AGRICULTURAL GROWTH FOR POVERTY ALLEVIATION

Subject title: Economics-II

Submitted to: Professor(Dr.) Madhuri Srivastava

Submitted by: Shashank Singhal
B.A.L.L.B (Hons.)
IVth Semester

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 POVERTY ALLEVIATION-

Agriculture has been the mainstay of Indian economy since time immemorial.
Even in the current day scenario, the vital role it plays cannot be discounted. This is
amply iterated by reflecting on the fact that 70 percent of the Indian population lives in
rural areas and an overwhelming majority depend upon agriculture as their primary
source of income.
It was as early as the 1980s, that the useful role agriculture could play in poverty
alleviation was realised, when Indian policymakers shifted their focus from food self
sufficiency to generating additional income in rural areas as a means of tackling the
problem of poverty. Acceleration of agricultural growth, with a special focus on
improving the position of small farmers and extending the productivity revolution to non-
irrigated areas was seen as a critical part of the strategy for poverty alleviation.
Since then, this endeavor has been met with many accolades as well as criticism.
The debate rages on- is agricultural development the panacea for the eradication of the
biggest ill that hinders Indian development? This project shall seek to examine this moot
question in detail. Various factors such as agricultural development being instrumental in
the plugging of rural migration to urban centres, overall rise in family income on account
of more mechanised agriculture, rural industries coupled with agriculture, amongst
others, shall be examined.
Following this basic weighing of options, further details as to how agriculture can
be viewed as the panacea for eradication of rural poverty shall be extrapolated.
Finally the researcher shall give suggestions as to what modifications in the
current system of economic development may help make it more inclusive in approach.

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 TABLE OF CONTENTS

LIST OF ABBREVIATIONS....i
RESEARCH PLAN..ii
1.POVERTY........................................................................................................................1
1.1 Concept of Poverty....................................................................................................1
1.2 Determinants of Poverty............................................................................................1
1.3 Surveys for Ascertainig Poverty in India...................................................................2
1.4 Magnitude of Poverty in India...................................................................................2
1.5 Causes of rural poverty..............................................................................................3
1.6 Effects of rural poverty..............................................................................................4
2.AGRICULTURE AS A SOLUTION TO RURAL POVERTY........................................6
2.1 Importance of agriculture in India.............................................................................6
2.2 Course of Agricultural Growth in India.....................................................................8
2.3 Impact of fall in agricultural growth on poverty.......................................................9
2.4 The Vision of Agricultural Development.................................................................10
2.5 Shift in focus of agricultural policy framers............................................................12
2.5.1 Early Focus on Food Self-Sufficiency..............................................................12
2.5.2 Agricultural Growth for Poverty Alleviation....................................................12
3.DEVELOPMENTS IN AGRICULTURE FOR POVERTY ALLEVIATION................14
3.1 Technological developments....................................................................................14
3.1.1 Usher the gene revolution.................................................................................15
3.1.2 Remote sensing and GIS-based wasteland mapping........................................16
3.1.3 Free Access to technology to be ensured..........................................................17
3.2 Greater Emphasis on Appropriate Crops and Seeds................................................17
3.3 Fertilisers.................................................................................................................19
3.3.1 Use of biofertilisers...........................................................................................20
3.3.2 Practice of Organic agriculture........................................................................20
3.4 Literacy....................................................................................................................21
3.5 Removal of restrictions of domestic trade and processing......................................22
3.6 Agricultural Diversification.....................................................................................22
3.6.1 Horticulture.......................................................................................................22
3.6.2 Contract Framing..............................................................................................23
3.6.3 Livestock rearing..............................................................................................23
3.7 Investments In Agriculture..........................................................................................24
3.7.1 Public Sector Investment..................................................................................25
3.7.2 Private Sector Investment.................................................................................26
3.7.4 Infrastructure.....................................................................................................26
3.7.5 Storage facilities...............................................................................................27
3.8 Credit Reforms.........................................................................................................28
3.9 Accent on Post-Harvest Management, Value Addition and Cost-Effectiveness......29
3.10 Land Reforms........................................................................................................30
3.11 Agricultural Price Policy and the Public Distribution System...............................31
3.12 Current poverty alleviation schemes.....................................................................31
4. CONCLUSION..33
BIBLIOGRAPHY.iii

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 LIST OF ABBREVIATIONS

APC -Agricultural Prices Commission

FAO -Food and Agriculture Organisation
GDP -gross domestic product
IADP -Indian Agriculture Development Program
IARO - Indian Agriculture Research Institute
ICAR -Indian Council for Agricultural Research
IPM - Integrated Pest Management
IRDP -Integrated Rural Development Program
MISH - Market Information Survey of Households
NGO - Non-Governmental Organisation
NREGA - National Rural Employment Guarantee Act
NSS - National Sample Survey
PDS -Public Distribution System
TRYSEM -Training rural youth for self employment

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 RESEARCH SCHEME
Research Methodology
The method of research used in this project is Doctrinal in nature. The researcher
has used the books and journals available at the NALSAR Law Library, and the
Hyderabad Central University library. Further, web based resources have also contributed
to the project; including some law based databases and general search engines.
The resources used by the researcher can be categorized as primary and secondary
sources. The primary sources are the bare acts available. The secondary sources were the
books and journal articles by various authors on this topic.
Research Plan
The Researcher has divided the topic into headings and subheadings in order to
fulfill the aims of the project. The first part introduces the concept of poverty in India.
The second part deals with the interaction of poverty and agriculture. The third part
discusses possible innovations in agriculture for poverty alleviation. The final part
concludes the project.
Aims and Objectives
Through this project the researcher aims to provide the reader with a detailed
overview of agricultural development for poverty alleviation. The researcher has made
profuse use of theory, as well as tables and statistics to explain the above.
Scope and Limitations
Within the scope of this project the researcher has discussed the topic with
reference to the Indian economy. This has been due to paucity of space, and to a certain
extent time as well.
Formatting and Footnoting Style
The researcher has followed the formatting style as given by Dr. Vijender Kumar,
Professor of Law, NALSAR University of Law.

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 1.POVERTY
1.1 Concept of Poverty
Poverty is one of the most important issues and unfinished tasks of this century.
Though it is as old as the history of the world, the phenomenon has assumed multifarious
dimensions in recent times and has therefore attracted quite a lot of attention.
Poverty indicates a condition in which a person fails to maintain a living standard
adequate for his physical and mental efficiency.1 It gives rise to a feeling of a discrepancy
between what one has and what one should have. However, the term poverty by itself is a
relative concept. It is very difficult to draw a demarcation line between affluence and
poverty. According to Adam Smith,
Man is rich or poor according to the degree in which he can
afford to enjoy the necessaries, the conveniences and the amusements of
human life.2
Therefore, there was the need to come up with certain criteria to determine
exactly who is poor.
1.2 Determinants of Poverty
Various international bodies and economists have come up with certain minimum
standards of consumption, failing which an individual is assigned a place below the
poverty line.
In India, a distinguished Study Group was set-up by the Planning Commission to
determine the nationally desirable minimum level of consumption expenditure. The Study
Group then recommended a standard of private consumption expenditure of Rs.20 at
1960-61 prices per capita per month as the bare minimum, using the income poverty
method.3
The Planning Commission has now adopted an alternative definition of poverty
provided by the Task Force on Projections of Minimum Needs and Effective
Consumption Demand. Using the income poverty method, the Task Force has defined
the poverty line as the mid-point of the monthly per capita expenditure class having a

1
Ratnakar Gedam, Poverty in India, 1st ed. 1998, p.55.
2
Asim Karmakar, Amartya Sen on Poverty, Inequality and Famine, AK Sinha and RK Sen(ed.),
Economics of Amartya Sen, 1st ed. 2000, 1st rep. 2006, p.193.
3
SK Misra, VK Puri, Indian Economy- Its Development Experience, 22nd ed. 2004, p.241.

