INDIAN AGRICULTURE

IMPORTANCE OF AGRICULTURE IN INDIA

very important sector of the Indian economy

nearly 58 per cent of the work force in India derives its sustenance
cultivators (32 per cent)
agricultural labourers (26 per cent)
largest employment providing sector
contributes significantly to the import earnings of India
major user of rail and road transport facilities
generates demand for industrial products such as tractors, tube wells, pump sets as well
as construction material for storage and warehousing, fertilisers etc
the source of supply of raw materials to some of the major industries viz, cotton and jute
textiles, sugar, vegetable oils, food processing etc
a steady growth in the marketed surplus of foodgrains is crucial for the workforce
engaged in non-agricultural sectors
rapid industrial growth and overall development in the economy hinges on the growth of
production of foodgrains in the agricultural sector
agriculture continues to remain the backbone of the Indian economy
Income generated in agriculture, with a bulk of the workforce engaged in this sector, also
becomes a major source of demand for industrial produce

Food grains --- Rice, wheat, coarse cereals and pulses

Non Food grains --- oil seeds. Sugarcane, cotton, etc
Growth of production--- Act of manufacturing goods for use or sale
Growth of productivitythe rate at which goods are produced compared to input.
performance of Indian agriculture

three distinct phases

1. independence to the mid 1960s-pre-green revolution phase
priority was accorded to land reforms
community development and
restructuring of rural credit institutions
providing a major thrust to irrigation infrastructure
Growth of the output of foodgrains was far from adequate to meet the
needs of growing population
Indias food security was in jeopardy

 Growth---3.1% per annum

Except for rice increase in the yield(yield per hectare) were at the expense
of area grown
the rate of growth of production of foodgrains was pretty high almost 3
per cent per annum
A growth rate of 4 per cent per annum in the production of wheat was
largely contributed by growth in area under wheat. Similar was the case of
non-foodgrain crops.
2. green revolution (1968-69 to 1991-92)
applying a package of inputs to irrigated areas.
package constituted
high yielding variety of seeds
chemical fertilizers
pesticides and insecticide
application of water at the right time and in right proportions.
In the initial period, 15 years, the green revolution was confined to
irrigated areas largely in wheat growing regions
during the 1980s that the green revolution spread to other regions and
crops
Over 1970s and 1980s, there was a significant rise in yields per hectare
resulting also in the productivity of all inputs or Total Factor Productivity
As a result of rise in per capita incomes, discernible diversification in the
demand of the consumers to other food production like milk, poultry
meat, fish, vegetables and fruits
This has created an environment for diversification of agriculture
which led to the adoption of new agricultural strategy in the mid-1960s
Growth
Land is a scarce resource with absolute limits on its supply
In a country with rapidly growing population and the consequent increase
in the density of population, the increase in agricultural production could
not be sustained over a long time through an increase in bringing more
and more area under cultivation.
possible only through a sustained increase in productivity of land.
Moreover, continued increase in area under crops can be a possibility if
the intensity of cultivation is enhanced. This means agricultural land is
brought under cultivation more than once during a year
It will enhance the use of land without creating demand for additional
land for cultivation
the ways in which intensity of land use can be increased.
New agricultural technology
modernisation of technology in general

