India’s agriculture: Issues and priorities

Indian agriculture employs the largest share of the workforce – about 42 percent in 2019 – though its share in overall gross domestic product (GDP) is only 16.5 percent. India is still largely a rural economy with 66 percent of the country’s population living in rural areas (World Bank, 2019) and agriculture continues to be the mainstay of a large segment of this section of the population. Agriculture is also important for consumers, as an average Indian household spends about 45 percent of its expenditure on food. 1 Moreover, given that India is going to be the most populous country, surpassing China, by 2027 (according to United Nations population projections, 2019), it would be a major challenge for Indian agriculture to feed this large population especially in the wake of the emerging challenges of climate change and the degradation of natural resources such as air, water and land, etc. This challenge becomes more serious with the expected rise in per capita incomes2 as well as increasing urbanization – the urban population is estimated to be 600 million by 2030 – both of which are likely to increase the demand for food, feed and fiber. Moreover, not only will there be more mouths to feed, but, as per capita income grows, there will be much higher demand for high value agriculture products such as meat, fish, dairy, fruits and vegetables (OECD/FAO, 2019). This would be very much in line with Bennett’s Law of food consumption, which states. The paper is organized as follows: Section 1 presents the backdrop of Indian agriculture within the context of the Indian economy. Section 2 critically examines the Challenges in agriculture sector raising agricultural productivity per unit of land: Reducing rural poverty. Ensuring that agricultural growth responds to food security needs. Section 3 mainly focuses on priority areas in agriculture which includes Promoting new technologies and reforming agricultural research and extension: Water Resources and Irrigation/Drainage Management Facilitating agricultural diversification to higher-value commodities. Poverty alleviation Sustaining the environment and future agricultural productivity Finally It also highlights the intervention of World Bank Support to achieve sustainable agricultural growth.

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Government Expenditure ImbalanceClose ×

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Introduction

While agriculture's share in India's economy has progressively declined to less than 15% due to the high growth rates of the industrial and services sectors, the sector's importance in India's economic and social fabric goes well beyond this indicator. First, nearly threequarters of India's families depend on rural incomes. Second, the majority of India's poor (Some 770 million people or about 70 percent) are found in rural areas. And third, India's food security depends on producing cereal crops, as well as increasing its production of fruits, vegetables and milk to meet the demands of a growing population with rising incomes. To do so, a productive, competitive, diversified and sustainable agricultural sector will need to emerge at an accelerated pace. India is a global agricultural powerhouse. It is the world's largest producer of milk, pulses, and spices, and has the world's largest cattle herd (Buffaloes), as well as the largest area under wheat, rice and cotton. It is the second largest producer of rice, wheat, cotton, sugarcane, farmed fish, sheep & goat meat, fruit, vegetables and tea. The country has some 195 m ha under cultivation of which some 63 percent are rainfed (Roughly 125 m ha) while 37 percent are irrigated (70 m ha). In addition, forests cover some 65 m ha of India's land.

Methods and Materials

A descriptive and explorative methodology is followed. The secondary data based on various reports from Govt. depts. and other research institutions.

The published sources such as Web sites, periodicals and Reports are liberally used for the preparation of the paper.

Challenges

Three agriculture sector challenges will be important to India's overall development and the improved welfare of its rural poor.

Raising agricultural productivity per unit of land:

Raising productivity per unit of land will need to be the main engine of agricultural growth as virtually all cultivable land is farmed. Water resources are also limited and water for irrigation must contend with increasing industrial and urban needs. All measures to increase productivity will need exploiting, amongst them: increasing yields, diversification to higher value crops, and developing value chains to reduce marketing costs.