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daily calorie intake of 2,400 per person in rural areas and 2,100 per person in urban
areas.4
1.3 Surveys for Ascertainig Poverty in India
The National Sample Survey (NSS), initiated in the year 1950, is a nation-wide,
large-scale, continuous survey operation conducted in the form of successive rounds. It
was established on the basis of a proposal from P.C. Mahalanobis to fill up data gaps for
socio-economic planning and policy making through sample surveys. Data collected
through this is utilised in determining the extent and magnitude of poverty in the country.
However this has been open to much criticism from numerous prominent
economists.5 This has been not merely for the lackadaisical methods adopted in
conducting the field work, but also for the very methodology on which it functions and
the reach it has.
As an alternative, the Market Information Survey of Households (MISH), which
is less well known than the NSS is given more credibility in terms of veracity of results.
It is supposed to provide consistent information based on income trends in the country.6
1.4 Magnitude of Poverty in India
Even after more than 50 years of Independence India still has the worlds largest
number of poor people in a single country. Of its nearly 1 billion inhabitants, an
estimated 260.3 million(26%) are below the poverty line.7

Table 1-Incidence of Poverty in India

4
Ibid.
5
Deepak Lal and ors., Economic Reforms and Poverty Alleviation- India, Economic and Political
Weekly, Vol. XXXVI, no. 12.
6
Ibid.
7
India Social Development Report, 2006. Accessed at http://www.csdindia.org/social-development-report/,
last visited on 20th September, 2008.

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Source- National Statistical Organisation, 50th Survey Round.
Table 2-Number and percentage of population below poverty line in India

Rural Urban All India

Year No. of % of No. of % of No. of % of
persons person persons person persons person
(million) (million) (million)
1973 261 56 60 49 321 55
1983 254 46 74 41 328 45
1993 213 33 75 32 288 32
1998 170 24 81 30 251 26
th
Source- IARI-FAO/RAP study (2001) based on 50 NSS round (1993-94).
Of these, 193.2 million are in the rural areas and 67.1 million are in urban areas.
More than 75% of poor people reside in villages. For more than 21% of them, poverty is
a chronic condition.8 Much like wealth, poverty level is not uniform across India.
1.5 Causes of rural poverty
The causes of rural poverty are manifold. These include-
i) Insufficient access to land and other productive resources.
ii) Growth of population at an alarming rate, with the size of the Indian family
averaging at 4.2 members.
iii) Unfavourable terms of trade for food products, especially for animal products.
iv) Remoteness and weak infrastructure (roads, markets, health services, schooling
etc).
v) Poor health of the persons, on account of lack of adequate medical facilities,
such as government hospitals(jaundice, HIV/AIDS, malaria etc).

8
Ibid.

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 vi) Civil or international war or conflicts between groups.
vii) External shocks, such as drought.
viii) Bad governance, including corruption which has resulted in the failure of
targeted anti-poverty programs such as the Jawahar Rozgar Yojna, the
Integrated Rural Development Program(IRDP), Training rural youth for self
employment(TRYSEM), etc.
ix) Disregard for indigenous knowledge and local agricultural resource
management. 9
1.6 Effects of rural poverty
The primary effects of rural poverty, by way of the detrimental impact it has on
the lives of millions of Indians in rural areas is apparent. This manifests itself by way of
lack of education, malnutrition, poor health and hygiene and an overall low incidence of
well-being.
Another important impact of rural poverty is by way of the marked increase in
migration to urban centers because of lack of economic opportunities and absence of
basic amenities such as food, shelter, education and health-care in the villages. There are
serious implications of this trend of feeding the cities and food security of urban people,
urban poverty and environment.
Primarily, it causes pressure on the urban resources that cannot cope with the
increasing demand of the migrant population. The cause-effect relationship has a
symbiotic effect (for instance, the strain on environment) leading to further deterioration
of living standards. This creates more social evils such as illiteracy, poverty, tension and
communal violence.10
In fact, urban poverty is caused predominantly due to impoverishment of rural
peasantry that forces them to move out of villages to seek some subsistence living in the
towns and cities. In this process, they even lose the open space or habitat they had in
villages albeit without food and other basic amenities. When they come to the cities, they
get access to some food though other sanitary facilities including clean water supply still
elude them.
9
Deepak Lal, Economic Reforms and Poverty Alleviation, I.J. Ahluwalia and I.M.D. Little(eds.), Indias
Economic Reforms and Development, 1st ed. 1998, p.276.
10
HR Machiraju, Poverty: Concept and Alleviation, RVR Chandrashekhara and ors.(eds.), Perspectives on
Indian Development, 1st ed. 2000, p.173.

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 Such a situation has a detrimental impact on the economy of the nation as a whole
for it hinders development.

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 2.AGRICULTURE AS A SOLUTION TO RURAL POVERTY
2.1 Importance of agriculture in India
Agriculture is a crucial contributor to the national income. Agriculture and allied
activities constitute the single largest contributor to the Gross Domestic Product, almost
33 percent of it. Agriculture is the means of livelihood of about two-thirds of the
workforce in the country.11
Industrial and service sectors have expanded faster than agriculture sector
resulting in declining share of agriculture in national accounts. However, despite the
structural change, agriculture still remains a key sector, providing both employment and
livelihood opportunities to more than 70 percent of the countrys population who live in
rural areas.12 The contribution of small farmers to the national and household food
security has been steadily increasing.
Its importance is highlighted by the following three distinct components. Firstly, it
is essential for the acceleration of the overall growth rate of our economy not only by
achieving a high rate of growth itself but also through pulling up the growth rates of other
sectors through a widespread distribution of purchasing power and demand.
Secondly, it is central to all efforts at self-reliance. These efforts and their
realization is central to not only the well-being of the nation, but even its sovereignty.
Finally and most significantly in this regard, agricultural growth is the surest way
to bring about equity in income and wealth and elimination of rural poverty.

11
http://planningCommission28678392%%statisticaldata.nic.in, last accessed on 23rd September, 2008.
12
Ibid.