extension of irrigation
increased productivity of land can augment incomes at the farm level
which is sure to have a spillover effect on the rest of the economy
the rate of growth in production for all crops was 2.8 per cent per annum,
which is somewhat lower than the rate of growth of 3.1 per cent per
annum observed for phase I
growth in yield per hectare to this growth was however much higher at
2.3 per cent per annum
contribution of growth in Area was only 0.5 per cent per annum.
drought during 1964-67
the rate of growth in production for all crops was 2.8 per cent per annum
the rate of growth in yield per hectare
significantly higher during the decade of 1980s (1981-82 to 1991-92
sub-period 2) as compared the decade of 1970s (1968-69 to 1981-82
sub-period)
It was 2.9 per cent for all crops in the sub-period 2 as compared to 1.7 in
sub-period 1
For food grains as a whole as well as the two major food grain crops viz.
Rice and Wheat,
the rates of growth in yield per hectare contributed much more to the
increase in the production during the 1980s as compared to the 1970s
the rate of growth in area under non-food grains has been increasing far
more rapidly than the area under food grains
It is the rapid growth in area coupled with the growth in productivity,
which has raised the rate of growth of non-food grains production to a
level higher than that of the food grains production
the growth in productivity does not necessarily induce growth in area
under a crop. However, there will be some cases
The emphasis on food grains has been clearly on the decline.
It is very significantly discernible in the decade of 1980s
allocation of area under commercial crops is on the rise
some diversification in agricultural production has been observed
fruits and vegetable crops have been steadily gaining ground at the cost of
coarse cereals and pulses
at the beginning of the decade of 1990s
almost 83 per cent of the small and marginal farmers
68 per cent of the large farmers were engaged in the production of
foodgrains
The proportion of farmers involved in the production of commercial crops
is, thus, very small

3. The third phase

Coincides with new economic policy of the year 1991 and thereafter
greater incentives were provided to private investment in agriculture
steady decline in public investment in agriculture
adversely affected the rural infrastructure particularly
irrigation
agricultural research and extension
The acceleration experienced in the yield per hectare during the second
phase got arrested
noticeable slowdown in agricultural growth on account of
declining input use
factor productivity
profitability

Growth
clear symptoms of a green revolution fatigue with a slowdown in the rates
of growth
rate of growth in yield per hectare for all crops was barely over 1 per cent
per annum as compared to around 3 per cent per annum for the preceding
decade
The rate of growth in yield as well as production was lower than that in
the pre-green revolution period i.e. independence to mid 1960s
rate of growth of food production was around 1.7 per cent per annum
which is less than the estimated rate of growth of population
But for wheat where the rate of growth of production remained at the level
of about 3 per cent per annum,
The major concern
the rate of growth of productivity declined for nearly all foodgrain and
non-foodgrain crops
The rate of growth in area for wheat, cotton and sugar cane crop,
however, picked up possibly at the cost of area under coarse cereals and
pulses
The average rate of growth of production for this period has also been
around 1 per cent for all crops with a negative growth in the area
The average rate of growth for foodgrains production remaining around 1
per cent again
The rate of growth in production and productivity in respect of
nonfoodgrain crops is only slightly better than that for foodgrains, largely
due to the increase in productivity of oilseeds and cotton
In the case of sugar-cane, falling trend in the rate of growth of
productivity has persisted
Trends in growth of production and productivity

Growth rate of agricultural production picked up immediately after independence but

largely due to allocation of more area under cultivation
This was, however, not enough, as the country was becoming increasingly dependent on
food imports
Moreover, the increase in production through increase in area under cultivation has its
obvious limitations
The new agricultural strategy of water, seed and fertilizer technology brought about a
change in the rate of growth of production through an increase in productivity
The growth rate of production of the agricultural sector is around 3.4 per cent per annum
during the decade of 1980s and was higher than the rate of growth in production of 2.5
per cent per annum during the earlier decade
Increase in yield was the major contributor to the growth rates in agricultural production.
In respect of food grains, the gains of technological change were largely confined to Rice
and Wheat. Other Coarse Cereals and pulses lagged behind.
For the period up to 1980s,
the growth in production and productivity in non-foodgrain sector is only marginally
higher than for the entire sector
since the decade of 1980s the non-foodgrain sector has grown at a rate which is
distinctly higher than the growth of the sector as a whole

