i Growth 12MBA068

8/12/2019 i Growth 12MBA068

http://slidepdf.com/reader/full/i-growth-12mba068 1/10

A

PROJECT REPORT

ON

“Agriculture Gujarat”

PRESENTED BY

Krunal Patel

(12MBA068)

UNDER THE GUIDANCE OF

Ms. Kinjal Mistri

Ms. Komal Shukla

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE COURSE

“Inclusive Growth”

OF

SEMESTER-III

MBA PROGRAMME (2012-14)

SUBMITTED TO

INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (I2IM)

CHAROTAR UNIVERSITY OF SCIENCE AND TECHNOLOGY (CHARUSAT)

AT & PO CHANGA – 388 421 TA: PETLAD DIST. ANAND, GUJARAT

8/12/2019 i Growth 12MBA068


CHAROTAR UNIVERSITY OF SCIENCE AND TECHNOLOGY

(CHARUSAT)

FACULTY OF MANAGEMENT STUDIES (FMS)

INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (I2IM)

MBA/PGDM PROGRAMME (BATCH 2012-14)

SEMESTER III

CERTIFICATE

I Mr. KRUNAL PATEL (ID NO. :12MBA068) student of MBA program (Batch 2012-2014) at

Indikaka Ipcowala Institute Of Management (I2IM) hereby declare that this report as a part of

the course “Contemporary Issues In Management (MB 805.1)- Inclusive Growth” is the result of

my own work. I also acknowledge the other works/publications cited in the report.

Place:Changa (Signature)

Date: Krunal Patel

8/12/2019 i Growth 12MBA068


Introduction

Gujarat agriculture has recorded the fastest growth (above 9.6 percent) amongst all Indian

states, since 2000. This is more than three times agricultural growth at all India level (2.9

percent per annum during 2000/01 to 2007/08) and even higher in relation to states like Uttar

Pradesh (1.6 percent), Punjab (2.4 percent) and West Bengal (2.7 percent).

The paper explores if Gujarat‟s agricultural story is sustainable and can be a divadandi

(lighthouse) for other states and developing regions. First the sources of growth are

identified followed by the main drivers of growth i.e. which policies and institutions have

accelerated agricultural growth after 2000. Cotton, the high value segment (livestock, fruits and

vegetables) and wheat are identified as the main sources of growth as they have grown rapidly

both in production and value terms. Private sector has driven the cotton boom; but public sector

has also played an important role. Besides favorable monsoons in the past few years and past

investment in rural roads, active role of public sector through

[A] Mass based water harvesting and groundwater recharge

[B] Reform of rural power system through Jyotigram Scheme

[C] Reform of agricultural marketing institutions

[D] Revitalized and reinvented agricultural extension system are among the factors that have

contributed to Gujarat‟s impressive performance in agriculture.

8/12/2019 i Growth 12MBA068


THE KEY ISSUE

An important question facing Indian policy makers at the center as well as states is how to

promote faster and more inclusive agricultural growth. Due to significant regional disparity in

agricultural growth across states, the Tenth (2002-07) and Eleventh Plans (2007-12) have

worked out state-specific growth targets for Gross Domestic State Product from Agriculture and

Allied Activities. Unfortunately, most states have grown below their target; but one state which

stands out is Gujarat. From 2000/01 to 2006/07 GSDPA growth rate was 9.6 percent, albeit with

high volatility (as against target of 4 and 5.5 percent per annum for the Tenth and Eleventh Plan

respectively). During the same period Gross Domestic Product from Agriculture (GDPA) at an

all India level grew at only 2.9 percent per annum. Thus Gujarat has grown more than 1.5 times

above its Eleventh Plan growth target, and three times the all India figure. This stellar

performance of Gujarat in agriculture raises the question: can Gujarat be a dividend (lighthouse)

for other states to follow? Often called India‟s „growth engine‟, Gujarat‟s rapid Gross State

Product (GSDP) growth has been covered by various studies and the popular media already. The

services and manufacturing sectors have grown steadily since the nineties and the infrastructure

offered by the state from ports to roads have facilitated this growth. The latest testament to

Gujarat‟s economic development is a promise of investments worth US $ 243 billion via 8662

signed MOUs at the Vibrant Gujarat‟s Global Investors Summit in January 2009. But li ttle

attention has been given to Gujarat‟s impressive agricultural story-no other state has achieved

such high agricultural growth during this period. Other states like Uttar Pradesh, West Bengal

and Maharashtra (three of the largest agricultural states) are lagging below the national

average while even Rajasthan and Bihar have raced ahead (but with very high volatility). Is

agriculture in Gujarat a success story for other states to emulate? What are the drivers of this

high agricultural growth in Gujarat? Is this growth sustainable or a statistical aberration due to

high volatility?