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 Table 3-Contribution of agriculture to GDP:Compared with other Sectors

2000-01 2004-05 2005-06

to 2003- 2004- 2005-
Sector
2002-03 04 05 06 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
(Average
Agriculture -0.2 10.0 0.7 3.9 3.5 -0.2 -1.2 1.5 3.4 4.0 2.9 5.5
Allied Activities (23.5) (22.2) (20.8) (19.9) - - - - - - - -
1.1 Agriculture -0.5 10.7 0.7 - - - - - - - - -
Industry 5.2 6.6 7.4 7.6 6.6 8.0 8.1 6.8 9.5 6.3 7.0 7.9
(19.7) (19.5) (19.5) (19.3) - - - - - - - -
2.1 Mining and 4.4 5.3 5.8 0.9 8.2 6.0 5.7 3.7 3.1 -2.6 0.0 3.0
Quarrying
2.2 5.7 7.1 8.1 9.0 6.6 8.3 9.2 8.1 10.7 8.1 8.3 8.9
Manufacturing
2.3 Electricity, 2.8 4.8 4.3 5.3 4.9 7.9 3.1 1.4 7.4 2.6 5.0 6.1
Gas and Water
Supply
Services 6.6 8.5 10.2 10.3 10.0 8.2 10.6 11.6 10.1 10.3 9.7 11.0
(56.8) (58.3) (59.7) (60.7) - - - - - - - -
3.1 Trade, 8.5 12.0 9.7 11.0 10.2 12.9 10.6 11.5 10.6 11.2 11.7 11.0
Hotels,
Restaurants,
Transport,
Storage and
Communication
3.2 Financing, 6.5 4.5 9.2 9.7 8.8 7.5 9.7 10.7 8.8 10.5 8.9 10.5
Insurance, Real
Estate and
Business
Services
3.3 4.1 5.4 9.2 7.8 10.7 4.8 8.5 12.7 7.3 8.0 8.4 7.6
Community,
Social and
Personal
Services
3.4 5.9 10.9 12.5 12.1 8.9 6.8 20.8 13.5 12.4 12.3 11.5 12.0
Construction
Real GDP at 4.6 8.5 7.5 8.4 7.9 6.7 7.0 8.6 8.5 8.4 7.5 9.3
Factor Cost
Source-Planning Commission of India, accessed at
http://www.indiaonestop.com/gnp.htm, last visited on 20th September 2008.

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2.2 Course of Agricultural Growth in India
Growth of agricultural gross domestic product (GDP) accelerated to about 4.7
percent in the 1980s, compared with only 1.4 percent in the 1970s. This agricultural
growth, together with the beginning of economic reforms in the nonagricultural sector,
pushed up the growth rate of overall GDP to around 5.8 percent in the period 198081 to
198990 compared with about 3 percent in the 1970s.13
Indias growth was disrupted at the start of the 1990s by a major balance of
payments crisis that led to the adoption of an extensive process of structural reforms. It
took time to regain momentum, and it was only in 199394 that the economy got back on
track, clocking an average growth rate of 6.8 percent in the three years 199394 to 1995
96. This acceleration in growth in the post reform period led policymakers to set a more
ambitious GDP growth target of 8 percent a year for the Ninth Plan period (199798 to
20012002), to be supported by a growth rate of 4 percent a year in agriculture. The
projected growth of 4 percent per year in agriculture was clearly in line with the average
growth of 3.8 percent achieved in the period 199091 to 199697.14
Actual performance since the mid-1990s, however, has been disappointing.
Agricultural growth slowed to 2 percent a year in the Ninth Plan period, and overall
economic growth was only 5.5 percent, well below the 8 percent target. Since agriculture
accounted for about 25 percent of GDP, the shortfall of more than 2% points in
agricultural GDP growth, compared with the target, accounts directly for a shortfall of
about half a percentage point in GDP growth. 15 If the indirect effects of more rapid
agricultural growth on other sectors are taken into account, the total impact on GDP
growth may have been as much as one percentage point.
These shortfalls were known when the Tenth Plan (covering the period 200203
to 200607) was formulated, but it was assumed that the poor performance of agriculture
was due to temporary factors such as poor monsoons and depressed agricultural
commodity prices in world markets following the East Asian meltdown.

13
Chatterjee(ed.), Indian Economy for the 21st Century, 1st ed. 2002, 1st rep. 2003, p.292.
14
Ibid.
15
Ibid.

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 The Tenth Plan therefore adopted the same targets of 8 percent growth in GDP
and 4 percent growth in agriculture. Experience in the first three years of the Tenth Plan
period has sounded some alarm bells. GDP growth has averaged about 6.5 percent, but
agricultural GDP in these years (200203 to 200405) has grown by only 1.1 percent per
year.16 The loss of dynamism in agriculture explains most of the shortfall in aggregate
GDP growth.
2.3 Impact of fall in agricultural growth on poverty
Agriculture-Poverty linkages are very apparent everywhere in the world.
Accelerated growth of agriculture, especially of high value agricultural activities
continues to be the cornerstone of the overall governmental strategy to reduce poverty.
The fact is that a vast majority of the worlds poor live in rural areas-nearly 80% of the
total population of the world.17
Indias strategy for reducing poverty and hunger has always placed a great deal of
importance on the agricultural sector, reflecting the fact that 70 percent of the population
lives in rural areas and the overwhelming majority of them depend upon agriculture as
their primary source of income. The focus of attention has of course changed over time.
Increased agricultural productivity and rapid industrial growth in the recent years
have contributed to a significant reduction in poverty level, from 55 percent in 1973 to 26
percent in 1998.18 Despite the impressive growth and development, India is still home to
the largest number of poor people of the world.
In much the same way, lower growth in agriculture has direct implications for
poverty reduction in rural areas. Official figures suggest that the incidence of poverty fell
from 36 percent in 199394 to 26 percent in 19992000.19

16
Ibid.
17
http://agricoop.nic.in/statistics/pop5.htm, last accessed on 23rd September, 2008.
18
Ibid.
19
http://www.ficci.com/ficci/media-room/presentations/2001/sep/sep_agri_sinha.htm, last accessed on 23rd
September, 2008.

13
 Table 4- Rate of Agricultural Growth in India

Source- Planning Commission of India, accessed at http://www.indiaonestop.com/gnp.htm,

last visited on 20th September 2008.

Slow growth in agriculture is also at the root of growing evidence of distress in

the farming community. Surveys show that a large percentage of farmers want to leave
farming because they find it is no longer sufficiently profitable.20
The uncertainty associated with farming has also increased, and farmers lack
effective means of insuring against such risks. There is also evidence of increased
indebtedness arising from the inability to cope with risks.21
2.4 The Vision of Agricultural Development
Policy makers have two options here; in determining the role agriculture is to play
in the economy. One would be to develop agriculture as a source of food and raw
material for the economy and its people. The other would be to view agricultural
development as a means to larger goals of employment like economic growth, self-
reliance and poverty alleviation. The former vision may be termed as welfarist whilst the

20
SK Mishra and VK Puri, Indian Economy- Its Development Experience, 22nd ed. 2004, p.102.
21
Ibid.

14
latter as economic welfarist. The latter has been supported by economists of repute,
amongst them Jhonston, Dantwala, Mellor, Rangarajan and Namboodiri.22
This larger vision is economic welfarist because it is based on a proposition that
when agricultural growth relaxes the binding constraint of wage goods (i.e., food and
cotton textiles), it reduces the wage and/or raw material costs in various sectors which
leads to increased surpluses, investment and economic growth that is labour intensive.23
Also, such a vision is more consistent with the notion of structural transformation of the
economy from agriculture dominated, to textiles first industrialisation 24 and service
sectors oriented wherein resource productivity is higher and more stable. Such has been
the case with many of the most fertile economies of today including Japan, Taiwan and
South Korea.25
The economic welfarist vision also recognizes the coexistence of relative decline
and growth of real agricultural gross domestic product (GDP) in absolute amount as a
natural phenomenon.26 This realizes agriculture as an entrepreneurial economic activity
rather than a way of life.
Mission of agricultural development would be-
i) To concentrate agricultural growth in well endowed regions with larger
irrigation resource as was the case under Intensive Agricultural
Development Programme (IADP, 1959).
ii) To shift the emphasis from such regions to rainfed and dry-farming
areas as was done, for instance under the Drought-Prone Area
Programme, Tribal Area Development Programme, Hill Area
Development Programme, etc. during 1970s and 1980s.

