(Online Course) GS Concepts : Indian Economy - Agriculture in India

Topic: Agriculture in India

With about 14.5% contribution (2011) to the gross domestic product (GDP), agriculture provides livelihood support to about two-thirds of country’s population. The sector provides employment to 57% of country’s work force and is the single largest private sector occupation. Agriculture accounts for about 10% of the total export earnings and provides raw material to a large number of Industries (textiles, silk, sugar, rice, flour mills, milk products). Besides, the rural areas are the biggest markets for low-priced and middle-priced consumer goods, including consumer durables. It means, if agriculture performs, rural demand is high. Rural domestic savings are an important source of resource mobilisation.

The agriculture sector is crucial in maintaining food security and in the process, national security as well. The allied sectors like horticulture, animal husbandary, dairy and fisheries, have an important in improving the overall economic conditions and health and nutrition of the rural people. Thus any change in this sector, positive or negative, has a multiplier effect on the entire economy.
Recognising the crucial role played by the agriculture sector in enabling the widest dispersal of economic benefits, the Eleventh Plan has emphasised that agricultural development is central to equitable and fast economic development of country.

Food Deficit to Food surplus

After remaining a food deficit country for about two decades after Independence, India has become self-sufficient in food grains.

From the mid 1960s, food security improved with the introduction of high yielding varieties (HYVs) of crops and the development of agriculture infrastructure for irrigation, input supply, storage and marketing. The HYVs motivated farmers to adopt improved production technologies with the use of water, fertilesers and agrochemicals. Besides the public sector rural infrastructure, farmers developed their own ‘on farm’ resources. The extension support for production technology and the marketing support through procurement operations encouraged farmers to step up production. The production of various crop commodities has increased substantially over the various Plan periods.

The foodgrain production in 2010- 11 was more than 240mt an unprecedented level & in 2011-12 it is 235.54 mt.

Accounting for Success in Agriculture

The main factors for the all-round success of agriculture have been

• increase in net sown area

• expension of irrigation facilities

• land reforms, especially consolidation of holdings

• development and introduction of high yielding seeds

• fertilizers

• improved implements and farm machines

• technology for pest management

• price policy based on MSP and procurement operations

• infrastructure for storage/cold storage

• improvements in trade system

• increase in investments, etc.

However, in sprite of the spectacular achievements, various constraints and disturbing trends continue to hamper the requisite growth of the agriculture sector.

Question : Write a short notes on Crisis and Challenge in Agriculture.

Answer: One of the major challenges of the 11th Plan is to reverse the deceleration in agricultural growth from 3.2% observed between 1980 and 1996-97 to a trend average of less than 2% subsequently. This deceleration is the root cause of the problem of rural distress that has surfaced in many parts of the country-unemployment, under-employment, declining incomes, distress migration etc.

Low farm incomes due to inadequate productivity growth, high prices of inputs and lack of credit at reasonable rates pushed many farmers into crippling debt. Uncertainties have increased- prices, quality of inputs, weather and pests which, coupled with unavailability of proper extension and risk insurance have led farmers to despair. This has also led to widespread distress migration, a rise in the number of female headed households in rural areas and a general increase in women’s work burden and vulnerability.

To reverse this trend, corrective policies are being implemented under the 11th Plan-focused not only on the small and marginal farmers who continue to deserve special attention, but also on middle and large farmers who suffer from productivity stagnation arising from a variety of constraints. Bharat Nirman with irrigation component is an example.

It is vital to increase agricultural incomes for reasons of employment, equity, food security etc. A second green revolution is urgently needed to raise the growth rate of agricultural GDP to around 4% in an evergreen way (ecological friendly). This is not an easy task since actual growth of agricultural GDP including forestry and fishing, was below 2% for the 10th Plan period. The challenge posed, therefore, is to at least double the rate of agricultural growth. The challenge posed, the 12th plan Aproch Paper (2012-17) targets 4% growth rate for agriculture.

Question: What are the Causes for low Agricultural growth since mid-1990s?

Answer: There are region-specific cause for the decelerating growth in the agriculture sector during the 1990s. Some of these are

• Low public investment in irrigation.

• Poor maintenance of rural infra-structure, specially canals and roads.

• Decline in investments in rural electrification and in its availability. This has greatly affected production in eastern India, where huge groundwater potential remains untapped.

• Rising level of subsidies for power, water, fertilisers and food are eroding public sector investments in agriculture, besides encouraging inefficient use of scarce resources such as water. This further aggravates environmental problems leading to loss of soil fertility and decline in groundwater, which reduces returns on capital. Farmers then demand further subsidies to maintain the same level of production.

• Inadequate credit support till 2004

• Distortions brought in marketing mechanism

• Continuing imbalanced use of NP &K fertilisers, (6.4:2.5:1) as against the desirable norm of 4:2:1 and increasing deficiency of micro nutrients in the soil.

• Stringent controls on movement, marketing, credit, stock and export of agri-products that affect their profitability.

• Controls on the agro-processing industry.

• Poor extension service.

Question : Give the brief detail of initiative taken by Government for Agricultural growth.