Regional and inter farm variations

In the decade of 1980s
the average rate of growth of yield per hectare for foodgrain crops was around 3.1 per cent
annum at the all India level
states like Assam, Gujarat, Karnataka, Kerala and Maharashtra experienced much lower growth
rates in yield
Overall increase in productivity would obviously be higher if all states and regions as well as all
farms adopted the new technology and adjusted their farming operations keeping in view the
possibility of raising productivity further
far below the productivity levels realised in some of the other countries where these crops are
grown
Inter-country comparison
in the year 2003
far below the productivity levels realised in some of the other countries

rice
the productivity per hectare in India
less than even one-third of that in Australia
less than half that in China and USA
almost half of the per hectare yield in Japan
wheat,
The productivity level in India is close to the world average
but is far below that of China and Japan or even USA
Maize
which is included among the coarse cereals, shows a productivity level which is less than half
that of world average
less than one-fourth of the productivity level in USA
In China, the productivity of land under maize is more than double of that in India
sugar-cane
the productivity situation for sugar-cane crop in India compares favourly with several other
countries
There is still a substantial difference between the productivity of sugar-cane in India and that in
Brazil, Australia, USA and China.
This comparison indicates that there is a tremendous scope for further improvement in
agricultural productivity in India
The country has to exploit the frontier technologies like biotechnology..
It may also have to re-organise and restructure its research organisation toensure that benefits of
research are smoothly transferred from the laboratories to the land.

Worlds largest producer of pulses

the second largest producer of several other crops like rice, wheat, groundnut, sugar-cane.
leading producer of eggs and meat
ranks first in terms of the livestock population (buffaloes)
First in jute and jute like fibres
First in milk production

Diversification of farm sector

India has the second largest share in the global arable land, next only to US
Even though it holds the largest share in the worlds total irrigated area, only 40 per cent
of the cultivated area is irrigated
The dependence on monsoon continues to be glaring factor governing the performance of
Indian agriculture.
the consumption pattern of people is changing due to increase in per capita income,
urbanization, change in the food habits and greater availability of horticulture and
livestock products
Food security, therefore, need not be confined to the availability of food grains and it
should be extended to the overall availability of the edibles including fruits, vegetables,
dairy products, eggs, meat and fish.
Based on this argument, the focus of the Government policy on agriculture has been
gradually shifting to diversification of agriculture, comprising high-value horticulture
and livestock products and non-food commercial crops, which cater to the requirements
of the fast growing middle and upper middle class households
Such a policy would doubtless bring about a diversification of farm sector and will
generate productive and remunerative employment in the farm sector and rural nonfarm
sector such as agro-processing and marketing.
However, in the absence of an adequate marketing infrastructure and institutional
support, the farmers growing such products will be exposed to the vagaries of violent
price fluctuations
As the products of horticulture, poultry, dairy are highly perishable in nature, the
farmers cannot hold on to the stocks of these products even when their prices are unremunerative
As a result, the farmers suffer and may, therefore, not involve themselves with
diversification of their production.

Stabilisation and augmentation of agricultural yield

Stabilization and augmentation of agricultural yield is particularly important in view of

the limited scope for increasing area under cultivation of various crops
There has been also a decline in the size of land holding
an increase in the cost of production
depletion of ground water
Increase in production would, therefore, be possible mainly from improvements in
productivity from the existing cultivated area
Development of location specific high yielding varieties of seeds
balanced fertilizer doses along with organic manures/biofertilisers, along with a sustained
increase in irrigation infrastructure can all add up to a sustained growth in agricultural
productivity

One of the important factors that has influenced the growth rate of yield per hectare
the slowdown of the rate of investment in agriculture which has, in turn, slowed
down the pace and pattern of technological change