22
JS Uppal (ed.), Indias Economic Problems- An Analytical Approach, 3rd ed. 1983, p.506.
23
Deepak Lal, Economic Reforms and Poverty Alleviation, I.J. Ahluwalia and I.M.D. Little(eds.), Indias
Economic Reforms and Development, 1st ed. 1998, p.64.
24
Furthered by the Mahalanobis model since the Second Five Year Plan.
25
Supra n.23.
26
Between 1950-51 and 1996-97 absolute size of national income in 1970-71 prices contributed by the
agricultural sector increased from Rs. 10,294 crore to Rs. 33,606 crore inspite of the decline in its share in
national income from 61% to 30% and that in national workforce from over 75% to about 65% during the
same period.

15
 iii) To make agricultural growth geographically, farm-size wise and farm
enterprise-wise broad based as has been happening especially since the
Seventh Five Year Plan.27
This would provide higher sectoral growth, narrow regional differences in
agricultural productivity and growth, alleviate poverty more and lead to larger growth
linkages of agriculture.
2.5 Shift in focus of agricultural policy framers

2.5.1 Early Focus on Food Self-Sufficiency

In the 1960s India was deficient in foodgrain production and dependent on
imports of wheat, financed by PL 480 assistance from the United States.28
Understandably, the focus of Indian policy in this period was to increase foodgrain
production with a view to ensuring food security. This objective was successfully
achieved by the spread of the Green Revolution in the 1970s, beginning with wheat and
then expanding to rice.
This achievement must count as one of the major success stories in development,
considering that influential groups such as the Club of Rome, in the early 1970s, had
despaired of Indias being able to feed its growing population.29

2.5.2 Agricultural Growth for Poverty Alleviation

In the 1980s Indian policymakers shifted their focus from food self-sufficiency to
generating additional income in rural areas as a means of tackling the problem of poverty,
which was concentrated in rural areas.30 Acceleration of agricultural growth, with a
special focus on improving the position of small farmers and extending the productivity
revolution to non-irrigated areas, was seen as a critical part of the strategy for poverty
alleviation.
This effort was supplemented with targeted antipoverty programs to address the
needs of vulnerable groups who may not benefit sufficiently from general agricultural
growth. India achieved considerable success with this approach in the 1980s.
27
Ruddar Dutt and KPM Sundaram, Indian Economy, 4th ed. 1999, p.67.
28
Pravin Visaria and TR Sundaram(eds.), ML Dantwala, Dilemmas of Growth-The Indian Experience, 1 st
ed. 1996, p.52.
29
Ibid.
30
TCA Anant, Institutional Reforms for Agricultural Growth, NA Majumdar and Uma Kapila(ed.), Indian
Agriculture in the New Millenium-Changing Perceptions and Development Policy, Vol. 2, 1 st ed. 2006,
p.208.

16
17
 3.DEVELOPMENTS IN AGRICULTURE FOR POVERTY ALLEVIATION
The importance of agriculture in the Indian economy cannot be over-emphasized.
However, the fact that there is quite a lot lacking in increasing agricultural growth is
undeniable.
The agriculture policy must accelerate all-round development and economic
viability of agriculture in comprehensive terms. Farmers must be provided the necessary
support, encouragement and incentives. It must focus both on income and greater on-farm
and off-farm job and livelihood opportunities.
In this context, it is of prime importance to consider a number of equally relevant
factors.
3.1 Technological developments
Viewing the strategy for agricultural development, three options present
themselves, were one to follow the late Professor M.L. Dantwala. One would be
extensive farming, two, intensive agriculture and three, scientific knowledge-based
technical change.31
Extensive farming increases production by bringing hitherto uncultivated land
under the plough. Intensive agriculture does so by increasing the use of the same inputs
such as and, labour, irrigation-water and fertilizers. But scientific knowledge-based
technical change increases production(including product innovations) at the same level of
all inputs or same level of output at lower levels of input.
While the first two options increase production at a diminishing rate along a given
production-function (with the application of Ricardos Law of Diminishing Return), the
third option increases output by improving total factor productivity through an upward
shift in cost function that describes the relation between output and all input functions.32
Therefore, for long-term sustained benefits, there have to be continued high levels
of investments in research and technology development. The existing public outlay on
agricultural research and education, stagnating around 0.3% of agricultural GDP in the
country is meager and needs to be stepped-up substantially.33

31
Pravin Visaria and TR Sundaram(eds.), ML Dantwala, Dilemmas of Growth-The Indian Experience, 1 st
ed. 1996, p.94.
32
Ibid.
33
Ibid, at p.108.

18
 There needs to be mobilization of the best of science and development efforts
(including traditional knowledge and modern scientific approach) through partnerships
involving national and international research institutions, NGOs, farmers organizations
and private sector in order to tackle the present and future problems of food security and
production. Also, there is a need to shift away from individual crop-oriented research and
focused essentially on irrigated research towards research on crops and cropping systems
in the dry lands, hills and other marginal areas.
At present, the apex body for education, research, training and transfer of
technology in the field of agriculture is the Indian Council of Agricultural Research
(ICAR), established in 1929. Indias transformation from a food deficit to a food surplus
country is largely due to ICARs smooth and rapid transfer of farm technology from the
laboratory to the land. ICAR discharges its responsibilities through 43 research institutes,
four national research bureaux, 20 national research centres, nine project directorates, 70
all-India coordinated research projects, and 109 Krishi Vigyan Kendras (farm science
centres).34
Besides, the programme of Agricultural Education is coordinated by ICAR with
the curricula and other normative guidance given to the 26 agricultural universities and
four national research institutes.35 These need to undertake the following activities-

3.1.1 Usher the gene revolution

Ample scope exists for increasing genetic yield potential of a large number of
vegetables, fruits as well as other food crops and livestock and fisheries products.
Besides maintenance breeding, greater effort should be made towards developing
hybrid varieties as well as varieties suitable for export purposes. Modern biotechnology
tools, genetic engineering, as well as conventional breeding methods are all expected to
play important roles in the generation of higher yielding, pest and stress resistant varieties
of rice, wheat, maize and other cereal crops.

34
CH Hanumantha Rao, Reform Agenda for Agriculture ,Ajit Kumar Sinha (ed.), India Towards Economic
Super Power-A Journey of Economic Reforms, 1st ed. 2005, p.78.
35
Ibid.

19
 Research on coarse grains, pulses and oilseeds must achieve a production
breakthrough. Hybrid rice, single cross hybrids of maize and pigeon-pea hybrids offer
new opportunities.36

3.1.2 Remote sensing and GIS-based wasteland mapping

Incidence of poverty and land degradation is seen to co-exist in several agro-
ecological zones in India.
Table 5- Poverty of Population in Relation to Wasteland Occupied

Source- IARI-FAO/RAP study (2001) based on cost of cultivation data, Government of

India, accessed at http://www.icar.org.in/ncap/publications/pp11/executive
%20summary.htm.