Answer : In recent years, several new initiatives have been taken which included:

• Announcement of National Policy for Farmers (2007).

• Kisan Credit Card (1998-1999).

• Creation of a Watershed Development Fund

• Bharat Nirman

• National Horticulture Mission

• Technology Mission on Cotton (1999-2000).

• Implementation of the National Agriculture Insurance Scheme/Rashtriya Krishi Bima Yojana.

• programmes for elimination of post-harvest losses

• Lifting some of the restrictions and controls on the movement and storage and exports of foodgrains / agri produce.

• De-reservation of the manufacture of some farm implements/machines from the small scale industries sector

• Vishesh Krishi Upaj Yojana: The objective of the scheme is to promote export of fruits, vegetables flowers, minor forest produce, and their value added products, by incentivizing exporters of such products. Exporters of such products shall be entitled for duty rebates.

• AEZs

• Contract farming

• Loan waiver to revive farming

• NRAA was set up in 2006(read ahead)

• Nutrient based fertilizer subsidy (2008-09).

Question : Give an account of Capital Formation in Indian Agriculture.

Ans. Capital formation is one of the basic factors for increasing production. It means addition to the physical stock of dams, roads, power plants and other infrastructure. This is all the more important in agriculture where we are faced with the need of increasing production against vagaries of weather to keep pace with the increase in population. Judicious use of natural resources for sustainable production of agriculture, adoption of advanced technology and development of infrastructure for facilitating all agricultural activities, ensuring food security in the broader sense of making adequate nutritious food available and accessible to all and making agriculture a profitable commercial activity at par with other industries in the arena of global economy are the problems that can be successfully tackled only with a strong capital base.

It is necessary to have a broader measure of agricultural capital formation which can be called capital formation for agriculture in comparison with capital formation in agriculture. That is, rural roads, powers etc. should also be considered capital formation for agricultural growth while they may not be directly related to agriculture.

As agriculture is getting diversified, there is a need to not only augment but also re-structure the pattern of investment in agriculture. Historically, the public sector has taken the lead in directing the growth and pattern of agriculture investment. Steps should be taken to improve capital formation for agriculture in both Public and Private Sectors.

Otherwise, it may be difficult to sustain the agriculture growth and rural Purchasing power. Currently, irrigation accounts for the bulk of public investment in agriculture (above 90%).
The new strategy of agriculture growth and diversification of agriculture from traditional crop cultivation to horticulture etc. would require more investments on cold storage, rural roads, communication, marketing network and facilities, warehouses etc.

Simultaneously efforts should be made to revitalize agriculture through introduction of biotechnology and other innovations. This would require substantial increase in investment on research & development for agriculture.
Recent steps are showing Positive results: gross capital formation in agriculture as a proportion of agriculture GDP improved from 11.1 per cent in 2003-04 to 14.2 per cent in 2007-08. The share of public investment in gross investment increased by over 11 percentage points to reach 29.2 per cent in 2004-05 relative to 1999-2000.

Efforts are being intensified to boost investment in agriculture. These programmes are likely to increase capital formation in agriculture by the public sector and induce the private sector to increase investment in agriculture. The improved availability of credit for agriculture and liberalized trade for agriculture products should enhance private investment in agriculture.

Government stepped up public investment significantly for rural roads and rural employment programme Major measures taken for agriculture development through enhanced capital formation include the following:

• A roadmap for agriculture diversification has been prepared with focus on horticulture floriculture, animal husbandry and fisheries.

• Strengthening of agriculture marketing infrastructure

• National scheme for the repair, renovation and restoration of water bodies.

• Focus on micro irrigation, micro finance micro insurance and rural credits.

• Setting up a Knowledge Centre in every village.

• Setting up a National Fund for strategic agricultural research.

• Provision of urban amenities in rural areas through creation of new growth poles

• New fertilizer subsidy regime that is nutrient based so as to fortify soil

• Bharat Nirman

• Pradhan Mantri Gram Sadak Yojna

• Loan waiver also will enable fresh investment as farmers become eligible for loans again due to write off.

Sustainable Agriculture Water Management and Irrigation

Sustainable development of land and water resources becomes important for the nation like India, which shares about 16 per cent of the global population but has only 2.4 per cent of the total land and 4 per cent of the total water resource. Scarcity of water in rainfed areas is causing serious hardships. Ground water resources are dwindling fast due to poor water harvesting leading to excessive run off and poor recharging of ground water. This is accompanied by excessive drawal / exploitation mainly to meet the household needs of growing population as also irrigation needs of new high yielding crops. The number of dark blocks/mandals where there is over exploitation of groundwater (over 85 per cent) is increasing in most of the States with large rainfed areas (Andhra Pradesh, Karnataka, Rajasthan, Madhya Pradesh, Chattisgarh etc.). If this continues, the number of over exploited blocks will double over a period of every twelve and a half years.