Investment in Agriculture

Deceleration in public sector investment in agriculture has adversely affected major

irrigation projects
There may be several reasons for the declining share of public sector investment in
agriculture.
increase in the cost of maintenance of existing projects
delays in completion of projects and consequent cost over-runs
diversion of resources from direct investment to subsidies and
inadequate institutional credit support
In the post economic reform period, the declining developmental role of the state has
been an important factor contributing to dwindling public sector investment in
agriculture
As curtailing non-plan expenditure to reduce fiscal deficit was difficult for the
Government, it seems to have cut down its capital expenditure, especially in agriculture.
Slow growth of productivity, rising input costs and depressed prices of agricultural
products have made agriculture an unprofitable activity.
For the purpose of availability of bank credit, agriculture is treated as a priority sector and
18 per cent of total institutional credit flow is meant for the agriculture sector.
The farmers have to depend upon the informal sources of borrowing which besides the
uncertainty of availability of adequate credit are extremely costly, adding to the cost of
production

12 th plan and strategies

At 2004-05 prices

Food grains are cultivated on larger area. In this rice takes major part of area with 439.49
lakh hectares (Nearly 35% of food grains area)
Wheat is cultivated on nearly 24.75% of food grains area

Oilseeds constitute the most important crop group among the commercial or the nonfoodgrain crops
Two other important crops in the category of nonfoodgrain crops are cotton and sugarcane
Tea, coffee and rubber are the only significant crops in the category of plantation crops
with areas under each being around half a million hectares
Besides cotton, jute and mesta are the other two-three crops which have together about
one million hectare of land under cultivation
the relative importance of foodgrain crops in India is far more than that of the nonfoodgrain crops
around 83 per cent of small and marginal farmers and around 68 per cent of the large
farmers grow foodgrains
only about17 per cent of small and marginal farmers and about 32 per cent of the large
farmers are engaged in growing commercial crops
In the case of small and marginal farmers with steadily declining size of land holding,
subsistence farming may be one major reason for the predominance of food crops
In recent years because of the emergence of reverse tenancy (where small and marginal
farmers lease-out land to the large farmers), the role of commercial crops among these
farms may be an explanatory factor
preference for foodgrain crops among large farmers may be partly explained in terms of
the impact of yield growth and the existence of Minimum Support Price System which
reduces the risk of farmers in the boom years
In the boom years, excess production need not be accompanied by distress sales at very
low prices given the minimum support price system
It is equally important to note that in a large number of cases the tradition of growing
food grain crops over a long time may be a factor contributing to its dominance.

ISSUES AND CONCERNS IN INDIAN AGRICULTURE

1.
2.
3.
4.
5.
6.
7.
8.

Shrinking Land-base and Declining Access to Land

Irrigation System: Its Expansion and Utilisation
Availability and Access to Credit
Availability and Use of Other Inputs: Fertilisers, Seeds and Pesticides
Prices, Costs and Profitability
Marketing System
Agreement on Agriculture under WTO
Investment in Agriculture

Shrinking Land Base and Declining Access to Land

four diverse aspects
1.
2.
3.
4.

Land availability is shrinking

Under-utilisation of the available agricultural land
Inequalities in the access of land
Land degradation

Land availability is shrinking

due to conversion of land to nonagricultural uses largely due to rising pace of

urbanisation
Increasing population pressure without a commensurate increase in employment
opportunities in the non-agricultural sectors is leading to subdivision of holdings

Under-utilisation of the available agricultural land

due to the land being used as current fallow. Such land is left fallow for some seasons
and acts as a possible feeder to net sown area
agricultural holdings of socially disadvantaged groups like scheduled castes and
scheduled tribes are characterised by greater under-utilisation
The possible reason could be poorer quality of land

Inequalities in the access of land

land base of marginal landowners has not improved over time

the benefits of land redistribution have percolated only up to the middle level of
peasantry
The land base available to these categories of households has further declined due to
continuously growing population pressure coupled with lack of alternative employment
opportunities.
The huge proliferation of extremely small and economically non-viable holdings is,
therefore, becoming a serious issue