8/12/2019 i Growth 12MBA068


Figure 1: Average Annual Growth Rates of Gross State Domestic Product (GSDP) and Gross

State Domestic Product from Agriculture (GSDPA): Major States and All India (%): 2000/01 to

2007/08

This paper attempts to study the growth story of Gujarat‟s agriculture sector during the period

2000/01 to 2006/07 (the last year for which data is available). The paper will explore the

plausible sources and drivers of agricultural growth in the state using state-level secondary data

and literature. Deeper research and a district-level analysis are required to understand the relative

weights of each of these factors, but this is not attempted at present. The paper puts forth some

preliminary observations, raises some questions and hopes to expand the debate around this

topic. Gujarat‟s recent growth experience provides a unique opportunity to study the drivers of

agricultural growth and explore whether its experiences can be shared and implemented in other

states and developing regions.

The second section presents a brief literature review and overview on Gujarat‟s economy andagricultural sector. The third section looks at the period 2000/01 to 2006/07 more closely and

examines the sources of growth within the agricultural sector in Gujarat, based on the share and

growth of value of output of major crops and their area and production. The fourth section

considers some of the drivers of this recent growth and the policies, programs and institutions

that have helped foster this growth.

8/12/2019 i Growth 12MBA068


BACKDROP

Gujarat has around 6 percent of India‟s geographical area (19.6 million ha) and is home to

around 56.4 million people (projected population as of 1st March 2008, based on Census 2001).

Of this, 62.6 percent of the population is classified as rural (Census, 2001). The state has around

5 percent of the total Indian population, contributes around 6.5 percent of the all India GDP and

5.6 percent of all India GDPA (triennium ending (T.E.) 006/07). GSDPA constitutes around 16.8

percent of the GSDP (T.E. 2006/07).

Gujarat‟s economic performance, especially after the 1991 reforms has been a topic of

much discussion in both academic and popular media. Ahluwalia (2000) notes that Gujarat‟s

rapid GSDP growth during the 1990‟s is commonly associated with „miracle growth‟

economies. State Product growth was dominated by the manufacturing and services sector

during the eighties and the nineties, due to Gujarat‟s strong industrial policy and state

support to private sector initiative. But during the same period agricultural growth slowed down,

showing little or no growth (see Dholakia, 2000; Hirway, 2000; Bagchi et al, 2000). This is

attributed to many factors including saturation of earlier Green revolution strategies and

diminishing land productivity, falling public expenditure on agriculture, irrigation and

electricity during the eighties, water scarcity and erratic rainfall (Hirway, Ibid.; Mathur and

Kashyap, 2000; Shah, 2000)

Table 1, shows that though growth rate during the eighties and nineties is quite high, it does not

adequately represent the true picture due to even higher volatility (the Coefficient of Variation

(CV) during these two periods is far above the all India figure; also see Dholakia, 2006). But

based on the latest Gross State Domestic Product series released by Central Statistical

Organization (in 1999/00 prices), agriculture in Gujarat after 2000 seems to have picked up

dramatically recording average annual growth rate of 9.6 percent during 2000/01 to 2006/071.

Though volatility is still high, it seems to have reduced (the CV value has almost been halved)

This volatility is partly due to Gujarat‟s high de pendence on rainfall- 64 percent of the area is

rain fed, which is marginally higher than the all India figure, i.e., 60 percent (Government of

India, 2008a). Agriculture is largely dependent on the south-west monsoons from June/ July to

8/12/2019 i Growth 12MBA068


September/October, which is often erratic and unevenly distributed (Valsad district in south

Gujarat received maximum rainfall of 2064 mm, while the Kutch district received minimum

rainfall of 663 mm in the monsoon of year 2007). The correlation between annual percentage

growth and departure of actual rainfall from normal rainfall is 0.5 (during the period 1992/93 to

2006/07)3. Agriculture suffered especially in the end of the nineties and early part of 2000, as

Gujarat witnessed lower than normal rainfall for 4 years from 1999/00 to 2002/03. The worst hit

year was 1999/00, where average percentage departure of actual from normal rainfall and

GSDPA growth fell to around -28 percent and crop production declined by as much as 29-31

percent in Saurashtra, Kutch and North Gujarat districts (Prakash, 2008).