Water is a critical input for agriculture and this call for more effective utilization of existing irrigation potential, expansion of irrigation where it is possible at an economic cost, flood forecasting and better water management in rainfed areas where assured irrigation is not possible. The Bharat Nirman programme envisages creation of 10 million hectares additional assured irrigation during the 4 years period (2005-2009).
Along with expansion of irrigation facilities, steps need to be taken to ensure that water is distributed equitably and that it is used efficiently. The pattern observed in the past where tail-enders are denied water because upper end-users appropriate it for highly water intensive crops must be avoided. Participatory Irrigation Management (PIM) by democratically organised water user associations empowered to set water charges, collect and retain substantial part of it, would help to maintain field channels, expand irrigated area, distribute water equitably and provide the tail enders their just share of water. Experience in Andhra Pradesh and Gujarat has shown the effectiveness of such PIM.

Watershed management, rainwater harvesting and ground water recharge can help augment water availability in rainfed areas. Micro-irrigation is also important to improve water use efficiency.

Question : Define Warabandi.

Ans. Warabandi means fixing of turns for irrigation water for each farmer importance so as to make it available to its potential users, i.e. farmers most judiciously and equitably. ‘Warabandi” is a most appropriate, suitable, and successful method of irrigation water distribution below outlet t maintain equity and rightfulness among the users and make best and economical use of available water potential.
The objective of this course is to acquaint the participants/trainees with the methodology of system of “warabandi”, i.e. fixation of the turn and time and also provide them the most appropriate knowledge so that they are able to prepare water distribution schedules and to distribute slips (parchi) to the individual farmers. This course also creates a feeling of importance and essential need of “Warabandi” to resolve conflicts among users in water distribution and help in solving many related problems. It also creates an atmosphere of economical and best use of available water generating water discipline, preventing malpractice and canal offences.

Soil Health

Soil health is a critical factor for agriculture Productivity and human health. The following steps are being taken to improve it. Government will issue Soil Health Cards to all farmers in the Country detailing the deficiencies in the soil and the amount of fertilizers needed, Soil Health Cards would give farmers information about the quality of the soil and what is the normal quantity of fertilizer to be used for a particular crop. For this, setting up of 500 new soil testing laboratories and 250 new mobile soil testing laboratories had been sanctioned in the Budget for 2008-09 Studies have found that overdose and Injudice use of conventional chemical fertilizers and pesticides affect soil fertility, vegetation human and animal health. The government is also encouraging use of organic fertilizer and wormico as overdose of conventional fertilizers has been found to affect fertility of the soil in many places Land under organic farming has increased from 42,000 hectares in 2003-04 to 464,000 hectares currently.The introduction of nutrient based fertilizer Subsidy will enhance soil health as it will be demand driven and not price driven.

Extension services

The National Commission on Farmers (NCF) has drawn attention to the knowledge deficit that exists at present and explains much of the difference between yields realised in experiments and what farmers actually get. One reason for this is the virtual collapse of extension services in most States. Farmer are not fully aware of the adverse consequences of unbalanced fertiliser use or of benefits of micronutrient application and soil testing to determine optimal requirement is hardly practised on a regular basis even by State Agriculture Departments Similarly, although many new varieties of seeds and pesticise have entered the market during the last decade and farmers are using these, they do not appear to have significantly higher productivity and there are frequent complaints about quality. A problem is that input dealers, who have narrow commercial interests have emerged as the main vehicle for technology diffusion and farmers do not have access to reliable third-party advice which an effective and knowledgeable extension service should be able to provide. Lack of credit also pushes farmers to purchase inputs from local suppliers who often provide sub-standard inputs.

To overcome information gaps and for advice in contingencies such as pest-attacks, it is necessary to revitalise the extension system in a manner which links universities and best practices effectively to farmers. States need to take urgent steps in this area. Central initiatives on this also need to be strengthened. Krishi Vigyan Kendras set up by Indian Council of Agricultural Research (ICAR), can be better used. Agricultural Technology Management Agency (ATMA) model of extension being promoted by Department of Agriculture & Cooperation (DAC) will deliver results.

The Department of Agriculture and Cooperation, along with NABARD, has introduced a scheme for establishment of agri-clinics / agri-business centres / ventures by the agricultural graduates. The ICAR is also associated in agriculture extension activities not only through KVKs but also Institute Village Linkage Programme (IVLP) and also its institutes / centres all over the country. The interaction of KVKs activities with the State / district extension machinery is being strengthened. It is planned to strengthen linkages between research and extension to improve quality and effectiveness of research and extension system. The extension system, thus, is being revitalised and broad based through KVKs, NGOs, farmers’ organisations, cooperatives, the corporate sector and agri-clinics / agri-business centres. KVKs and ICAR/SAUs units are designated nodal agencies for quality certification including organic products, bie-fertilisers, and bio-pesticides. The supply of inputs, agro processing and trade through such cooperatives / companies is encouraged through the availability of credit with the help of NABARD.

The NFC has suggested ways to synergise at the village level, for example through Farmer Knowledge Centres, and this is already being implemented in some places with PRI and NGO help. Since synergies across line departments and centrally sponsored schemes can be derived best through district plans, the Planning Commission and Ministry of Panchayati Raj have begun strengthening the process of district planning. The recent MoA initiative to set up technical bodies such as the National Fisheries Board and the National Rainfed Areas Authority should help to improve synergy.

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