Achievements in Agriculture Sector in India

The agriculture sector has witnessed phases of high and low growth in the past seven decades since independence. Credible data on most economic indicators for the post-independence period is available only from 1950-51 onwards.

Therefore, according to the Economic Survey, Ministry of Finance; National Accounts Statistics, Ministry of Statistics and Programme Implementation (MoSPI), Government of India; Agricultural Statistics at a Glance, Ministry of Agriculture and Farmers Welfare; Annual Report, Periodic Labour Force Survey, July 2021 to June 2022, NSO, MoSPI, GOI, following data reveals the success of Agriculture sector in India.

Changes in Indian Agriculture and Economy between 1950-51 and 2021-22

• Income from the agriculture sector, at 2011-12 prices, increased 7.2 times over this period, with an underlying annual trend growth rate of 2.83%

• Food production increased from 106 million tonnes to 936 million tonnes between 1951 and 2021. Thus, the increase in food production was more than twice the increase in human population during the last seven decades

• The non-agriculture sector witnessed higher growth than agriculture, resulting in overall national income increasing by 28.4 times, with an average annual growth rate of 4.83%

• However, the number of agriculture workers increased from 9.72 crore in 1950-51 to 25 crore in 2021-22.

Sources of Growth

Indian agriculture has achieved long-term growth, where the overall performance of the sector is considered satisfactory, though some challenges remain. The main factors underlying this growth are:

• Favourable policy environment and timely institutional reforms initiated by the Union and State Governments

• Agriculture research and development (R&D) and extension for improved technology generation and its dissemination

• Public and private (farmers’) investments in building irrigation capacities.

• Use of modern farm inputs, including seeds

• Institutional credit supply

• Output price and market support

• Input subsidies.

Subsidies and Investments

Subsidies and investments in various types of infrastructure and institutions are important policy instruments contributing to the growth and development of the agriculture sector and the income of producers.

Both the Union and the State Governments have used these instruments to promote agriculture as well as the welfare of producers and consumers. Subsidies to the agriculture sector have more than doubled between 2011-12 and 2020-21. While public investments have also increased at almost the same rate as subsidies, their level has remained around one-third of the National Institution for Transforming India 10 subsidies. Subsidies constitute close to 7% of income generated in agriculture and allied sectors.

Initially, input subsidy was provided mainly for fertilizers. Fertilizer subsidy forms the biggest component of total subsidies for the agriculture sector, closely followed by power subsidy. Fertilizer subsidy is estimated to reach Rs. 2.25 lakh crore in FY22 – FY23 due to skyrocketing international prices of plant nutrients following the Russia-Ukraine war.

Several studies have pointed out that the level of input subsidies and the manner in which they are dispensed is reaching unsustainable levels and leading to a lot of adverse effects.

Agriculture Trade

At the beginning of 1990-91, exports exceeded imports by a sizeable margin, and the difference only increased over time. This was a result of the following:

• Steady and accelerated growth in agriculture production

• Slow-down in population growth which affected growth in domestic demand

• Liberalization of agriculture trade

Agri exports and imports now constitute more than 10% of total production in the country. The trade share in the produce that enters the market is much higher, as producers retain some part of production for self-use.

There is now strong integration of the domestic market with global markets and changes in global prices are promptly transmitted to the domestic market. This necessitates careful regulation of agricultural trade to safeguard domestic producers and consumers against the normal volatility in global prices without causing adverse effects on exports.