The policies and interventions related to poverty alleviation, aimed at breaking

this nexus, drive labour and capital flows by creating the alternate livelihood
systems beyond the exploitative dependence of stake-holders on marginal natural
resources.37 Examining the penetration of such policies and interventions needs extensive
database on the natural resources as well as socio-economic indicators. Nationwide
wasteland mapping project, carried out by National Remote Sensing Agency, provides
insights into the problems related to natural resources degradation.38

36
Prabhu Pingalei and Terry Raney, From the green Revolution to the Gene Revolution: How Will the Poor
Fare, S. Mahendra Dev and K.S. Babu(ed.), Some Aspects of Economic and Social Development, 1 st ed.
2008, p.332.
37
HR Machiraju, Poverty: Concept and Alleviation, RVR Chandrashekhara and ors. (eds.), Perspectives
on Indian Development, 1st ed. 2000, p.63.
38
Ibid, at p.76.

20
 These must continue to be carried on. Also, agronomic and soil researches in the
country need to be intensified to address location specific problems as factor productivity
growth is decelerating in major production regimes.

3.1.3 Free Access to technology to be ensured

The availability of genetic innovations in developing countries will depend on
continued high levels of investments in agricultural research, both at the international and
the national levels. Free and unhindered access to germplasm to breeders worldwide is
absolutely crucial to the rapid dissemination and adoption of improved germplasm.
This free movement and the dissemination of modern biotechnology innovations
to developing countries are hampered by increased patent protection and private sector
investments. There is an urgent need to address this problem of free access to technology
in the future. No trade barriers or restrictions should be allowed to affect these.
3.2 Greater Emphasis on Appropriate Crops and Seeds
The 1970s saw a multi-fold increase in wheat production that heralded the Green
Revolution. In the next decade rice production rose significantly; in 1995-96, rice
production was 79.6 million tonnes. The total grain production crossed 211 million
tonnes in 2001-02, a big leap from 51 million tonnes in 1950-51.
To carry improved technologies to farmers, a National Pulse Development Programme,
covering 13 states, was launched in 1986. Efforts to boost pulse production were
augmented further by the Special Food Production Programme. In 2001-02, pulse
production was 13.52 million tonnes. With some states offering more than the statutory
minimum price, sugar cane production also received a boost, and in 2001-02 a record
292.2 million tonnes was registered.39

39
http://agricoop.nic.in/statistics/pop5.htm, last visited on 23rd September ,2008.

21
 Table 6-Priority states for increasing national average yield of target crops

Crops Target Priority states Percent share of

growth priority states in total
Per cent crop area
Rice 2.35
BH, OR, AS, WB, UP 66
Wheat 2.22
UP, MP, BH, RJ 68
Sorghum 1.36
MH, KN, MP, AP 82
Pear-millets 0.43
RJ 47
Maize 2.00
BH, Up, MP, RJ 60
Chickpea 4.34
MP, Rj, UP, MH 83
Pigeon pea 4.28
MH, GJ, KN, AP, MP 72
Groundnut 2.51
AP, GJ, KN, MH 76
Rapeseed & 2.11
RJ, UP, MP, WB 74
Mustared
Soyabean 1.11 MP, RJ 83
Cotton 3.78 MH, GJ, KN, RJ, AP 74
Sugarcane 3.07 UP 51
Note: AP: Andhra Pradesh. AS: Assam. BH: Bihar. GJ: Gujarat. KN: Karnataka.
MP: Madhya Pradesh. MH: Maharashtra. OR: Orissa RJ: Rajasthan. UP: Uttar Pradesh.
WB:West Bengal.
Source- IERD Annual Survey, 2006. Accessed at
http://www.ierd/GovernmentOfIndia938989898%agrisurvey.gov, last visited on 23red
September, 2008.

Similarly, a technology Mission on Oilseeds was launched in 1986 to increase

production of oilseeds in the country and attain self-sufficiency. Pulses were brought
under the Technology Mission in 1990. After the setting up of the Technology Mission,
there has been consistent improvement in the production of oilseeds. The oilseed
production, which was 108.3 lakh tonnes in 1985-86, has increased to 247.30 lakh tonnes
in 1998-99, the highest production so far. However, due to unfavourable weather
conditions prevailing in the major oilseeds-growing states, the oilseed production during
1999-2000 and 2000-01 suffered some decline.40
The increase in production was largely contributed by soyabean, rapeseed and
mustard. Production of pulses has seen many ups and downs, which is expected to be
checked under the mission.

40
Ibid.

22
 The country grows mainly nine oilseeds, with groundnut, rapeseed and mustard
accounting for 62 percent of total production. Lately, soyabean and sunflower have
shown major growth potential.41
This channelising of agricultural policy to further production of appropriate
crops that will lead to greater food reserves and also, the poor farmers making money
must be continued. At the same time, there is the need to provide access to high-quality
seeds and plant material for vegetables, fruit, flowers, oilseeds and pulses, without in any
way compromising quarantine conditions.
The quality of seeds and planting material needs to be greatly improved, and this
calls for strengthening the research effort to make it more effective.
The system for producing and marketing certified seeds of existing varieties at
reasonable prices also needs to be improved. Seed replacement rates in most parts of the
country are only one-third to one-half of what they should be, a situation that reflects
partly a lack of knowledge of the importance of seed replacement and partly a lack of
availability of reliable seeds.42
3.3 Fertilisers
Fertiliser nutrient demand has gone up from 0.29 million tonnes in 1960-61 to
16.7 million tonnes at the end of 2000-01, compared to 12.15 million tonnes during 1992-
93.43 This trend must be encouraged and adequately catered to.
Integrated Pest Management
Intgrated Pest Management is required. So, attention should be given to balanced
use of nutrients. Phosphorus deficiency is now the most widespread soil fertility problem
in both irrigated and unirrigated areas. Correcting the distortion in relative prices of
primary fertilizers could help correct the imbalances in the use of primary plant nutrients
-nitrogen, phosphorus, and potash and use of bio-fertilizers.
There is evidence that the use of fertilizers is at present highly imbalanced,
suggesting that scientific application of fertilizers holds potential for raising productivity.
Nitrogen fertilizers are oversubsidized compared with phosphorus and potassium
41
Ibid.
42
TCA Anant, Institutional Reforms for Agricultural Growth, NA Majumdar and Uma Kapila(ed.), Indian
Agriculture in the New Millenium-Changing Perceptions and Development Policy, Vol. 2, 1 st ed. 2006,
p.109.
43
CH Hanumantha Rao and ors.(ed.), Indian Economy and Society in the Era of Globalisation and
Liberalisation, p.12.

23
fertilizer.44 The structure of fertilizer subsidies should be rationalized to avoid excessive
and wasteful use of nitrogen fertilizers.
Lack of knowledge of micronutrient deficiency in the soil is also a serious
problem. There is need for much more extensive soil testing to encourage balanced
application of nutrients. To improve efficiency of fertilizer use, what is really needed is
enhanced location-specific research on efficient fertilizer practices (such as balanced use
of nutrients, correct timing and placement of fertilizers, and, wherever necessary, use of
micronutrient and soil amendments), improvement in soil testing services, development
of improved fertilizer supply and distribution systems, and development of physical and
institutional infrastructure.
Also, this would be in accordance with the mandate of the High Powered
Fertilisers Pricing Policy Review Committee, Hanumantha Rao Committee Report,
1998.45

3.3.1 Use of biofertilisers

Since biofertilisers are regarded as an effective, cheap and renewable supplement
to chemical fertilisers, there is an urgent need to implement the National Project on
Development and Use of Bio-fertilisers which is still in the pipeline.