Land degradation

Most of this degradation has been caused by human action and comparatively much less
by the natural factors
attributable largely to the poverty of the farmers; this may be only partially true
depends not only on the agro-climatic and socio-economic conditions of the region but
also and perhaps more importantly on the farmers access to productive assets
Since the sustenance of land-poor depends on the sustained productivity of their meagre
land resource, they cannot perhaps afford to allow the quality of their land to deteriorate
On the contrary, the land rich usually go for short-term gains from the produce of the
land and can afford to absorb and overlook some degree of deterioration in quality
Policies to address this
The policy-makers have adopted several institutional interventions to mitigate the
problem of ever shrinking land base and declining access to land
the implementation of several land reform and land development programmes at the
Government level not yielded the desired results. For instance, consolidation of holdings
has not been implemented satisfactorily in most of the states.
Similar is the case with the implementation of land ceiling acts
the area declared surplus far exceeds the area actually redistributed
number of beneficiaries covered is also small and not necessarily the most needy
Computerisation of land records, an essential prerequisite for the successful
implementation of consolidation of land holdings and land ceiling laws has yet to be
fully implemented
Farmers have taken initiatives at their own level in overcoming

attempts have been towards allocating and using land in an optimal manner partly by
diversifying to high value crops and partly through launching of non-crop enterprises
Diversification leads to an improvement in land productivity
Institutional interventions have steadily undergone a change in their format and
approach.
For example
land development programmes have undergone a change from sectoral approach to
watershed approach
The programmes initiated under the watershed approach were formulated in response to
the increasing environmental crisis and non-sustainability of agriculture in the rain fed
and semi and areas
These integrated programmes have been evolved keeping in view the need for
conservation and development of national resources, particularly land, water and
vegetation
In this context, it has been increasingly recognised that there is a need for fresh grassroots level
Institutional building involving the landless and land-poor to manage the watershed
programmes
Many states have witnessed a continuous decline of area under common property
resources
Such a phenomenon particularly harms the interests of the poor and underprivileged.
Appropriate policy measures are required to put a halt to such a process

Irrigation System: Its Expansion and Utilisation

Harnessing of water resources is, therefore, a crucial issue and concern for the growth of
agricultural sector
Water is both surface water and ground water reserved over time by rain and snow.
Three-fourths of the rainfall--June to September
It adds to water in the reservoirs, tanks through water flows in the streams in catchments
areas
Raises the level of ground water, which can be harnessed for raising crops in other
seasons.
Agriculture continues to depend on rainfall with its attendant uncertainties
Vagaries of the monsoons have made it imperative for the Government and the farmers
alike to place a high priority on harnessing water-resources for irrigation
the relative share of net irrigated area irrigated by canals steadily declined
there has been a considerable decline in the area irrigated by tanks
The ground water irrigated area has, however, been persistently on the rise with its share
rising to almost 60 per cent

Even among ground water, it is the tube well as distinct from dug well, which is
increasingly becoming more dominant as a source of irrigation
Declining area under canal irrigation despite an increase in expenditure on major and
medium irrigation sector is a matter of serious concern
The irrigation projects taken up since the beginning of 1990s required relatively higher
amount of investment because of the nature of terrain and topography in which projects
were to be constructed.
There were a large number of projects which had been taken up in the past but had not
been completed either due to shortage of funds for investment or for other factors
leading to delays and cost over-runs
Policy-makers were themselves questioning the advisability of continuing investment
into new major and medium irrigation because of the sharply increasing cost of the
projects
With worsening fiscal situations both for the Central and the State Governments, the flow
of capital or investment into irrigation was declining while recurring expenditure was on
the rise for the existing projects
Another matter of major concern is tank irrigation,
which is not only a low-cost source of irrigation but also predominantly managed by the
users themselves, has been declining steadily
Traditional water management structures and institutions have been quite often cited as
solutions to the problems of water-resource management.
Moreover, the current emphasis on the rainwater harvesting also suggests a greater use of
the tank irrigation and irrigation through other water bodies which are rain-fed.
There is, thus, a need to blend the modern scientific knowledge with the traditional
wisdom to create a sustainable water management system
Growing use of underground water for irrigation purpose has created the problem of
progressive decline in water table
Reduced the recharging capacity of dug wells, not only in hard rock regions but also in
the other regions.
As a consequence, the investment required for increased use of ground water is
continuously on the rise
In some cases, farmers with fewer resources are forced to leave the wells owing to very
poor yield of water
competitive deepening of wells not only increases the cost of water but also affects the
small and marginal farmers, who mostly use dug wells, adversely
The small and marginal farmers are, thus, finding themselves in a piquant situation in the
competition for use of ground water.

