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It is often assumed that since agriculture and allied sectors contribute about 14% to India’s GDP, their role in the economy is not very significant. However, India has the largest workforce engaged in agriculture, with nearly 80% of the country’s poor residing in rural areas and primarily dependent on agricultural labor. As the most populous nation, ensuring food security remains a top priority. Moreover, India cannot achieve developed status unless its per capita income reaches the required level. Therefore, revitalizing the agricultural sector is crucial for sustainable economic growth.

The Role of Agriculture in Economic Development

Agriculture plays a fundamental role in the broader production system. In a globalized economy, increased productivity is a key driver of overall economic growth. Efficient agricultural production ensures lower costs for food, which in turn reduces labor costs, a vital input in the entire production system. This leads to a lower-cost economy and enhanced global competitiveness. Recognizing this, governments—especially in developed countries—provide substantial subsidies to their agricultural sectors to maintain economic stability and competitiveness.

As economies grow, a transition occurs where people move from agriculture to small-scale industries. China serves as a strong example, where workers were gradually absorbed into Town and Village Industries (TVIs), which modernized over time. Similarly, in India, labor-intensive industries, construction, and the service sector create demand for workers as the economy expands. Therefore, improvements in agriculture are essential to facilitate this transition and ensure balanced economic growth.

Agricultural Performance in India

Between 2014-15 and 2023-24, India’s agricultural sector grew at an average annual rate of 3.7% under the Modi government, compared to 3.5% under the previous UPA government. The growth under Modi’s tenure was driven by higher production in livestock and fisheries, which registered annual growth rates of 5.8% and 9.1%, respectively. However, crop production grew at a much slower rate of 2.3%, with horticulture registering a 3.9% annual growth rate, while non-horticulture (field crops) recorded a meager 1.6%. This indicates a crisis in traditional crop cultivation, which necessitates urgent reforms.

Key Areas for Reform Technology Adoption and R&D:

Implementing digital tools and supporting agri-startups to enhance efficiency. uIncreasing investment in agricultural research and development (R&D), which has been shown to yield returns five to six times the initial expenditure. uPromoting precision farming techniques to optimize resources such as water and fertilizers, thereby improving crop yields.

Infrastructure Development:

Expanding water-efficient irrigation techniques to improve water management.

Establishing modern storage and transportation facilities to reduce wastage and ensure timely market supply.

Strengthening cold chain infrastructure to maintain the freshness of perishable agricultural products.

Market Reforms:

Reducing the number of intermediaries to ensure farmers receive fair prices. Recognizing the role of middlemen in certain agricultural markets while ensuring they do not exploit farmers.

Formation of Farmer Cooperatives:

Encouraging the establishment of more farmer cooperatives to facilitate access to finance, affordable inputs, and modern agricultural implements.

Farmer-Centric Policies:

Shifting agricultural policies to prioritize farmers’ interests rather than focusing solely on consumer benefits.

Addressing price volatility by ensuring that government interventions are balanced between producer and consumer welfare.

Sustainable Agriculture Practices:

Promoting crop diversification, sustainable land management, and efficient water use. Encouraging organic farming to improve soil health and ensure long-term agricultural sustainability.

Agricultural Education and Skill Development:

Establishing more agricultural education and skill development centers to equip farmers with modern agricultural techniques and knowledge.

The Role of Central and State Governments

A collaborative approach between the central and state governments is essential for effective agricultural reforms. Agricultural economists Ashok Gulati, Devesh Kapur, and Marshall M. Bouton, in their article “Reforming Indian Agriculture” (Economic and Political Weekly, March 14, 2020), emphasized that while agriculture is a state subject, the central government plays a significant role. They proposed that reforms can only succeed if both levels of government work together in a spirit of cooperative federalism. Additionally, they suggested the creation of a permanent agricultural reform council, modeled after the Goods and Services Tax (GST) Council, to oversee and coordinate agricultural policy implementation.

Conclusion

For India to achieve sustained economic growth and improve its per capita income, comprehensive agricultural reforms are necessary. By adopting technology, enhancing infrastructure, implementing market reforms, and prioritizing farmer welfare, India can create a more resilient and pro-ductive agricultural sector. A coordinated effort between central and state governments will be crucial in ensuring the success of these reforms and positioning India as a global agricultural powerhouse.