agri. and ind. Productivity
 Lewis model of development talks about dual
economy of capital-intensive industrial sector with
migrated surplus labour from agri and traditional
agri sector
 Role of Agri then diminishes?
Rapid Eco Dev depends on Agro

 Motivation and values required for Industrialization

requires structural change in agri sector
 Marketable surplus increase is required for growing
population and raw materials to industry
 New demand for food grains in terms of bio-fuels
 Employment generation for growing population
Objectives of planning in Agri
 Increase Agricultural Production
 Increase employment opportunities
 Reduce population pressure on land
 Reduce Inequality of Rural Income

 The above objectives were diluted after Economic

reforms of 1991
Strategy used in Agricultural Sector
 Community development programmes and
agricultural extension services
 Irrigation facilities expanded
 Provision of Fertilizers, pesticides, HYV seeds,
transportation, power and institutional credit
 Agro-based ind and handicrafts promotion for Rural
development and reduce land pressure
 Land reforms for equality
Pattern of Agricultural Investment
 Investment was made on Community development
services, irrigation, fertilizers, seed technology that
led to Green revolution
 Initially the plan outlay was high in five year plans
but then over the various plans the plan outlay in
agriculture declined, 17.3% in the last plan (12th
FYP)
Progress of Agro in India under FYPs
 First 3 FYP – A realization that economic planning
would be a failure without agricultural production.
 First green revolution in terms of HYV, not much
success
 Second green revolution in 6th FYP included supply
of inputs, services to farmers, agri extension and
better management – Success in UP, Haryana and
Punjab only
Progress of Agro in India.........
 4% targeted growth of Agri during 7th, 8th and 9th
FYP not achieved
 Intro of rice production programme, watershed prog,
oilseed dev., social forestry, irrigation, etc.
 8th FYP was successful due to good monsoons but by
the end of 9th FYP it was realized targets were
unrealistic
 No target in 10th FYP
Progress of Agro in India....
 Targeted growth rate of 4% continued in 11th and
12th FYP plans
 However growth rate was 3.2% in 10th FYP declined
further to 2.3% in 11th FYP.
 Focus on course cereals, dry-land farming
 During 12th FYP the agri growth rate was completely
dependent on monsoons. It was as low as -0.2% in
2014-15 and as high as 5.6% in 2013-14
Progress of Agro in India....
 4.9% due to good monsoons in 2016-17
 Plan outlay kept on reducing throughout the
planning period
 Decline of investment in agri
 More corporate sector encouraged in terms of
contract farming and cooperative farming
 Limited use of new agro technology
 Low productivity remained the main issue
Cropping Pattern
Taxonomy of Risks
Addressing Weather issues
Minimum Support Price
 APMC decides prices
 Dependence of Market shortage or surplus
 MSP is determined based on previous period slump
or surplus
 Too much focus on Price
 Focus to be shifted to volume sown
 Awareness of MSP only on wheat and rice
 High input cost but lower and volatile output price
Credit worthiness
Crisis: Incidence of Indebtedness
Market and Policy risks
 Cartel formation in APMC makes the farmers lose
 Fragmented markets and farmer’s benefits low
 Four laws:

Too many barriers, Only e-NAM should exist

Decentralized procurement scheme
 To enhance efficiency of PDS
 To ensure farmers get MSP
 A system to procure foodgrains by the states
Economic Reforms and Agriculture
 Discussion by Groups 1 and 2

 Does Economic reforms yield any Agri progress?

 Why Agriculture slowed down?
 What should be the way ahead
Way ahead
 Increase productivity
 Technology
 Use of IT
 Enhancing Institutional Credit
Budget 2017-18 on Agriculture
 Discussions by Group 3 and 4

 What are the rural needs?

 What did the budget address?
 Has it addressed enough?
 What are the grey areas to be addressed in the
next budget?