The reforms in the management of Indias irrigation system are overdue

The question of involvement of users in the management may be examined

There is a need to put a halt to the overexploitation of ground water

In this context, the pricing of electricity for pumping, even diesel prices, besides the issue of
access to other sources of irrigation needs to be reviewed.
A financial issue of considerable concern is that of pricing of water for irrigation.
Farmers preference for tube wells may be partly due to low price of electricity but largely due to
the control over the availability of water
The feasibility of a direct charge for water use from ground water sources in order to build
alternative rain-harvesting sources at the village level may be given a fair trial.
number of schemes
to improve the use of water and development of water resources
The Special Foodgrains Production Plan of 1987
the Advanced Irrigation Benefit Programme of 1996
water saving cum productivity enhancing technology in some states (e.g. drip irrigation,
sprinkler irrigation)
institutional reforms in this regard are getting priority
states have initiated measures to improve the irrigation management
Participatory Irrigation Management
Financing Irrigation
the growth of irrigation potential since independence has been substantial
But the utilisation has remained a problem
Moreover, in the recent decades, the structure of irrigation system is getting increasingly tilted
towards ground water irrigation partly because of the farmers control over the system and also
because of the lack of access to the surface water irrigation.
another factor could be the price-subsidization of use of electricity for operating the tube wells
or the diesel prices for gensets and pump sets
The system requires a review for the sustained growth of agriculture which is critically
dependent on water-resources.

Availability and Access to Credit

Emphasis on the development of institutional sources of credit to agriculture was considered as
an antidote to the exploitative money lending by noninstitutional sources
there was a need for credit not only for cropping but also for building some capital base for
long-term improvement at the farm level.
A major thrust to the provision of institutional credit was provided by the nationalisation of the
major commercial banks in 1969
followed by the establishment of Regional Rural Banks in 1975
National Bank for Agriculture and Rural Development (NABARD) in 1982
rapid expansion of branches of commercial banks in rural areas
priority accorded to credit to be given by commercial banks to agriculture.
Subsidised interests rates for the agricultural sector
Specialised institutions in the form of regional rural banks were set up to cater to the needs of
small producers and other disadvantaged sections of the rural sector
From a total institutional credit of only Rs. 214 crore to agriculture in 1960-61, the total credit
available to the agriculture sector in
In spite of a plethora of measures and substantial increase in agricultural credit, a number of
issues and concerns still remain
Inadequacy of the Amount

High Cost of Rural Credit Operations

Declining Share of Commercial Bank Credit to Agriculture
Micro-finance
Micro-finance
Neglect of the small and marginal farmers coupled with the general level of inadequacy of credit
further accentuates the inequalities within the farming sector.
Rich and larger farmers have a better access to institutional credit than the marginal and small
farmers
Yet another fallout of the inadequacy of the credit flow to sector is that agriculture will find it
difficult to diversify to high value crops.
High Cost of Rural Credit Operations
the non-profitability of large number of farming enterprises.
Absence of infrastructure and supportive system in rural areas further adds to the cost.
With the general lack of familiarity with the nature of farm operations and timing of
requirement, the credit agencies find it difficult to decide.
The transaction costs therefore tend to rise.
high establishment costs
Since the rural credit institutions continue to be modelled on the urban banking system with
high cost of wages and salaries, their operations tend to have a higher cost.
Unless rural credit institutions adapt themselves to the realities of the rural banking needs, they
will continue to remain loss-making units