3.3.2 Practice of Organic agriculture

One of the responses to the current challenges of rural poverty alleviation, food
insecurity, environmental protection and a globalized world market is the adoption of
organic agriculture by rural farmers in many developing countries. The growth of
organic agriculture is remarkable as it initially has developed from the bottom up
without much government support, and it has now become a viable income
-generating strategy for farmers the world over.
In India, organic agriculture has the potential to alleviate poverty in rural
areas. Two-thirds of Indian arable lands were under rain-fed conditions and had not been
introduced to the Green Revolution technologies. The existing modest yields could
easily be enhanced with the use of organic agriculture practices. In addition, input costs

44
Ibid, at p.84.
45
Ibid.

24
could be substantially reduced.46
Organic farming provides new market opportunities, offers the prospect to
discover, through the blending of traditional knowledge and modern science, new and
innovative production technologies in rural areas, and it can contribute to
environmentally sustainable social and economic development in rural areas.
3.4 Literacy
There is a very logical, positive and significant relation of literacy and awareness
levels of the farmer with crop productivity and a strong link exists between literacy and
farm modernisation.
Literacy has a very high impact on poverty alleviation as well as on hunger
reduction.
Table 7-Impact of literacy on alleviation of hunger and poverty in India
Literacy level Percent of population
Malnourished Below poverty level
Rural Urban Rural Urban
Zero 36 28 43 55
Below Primary Level 31 25 29 42
Above Primary Level 26 18 20 33
Graduate and Technical 14 8 7 4
th
Source- IARI-FAO/RAP study (2001)based on 50 NSS Round (1993-94)
There is an urgent need to ensure that farmers have at least basic literacy and
more so, information can be disseminated to them on a variety of issues relating to use of
modern technologies for farming.
Another key element, on which information needs to be provided to educated
farmers is marketing their products themselves, in such a way so as to ensure maximum
profit accrues. This would also assist in getting rid of middle-men who appropriate profits
due to the farmers. NGOs can also help in this effort, as in some areas they are involved
in rural-upliftment projects.

46
Report on Organic Agriculture and Rural Poverty Alleviation- Potential and Best Practices in India,
United Nations Economic and Social Commission for Asia and the Pacific, accessed at
http://www.unescap.org/rural/doc/OA/OA-Bgrd.htm, last accessed on 20th September 2008.

25
3.5 Removal of restrictions of domestic trade and processing
There are numerous restrictions in relation to agricultural production that have
been inherited from a post-war, pre-green revolution era of shortages. Now they are
merely counter-productive.
The Essential Commodities Act, Agricultural Produce Marketing Act, Small Scale
Industrial Revolution need to be revised and reviewed.47
It is necessary to amend outdated laws restricting the establishment of markets to
allow cooperatives and private entrepreneurs to set up modern markets with grading
facilities, cold storage, and transparent auction procedures. Half a dozen states have
already amended their existing laws on agricultural marketing to allow such markets to
be established, and a dozen others are in the process of doing so. 48 These changes are
being resisted by those who control the existing structure, but this opposition will weaken
over time.
3.6 Agricultural Diversification
Indias future agricultural strategy must also be oriented to the need for
agricultural diversification. Indias foodgrain production capacity has increased
significantly over the years, and there is evidence that household consumption patterns
are changing away from foodgrain toward higher-value crops such as vegetables, fruits,
milk, and eggs.
Future growth in agriculture must come from diversification into these non-
foodgrain areas, and this will pose a special challenge because marketing these
perishable products is much more complicated than marketing foodgrains.49

3.6.1 Horticulture
Horticulture development is currently constrained by poor marketing
arrangements. The gap between prices received by the farmers and those paid by urban
consumers is large, reflecting inefficient marketing arrangements. Horticultural

47
AN Agarwal, Indian Economy- Problems of Developing and Planning, 22nd ed. 1996, p.97.
48
Ibid, at p.117.
49
V.S. Vyas, Diversification in Agriculture- Concept, Rationale and Approaches, NA Majumdar and Uma
Kapila(ed.), Indian Agriculture in the New Millennium- Changing Perceptions and Development Policy,
Vol. 1, 1st ed. 2006, p.246.

26
 produce is typically collected from farmers by market agents, who sell it in organized
markets established under the Agricultural Produce Marketing Acts.
Unfortunately, these markets are controlled by a few traders and operate on a
highly nontransparent basis. Facilities for grading and handling are poor, and methods
of price discovery in the markets are not transparent. Wastage is high owing to poor
logistics and the absence of cold chains. 50 The net result is much lower realization of
income by the farmer.

3.6.2 Contract Framing

Contract farming is another innovation that has been introduced in many states
and could accelerate diversification.
Indias laws on agricultural land do not allow corporate bodies to purchase land
and operate large-scale farms-a national policy to prevent displacement of a large
number of small farmers-but corporate buyers, who know what is needed in export
markets, in high-end domestic markets, or in agroprocessing, can engage in contract
farming to procure high-quality produce.51
Buyers select areas suitable for the crops they are interested in and organize
farmers to produce these crops under contract, while providing planting material of the
right quality as well as technical supervision. The process enables the farmer to
eliminate marketing risk while allowing the corporate buyer to ensure quality supplies
by selecting planting material and providing access to scientific advice on disease and
other types of stress.

3.6.3 Livestock rearing

Livestock has the highest effect on reducing poverty and hunger. In rural India,
43% of the people who do not own even a single livestock are malnourished. Addition of
one cattle or one buffalo to their assets reduces the hunger prevalence by 16 and 25
percentage points, respectively.

50
Ibid, at p.248.
51
Ibid.

27
 Table 8-Impact of livestock on alleviation of hunger and poverty in India

Livestock Percent of population

Rural Urban
Hunger Poor Hunger Poor
None 36 28 43 55
Cow 31 25 29 42
Buffalo 26 18 20 33
Cow & buffalo 14 8 7 4
Source- IARI-FAO/RAP study (2001) based on 50th NSS Round (1993-94)
Livestock sector should also receive high priority with multiple objectives of
diversifying agriculture, raising income and meeting the nutritional security of the poor
farm households.
The direct benefits of rearing livestock for poverty alleviation are apparent.
However, in the face of even a small amount of entrepreneurship, this can be expanded
into a full-scale commercial activity such as pasteurising of milk, or preparation of butter.
3.7 Investments In Agriculture
The Agriculture sector has been starved of capital. A conducive climate has to be
created through a favorable price and trade regime to promote farmers' own investments
as also investments by industries producing inputs for agriculture and agro based
industries. The figures available however suggest that the government has been
systematically under investing in a sector that offers a high social return and that there is
considerable scope for diverting incremental outlays to priority areas in research.
The incidence of poverty and agriculture is evident.

Table 9-Gross capital formation in agriculture at 1993-94 prices (In crores)52

52
http://agricoop.nic.in/statistics/pop5.htm, last visited on 20th September, 2008.

28
 Year Total Public Private Percent Percent Investment
shar shar in
e e agricul
(Pub (Priv ture as
lic) ate) per
cent of
GDP
1990-91 14836 4395 10441 29.6 70.4 1.9
1991-92 13389 3871 9518 28.9 71.1 1.7
1992-93 14508 4076 10432 28.1 71.9 1.8
1993-94 13523 4467 9056 33.0 67.0 1.6
1994-95 14969 4947 10022 33.0 67.0 1.6
1995-96 15690 4849 10841 30.9 69.1 1.6
1996-97 16176 4668 11508 28.9 71.1 1.5
1997-98 15942 3979 11963 25.0 75.0 1.4
1998-99 14895 3870 11025 26.0 74.0 1.3
1999-00 17304 4221 13083 24.4 75.6 1.4
2000-01 16906 3927 12979 23.2 76.8 1.3
2001-02 17328 4127 13201 23.8 76.2 1.3
2002-03 18657 4538 14119 24.3 75.7 1.3
Source- Planning Commission of India, accessed at
http://www.indiaonestop.com/gnp.htm, last visited on 20th September 2008.