The past few years have seen fluctuating but normal/surplus rainfall in most districts. This could

have had some positive impact, but only explains a part of the story. As Table 1 shows, the

period of the nineties records a continuous declining trend in GSDPA growth, reaching the

lowest point in 1999/00. But there seems to be a structural shift after 2000, as growth rates seem

to exhibit a stable and slowly increasing upward trend, at a higher level than before. This

indicates that factors other than just rainfall have caused this shift in the growth trajectory. The

following section explores the changes within the agricultural sector and possible sources of

growth.

8/12/2019 i Growth 12MBA068


SOURCES OF AGRICULTURE GROWTH

Gujarat shows much diversification in the agricultural sector and is predominantly a non- food

crop economy. Oilseed especially groundnut, tobacco and cotton are the principal non-food

crops. The share of different segments is computed as a percentage of the total value of output

from Agriculture and Livestock only, which constitutes 94 percent of the total value of output

from Agriculture and Allied Activities (T.E. 2005/06)4. The share of cash crops, other than

cotton (value from oilseeds, fibers, condiments, sugars and drugs and narcotics) has fallen from

around 27.4 percent (T.E. 1995/96) to 25.8 percent of the total value of agriculture and livestock

(T.E. 2005/06). But the share of cotton has grown

Percent of the total value of output for agriculture and livestock (T.E. 2005/06) Rather than

oilseeds (usually seen as the primary cash crop in Gujarat), kapas value showed unprecedented

growth after 2000 with relatively lower volatility, emerging as the first source of growth. In

2003/04 cotton output value rose by 114 percent from the previous year, probably due to the

impact of Bt Cotton which was officially introduced in 2002. Average annual growth rate

during 2002/03 to 2005/06 of value of kapas output was 46.4 percent per annum, Growth in

8/12/2019 i Growth 12MBA068


value of output of cash crops (minus kapas) shows high growth but with very high volatility

due to fluctuating performance of oilseeds.

The second important source of growth is the high value sector. Livestock has witnessed steady

growth with again relatively lower volatility at 6-7 percent per annum. It contributes around 5

percent to overall GSDP of Gujarat state on an average (Government of Gujarat, 2008a). Milk

is the largest product, forming 89 percent of the total value of livestock and almost 20 percent of

the total output of agriculture and allied activities (T.E. 2005/06). The dairy industry received a

boost after the „Operation Flood‟ program launched by the National Dairy Development Board

in the 1970s. The stable performance of the livestock sector seems to be a key growth component

within the agriculture

Figure 3: Production and Procurement of Milk in Gujarat (Million Liters per day): 1996/97 to

2007/08

And allied services sector Of this total procurement a significant and simultaneously rising

portion is procured by District Milk Producer‟s cooperative Unions and consequently re-sold or

processed, The next source of growth within the high value segment is the fruits and

vegetables sector whose value of output grew steadily at 14.4 percent per annum during

2000/01 to 2005/06. From 1992/93 to 1999/00 production of fruits and vegetables grew by

8/12/2019 i Growth 12MBA068


5.5 percent per annum, but from 2000/01 to 2007/08 average annual growth rate has increased to

12.8 percent. Of total area under fruits and vegetables, area is highest under mango (14.5

percent), banana (7.5 percent) and chikku (3.6 percent) and potato (7.3 percent), onion (10.4

percent) and brinjal (8.3 percent) (T.E. 2007/08). There seems to be significant diversification

into other fruits like pomegranate, guava, ber and other vegetables like cucurbits, cow pea,

cluster beam and tomato. The last few years have also seen some land brought under

floriculture, but this still remains a small portion.

Lastly, though Gujarat has diversified away from total food grains, this sector has also recorded

rapid growth after 2000. In terms of value, both cereals and pulses are growing at 11 percent per

annum, but with high annual fluctuations.

Documents

i Growth 12MBA068