Reducing rural poverty through a socially inclusive

strategy that comprises both agriculture as well as non-farm employment: Rural development must also benefit the poor, landless, women, scheduled castes and tribes. Moreover, there are strong regional disparities: the majority of India's poor are in rain-fed areas or in the Eastern Indo-Gangetic plains. Reaching such groups has not been easy. Facilitating agricultural diversification to higher-value commodities: Encouraging farmers to diversify to higher value commodities will be a significant factor for higher agricultural growth, particularly in rain-fed areas where poverty is high. Moreover, considerable potential exists for expanding agro-processing and building competitive value chains from producers to urban centers and export markets.

While diversification initiatives should be left to farmers and entrepreneurs, the Government can, first and foremost, liberalize constraints to marketing, transport, export and processing. It can also play a small regulatory role, taking due care that this does not become an impediment.

Promoting high growth commodities: Some agricultural sub-sectors have particularly high potential for expansion, notably dairy. The livestock sector, primarily due to dairy, contributes over a quarter of agricultural GDP and is a source of income for 70% of India's rural families, mostly those who are poor and headed by women. Growth in milk production, at about 4% per annum, has been brisk, but future domestic demand is expected to grow by at least 5% per annum. Milk production is constrained, however, by the poor genetic quality of cows, inadequate nutrients, inaccessible veterinary care, and other factors. A targeted program to tackle these constraints could boost production and have good impact on poverty.

Developing markets, agricultural credit and public expenditures: India's legacy of extensive government involvement in agricultural marketing has created restrictions in internal and external trade, resulting in cumbersome and high-cost marketing and transport options for agricultural commodities. Even so, private sector investment in marketing, value chains and agro-processing is growing, but much slower than potential. While some restrictions are being lifted, considerably more needs to be done to enable diversification and minimize consumer prices. Improving access to rural finance for farmers is another need as it remains difficult for farmers to get credit. Moreover, subsidies on power, fertilizers and irrigation have progressively come to dominate Government expenditures on the sector, and are now four times larger than investment expenditures, crowding out top priorities such as agricultural research and extension.

Poverty alleviation and community actions

While agricultural growth will, in itself, provide the base for increasing incomes, for the 170 million or so rural persons that are below the poverty line, additional measures are required to make this growth inclusive. For instance, a rural livelihoods program that empowers communities to become self-reliant has been found to be particularly effective and well-suited for scaling-up. This program promotes the formation of self-help groups, increases community savings, and promotes local initiatives to increase incomes and employment. By federating to become larger entities, these institutions of the poor gain the strength to negotiate better prices and market access for their products, and also gain the political power over local governments to provide them with better technical and social services. These self-help groups are particularly effective at reaching women and impoverished families.

Sustaining the environment and future agricultural productivity

In parts of India, the over-pumping of water for agricultural use is leading to falling groundwater levels. Conversely, water-logging is leading to the build-up of salts in the soils of some irrigated areas. In rain-fed areas on the other hand, where the majority of the rural population live, agricultural practices need adapting to reduce soil erosion and increase the absorption of rainfall. Overexploited and degrading forest land need mitigation measures. There are proven solutions to nearly all of these problems. The most comprehensive is through watershed management programs, where communities engage in land planning and adopt agricultural practices that protect soils, increase water absorption and raise productivity through higher yields and crop diversification. At issue, however, is how to scale up such initiatives to cover larger areas of the country. Climate change must also be considered. More extreme eventsdroughts, floods, erratic rains -are expected and would have greatest impact in rain-fed areas. The watershed program, allied with initiatives from agricultural research and extension, may be the most suited agricultural program for promoting new varieties of crops and improved farm practices. But other thrusts, such as the livelihoods program and development of off-farm employment may also be key.

World Bank Support

World Bank Support

Summing Up

Agriculture in India has witnessed an impressive growth trajectory, taking the country from a food deficit one during the 1960s to a marginally food surplus one. Notwithstanding the economic success, the sector today is at a crossroads with numerous opportunities as well as concerns. On the one hand, the sector has grown and diversified, while, on the other. In order to meet these emerging challenges and mold food and agricultural policies, it is important to focus on the priority areas to boost up the agricultural growth in an economically, environmentally and financially sustainable way.

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