In this context, private and public sector investments both need to be examined.

3.7.1 Public Sector Investment

There has been a decline in the public sector investment in the agriculture sector.
Public investment for narrowing regional imbalances, accelerating development of
supportive infrastructure for agriculture and rural development particularly rural
connectivity needs to be stepped up. A time-bound strategy for rationalization and
transparent pricing of inputs has to be formulated to encourage judicious input use and to
generate resources for agriculture.
Input subsidy reforms should be pursued as a combination of price and
institutional reforms to cut down costs of these inputs for agriculture. Resource allocation

29
regime is being reviewed with a view to re-canalizing the available resources from
support measures towards asset formation in rural sector.53

3.7.2 Private Sector Investment

Private sector investments in agriculture needs to be encouraged more particularly
in areas like agricultural research, human resource development, post-harvest
management and marketing.
The private sector can be viewed as the key driving force in the investment scenario of
the Agriculture Sector in India. Many corporate giants have already entered rural areas
with a view to expanding business. But public policy should facilitate these investments
in rural areas by removing controls on private investment as well as by offering tax
concessions for investing in rural areas, in order to improve poor communities access to
education, market information for farmers and other small businesses, and service
information.

3.7.3 Rural electrification

This is an area that has been given a high priority as a prime mover for
agricultural development. The quality and availability of electricity supply has to be
improved and the demand of the agriculture sector has to be met adequately in a reliable
and cost effective manner. The use of new and renewable sources of energy for irrigation
and other agricultural purposes also requires being encouraged: all of these calling for
lump some investments to be ploughed into this sector.

3.7.4 Infrastructure
The connection of Indias villages to information and communications technology
is an important component of investment initiatives.
Besides this, infrastructure by way of roads that connect rural India are of primary
significance. Their importance lies primarily in the fact that they provide farmers with
access to better markets for selling produce. Also, there are better opportunities for

53
B.C. Roy and Suresh Pal, Investment, Agricultural Productivity and Rural Poverty in India- A State Level
Analysis, NA Majumdar and Uma Kapila,(ed.), Indian Agriculture in the New Millennium- Changing
Perceptions and Development Policy, vol. 1, 1st ed. 2006, p.367.

30
acquiring good quality agro-machinery and products at competitive prices. Further,
inroads can be made by developmental organisations and NGOs into these rural areas.54
Also, there is a need to give emphasis on development of marketing infrastructure and
techniques of preservation, storage and transportation with a view to reducing post-
harvest losses and ensuring a better return to the grower. The weekly periodic markets
under the direct control of Panchayat Raj institutions will be upgraded and strengthened.
Producers markets on the lines of Ryatu Bazaars must be encouraged through out the
width and the breadth of the country.

3.7.5 Storage facilities

Investment must be pooled to create storage facilities for different kinds of
agricultural products in the production areas or nearby places particularly in the rural
areas so that the farmers can transport their produce to these places immediately after
harvest in shortest possible time.
The establishment of cold chains, provision of pre cooling facilities to farmers as a
service and cold storage in the terminal markets and improving the retail marketing
arrangements in urban areas ought to be given priority.55 Up gradation and dissemination
of market intelligence should receive particular attention

3.7.6 Agro-processing units

Setting up of these units in the producing areas to reduce wastage, especially of
horticultural produce, increased value addition and creation of off-farm employment in
rural areas to be encouraged.
Collaboration between the producer cooperatives and the corporate sector should
be encouraged to promote agro-processing industry.56 An inter-active coupling between
technology, economy, environment and society will be promoted for speedy development
of food and agro-processing industries and build up a substantial base for production of
value added agro-products for domestic and export markets with a strong emphasis on
food safety and quality. Thus there is the pressing need for the funds to be canalized in to

54
Ibid, at p.381.
55
Ibid, pp.385-388.
56
B.C. Roy and Suresh Pal, Investment, Agricultural Productivity and Rural Poverty in India- A State Level
Analysis, NA Majumdar and Uma Kapila,(ed.), Indian Agriculture in the New Millennium- Changing
Perceptions and Development Policy, vol. 1, 1st ed. 2006, p.219.

31
the Indian Agricultural sector.
3.8 Credit Reforms
About 60% of credit requirements of farmers are met by institutional sources.
However, small and marginal farmers (less than 2 ha) including tenants who account for
nearly 80% of holdings and 1/3rd of area operated, depend far more heavily on informal
sources. These informal sources, primarily the traditional moneylenders, charge
incredibly high rates of interest. Among formal institutions, commercial banks have
emerged as major players in agriculture credit (about 50%) followed closely by
cooperatives, at 43%.57

Table 10-Credit/ Deposit Ratio of Scheduled Commercial Banks

Year Rural Metropolitan

Centres
1997 44.64 75.71
1998 42.43 74.89
1999 40.15 76.93
2000 39.35 82.24
2001 40.18 84.32
2002 41.08 93.46
2003 42.42 82.97
Source- Reserve Bank of India. Accessed at http://www.rbi.gov/financeestimates
%282828.gov, last visited on 20th September, 2008.

Here, the role of the government, particularly at the grass-root level is of utmost
importance. Interaction with farmers is essential for ensuring relevance and quality of
programmes designed.
NABARD, the Kisan Credit Scheme, and self-help groups for women are some
steps taken by the government in this regard.58 Giving credit to farmers has been
identified as a critical area for corrective action. The public sector commercial banks are
being pushed to provide credit to agriculture and have responded commendably. The
cooperative credit system, however, which was meant to be the backbone of agricultural
credit, has become financially weak.

57
Ibid.
58
Ibid, at p.230.

32
 Part of the problem has been the politicization of cooperative institutions as a
consequence of interference by state governments. The following problems needs to be
tackled-
i) Access to credit is a long and cumbersome procedure that
needs to be simplified.
ii) Recovery of loans is often a problem faced, which may be
dealt with by organizing potential borrowers into unions, or
professional groups to reduce risk. This will make the arena more
attractive for private banking institutions.
iii) Strengthen the institutional and regulatory framework for
the enforcement of contracts, arbitration and conflict resolution.
iv) Maintain accountability is a key for effective
implementation. This may be done if there is effective functioning of
the Panchayti Raj, as envisioned under the 73rd and 74th amendments to
the Constitution.
3.9 Accent on Post-Harvest Management, Value Addition and Cost-Effectiveness
Post-harvest losses generally range from 5 to 10 percent for non-perishables and
about 30 percent for perishables.59 This loss could be and must be minimized.
Emphasis should therefore be placed to develop post-harvest handling, agro-
processing and value-addition technologies not only to prevent the high losses, but also to
improve quality through proper storage, packaging, handling and transport. With the
thrust on globalization and increasing competitiveness, this approach will improve the
agricultural export contribution of India, which is proportionately extremely low.
Cost-effectiveness in production and post-harvest handling through the
application of latest technologies will be a necessity. The agro-processing facilities
should preferably be located close to the points of production in rural areas, which will
greatly promote off-farm employment. Such centres of processing and value addition will
encourage production by masses against mass production in factories located in urban
areas. Agricultural cooperatives and Gram Panchayats must play a leading role in this
effort. In doing so, the needs of small farmers should be kept in mind.

