The Indian economy has been a growing economy and now it is poised to achieve the level of the fourth and later the third largest economy of the world. Even today, about 45% of its population is directly involved in the agricultural sector alone. As many as 42.3% of the country’s workforce (in 2019-20), is directly employed in this sector. Two recent events – the Covid 19 pandemic and the ongoing geo-political problem in Europe - has revealed the necessity of a vibrant agricultural sector in the country for economic stability.
India's agricultural status in the global perspective
India’s agriculture covers 11.24% of the total arable land of the world. It has 4% of the world’s renewable resources. As of 2020, India feeds about 18% of the world’s population which is about 1.38 billion.
Ashok Gulati, Infosys Chair professor at ICRIER and Ritika Juneja, fellow at ICRIER (FULL FORM) in their research article published a few months ago named ‘Indian Agriculture Towards 2030’, pointed out many interesting data.
How did India achieve self-sufficiency in food production? The reason is simple. Between 1980-81 and 2019-20, the sector registered an annual growth rate of 3.2%. In that period, India’s population growth was 1.7% per annum – a rate that was half of the agricultural food production growth rate. This helped India achieve self-sufficiency in food production. At the same time, labour productivity in agriculture is low. India produces about 16.5% of its GDP with the engagement of 42.3% of the country’s workforce. Most of the holding size is very small. The average size of the land holding is 1.08 hectare (in 2015-16).
Gulati and Juneja’s main purpose of the article was to point out that Indian agriculture has transformed highly by using productive technology, investments and suitable institutional policies. But they also raised an important question - can India remain a food surplus nation by 2030? According to them, the main challenges before the Indian agricultural sector have been sustainability, climate changes, urbanisation etc.
Many people are aware of the situation of many neighbouring countries like Sri Lanka, Pakistan, Bangladesh and Nepal. These countries are also facing several new challenges linked to availability of food and developing agriculture. India has also been facing low kharif production due to scanty rainfall in at least five states. The stocks of many food items have dropped, although not to an alarming level. The government quickly responded with an export ban on some of the main food products. The global food availability has been heavily disrupted in the international market due to the war in Europe. In this situation, India has to rethink its agricultural policy.
Focus should be given to India’s agriculture
First, heavy emphasis is needed on agricultural research. Economically speaking, the rate of return on agriculture against money spent on it has been highest. A few years ago, in 2018, Professor Ashoke Gulati had pointed out in the Financial Express that every rupee spent on agriculture and development yields higher returns of 11.2. Expenditure on other areas is relatively lower. For example, for fertiliser subsidy it was 0.88, for power subsidy it was 0.79 and for roads it was 1.10. But how to utilize the research knowledge in actual farming is vital and the government has to take an initiative in this matter. Use of a high yielding variety of seeds, artificial intelligence technology and the use of drones to supervise fields can have economic benefits in agriculture.
Secondly, rural infrastructure is not at all note-worthy in most of the areas. M Srikanth and K Krishna Reddy, both from NIRDPR (FULL FORM), Hyderabad (the Hindu Business Line, September, 2022) pointed out that about 10% of cereals, pulses and oil seeds and about 16% of fruits and vegetables grown in India do not reach the ultimate consumers. The main reason behind this huge loss is the inadequacy of the cold chain infrastructure. It is known that the post harvest loss is close to `2 lakh crore per annum. They mention that China had promoted rural township and village enterprise by creating massive infrastructure. That created huge scope for income growth. India can adopt the model and reduce post-harvest losses.
Thirdly, proper distribution of institutional credit is necessary. For example, in 2021-22 agriculture credit was fixed at `16.50 crore. It is known that only a small fraction was taken away by the medium and large size farmers, corporate entities and traders. The usage of Krisan Credit Card is still low due to unawareness of small farmers.
Fourthly, the government has to have policy support for a variety of items. In India, paddy, wheat and sugarcane are produced in large amounts. The rest of the agricultural income comes from livestock (30%), forestry and logging (8%) and fishing (7%). However, diversification of the production structure will not happen automatically. For example, most dairies do not produce according to their capacity. The costs of inputs are very high and volatile. In several cases, viral infections drag down production and heavy loss of cattle are also experienced. Srikant and Reddy mention that The Indian Council of Agricultural Research promoted integrated farming by encouraging 75,000 farmers in 1,400 villages across India, thereby enhancing the farmers’ income by 125 to 272% during the last four years.
Fifthly, farmers have to form a body to enhance their bargaining power for selling products. This is known as the ‘Collective Action Theory’.
Sixthly, market linkages through platforms like e-NAM need to have online, transparent and competitive bidding systems.
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