59
Ibid, at p.245.

33
3.10 Land Reforms
A fair distribution of land resources is a pre-requisite not only for agricultural
development but also for social justice. The 9th Five-Year Plan admits, The pattern of
landholdings in the country is extremely skewed.
An analysis of the incidence of rural poverty and hunger by farm size would
reveal that more than half of the landless people are poor. Poverty is significantly reduced
from the landless group to those owning land, suggesting that even a small piece of land,
less than 1/2 hectare, can greatly reduce both poverty and hunger.
Table 11-Incidence of hunger and poverty by amount of land owned in rural India

Land class Percent of population

Hungry Poor
Land less 49 54
<0.5 ha 32 38
0.5-1ha 24 27
1.0-2ha 17 19
2.0-4ha 12 14
>4ha 12 13
th
Source-IARI-FAO/RAP study (2001)based on 50 NSS Round(1993-94).
The incidence of hunger and poverty gets reduced as one is able to meet even part
of his/her dietary energy requirement through growing his/her own food.
Table 12-Relationship between agriculture-produced calories and poverty
Degree of home Percent of population
produced calories Hungry Poor
0 49 41
< 25 percent 36 34
25-50 percent 26 25
50-75 percent 23 20
>75 percent 17 29
Source- IARI-FAO/RAP study (2001)based on 50th NSS Round (1993-94)
Thus, it can be seen that even a small plot of ones own helps the agrarian
populace to escape extreme poverty and deprivation. Land is the main asset for
livelihood security.
Broadly speaking, land reforms would entail the following

34
 i) Tenancy reforms such as security of tenure, regulation of rent, and
conferment of ownership rights on tenants.
ii) Ceiling of unruly sized landholdings and their distribution amongst
landless workers and marginal farmers.
iii) Consolidation of extremely fragmented holdings.60
3.11 Agricultural Price Policy and the Public Distribution System
The twin objectives of agricultural price policy evoloved in the mid-sixties were-
i) To guarantee remunerative prices to farmers to induce them to
adopt high-yielding varieties and apply modern agricultural inputs,
ii) To provide food grains at affordable prices to the poor.
In 1965 the Agricultural Prices Commission (APC) was set up to advise the
government on a regular basis for evolving a balanced and integrated price structure. The
APC was required to keep in view not only the need to provide incentive to the farmers to
adopt the new technology but also the likely effect of the policy on the cost of living and
industrial cost structure. Based on the recommendations of the APC, the central
government announces the minimum support prices for selected agricultural crops.61
Subsequently, from June 1996, the targeted Public Distribution System was
adopted. This was supposed to help meet peoples basic food needs by providing rations
at subsidized prices. Although it has affected less than 20% of the poors food purchases,
the system has been important in sustaining peoples consumption of cereals, especially
in periods of drought.62
3.12 Current poverty alleviation schemes
The largest credit-based government poverty reduction programme in the world,
the Integrated Rural Development Programme(IRDP) provides rural households below
the poverty line with credit to purchase income-generating assets. The Jawahar Rozgar
Yojana was a national public works scheme launched in 1989 with financing from the

60
Chatterjee(ed.), Indian Economy for the 21st Century-Essays in Honour of Professor P.R.
Brhamananda, 1st ed. 2002, 1st rep. 2003, p.126.
61
U.Sankar, Agricultural Price Policy, Raj Kumar Sen and Biswajit Chatterjee(ed.), Indian Economy for
the 21st Century, 1st ed. 2002, 1st rep. 2003, p.186.
62
Pravin Visaria and TR Sundaram(eds.), ML Dantwala, Dilemmas of Growth-The Indian Experience, 1 st
ed. 1996, p.145.

35
central and state governments. Similarly, TRYSEM (Training rural youth for self
employment) and the recent NREGA have been implemented, targeting the same people.
Yet, we continue to hear of incidences such as farmer suicides, that happen every
year and seem to have an escalating incidence. 63 These clearly show that the program has
not really been successful in its entirety.
Many explanations are offered for the failure of special programmes for the
weaker sections-IRDP, NREP 20 point programme, etc. to make any significant impact
on the magnitude of poverty and unemployment. Besides factors such as technocratic
approach, administrative inefficiency and lack of motivation, urban bias; a more
substantive explanation which has gained greater academic acceptability and respect is
the one which attributes the failure to the economic and political power structure which
has vested interests in maintaining the status quo.
The iniquitous economic structure itself ensures that any development
programme, even if it were targeted to the weaker sections would automatically bring
more benefits to those who have resources than to those who have none. In this context, it
is important whilst not only plugging these lacunae, to ensure poverty reduction programs
are aimed more at the empowering the poor, rather than providing them mere crutches for
support. In this light, it is apparent that escalating the agricultural capacity of the farmers
is a better way to ensure empowerment than many of these schemes. However, it is when
both work in conjunction, that the best results can be expected.
Other pertinent factors would include raising the cropping intensity of the land,
and development of infrastructure such as rural roads.

63
TCA Anant, Institutional Reforms for Agricultural Growth, NA Majumdar and Uma Kapila(ed.), Indian
Agriculture in the New Millenium-Changing Perceptions and Development Policy, Vol. 2, 1 st ed. 2006,
p.98.

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 4.CONCLUSION
There are no quick-fix solutions to the problems of rural poverty. In general, the
most promising approaches are those that help the local community to improve its own
conditions. A key feature of several successful programmes has been the underlying
attitude towards the poor, seen as hard working producers, restricted by lack of external
inputs. Through monitoring the programmes and its overall approach to development, one
can continuously improve its effectiveness in poverty alleviation - in partner ship with
Central and State governments, NGOs and local communities.
Elimination of poverty on a durable basis can be achieved only by ensuring that
all rural households, especially those below the poverty line have an entitlement to
productive assets and skills which provide them gainful employment and adequate
earnings to enable them to live above sustenance level.
This objective can be achieved through
i) Redistribution of existing productive assets,
ii) Adopting a deliberate policy augmenting the flow of income stream
towards poor households and facilitating acquisition of assets generated by
public investments,
iii) Plugging sources of exploitation of the poor households by establishing
non-exploitative institutions for providing tenure security, credit, supply of
inputs and marketing of outputs, etc.64
There needs to be a balance between currently employed trends by way of
schemes for poverty reduction, and increasing agricultural capacity of farmers per se.
Also, it needs to be noted that it is this empowering of farmers by using agriculture that is
most relevant in the current rural context.
However, it must be noted that poverty removal is not purely an economic or
social issue. There is a desire and struggle to eradicate poverty because certain values are
cherished. It is believed to be wrong to tolerate a system which subjects a part of the
population to sub-human conditions of living. Hence, this moral dimension is relevant to
structural change and not only to structural change, it is equally relevant to other

64
R.Parthasarathy, Poverty Alleviation and Rural Upliftment, Business Line, 3rd August 2000, accessed at
http://www.hinduonnet.com/businessline/2000/08/03/stories/040320ma.htm, last visited on 20th September,
2008.

37
components of the economic system, the bureaucracy, the management and the
institutions.
It needs to be realized, that any structural change without a corresponding change
in socio-ethical values will be superficial and short-lived. The form may change but the
purpose(equity) for which it is changed may not be achieved unless the change is
supported by internalization of values that the change represents.

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