INDIAN AGRICULTUE –

THE GROWTH PROSPECTS

AND CHALLENGES

Agricultural Development & Rural Transformation Centre

Institute for Social and Economic Change, Bangalore

Prof Parmod Kumar

pkumar@isec.ac.in

• National Council of Applied Economic

Research, New Delhi

• 7th March 2017

Indian Agriculture

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• Agriculture in India has been a profession for

thousands of years

• Presently country holds the second position

in agricultural production all over the world

• Indian agriculture has made rapid strides

since independence:

• From food shortages and import to self

sufficiency and exports

• From subsistence farming to intensive and

technology led cultivation

• Today India is the front ranking producer of

many crops in the world

• Ushered in through the green white, blue and

yellow revolutions.

Food production growth has remained

always ahead of population growth

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Key Drivers of Agriculture

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• Technology (farming and crop)

• Government Policy (credit, crop specific programmes)

• Cropping pattern (which depends on profitability, awareness etc)

• Environment factors (water availability, soil degradation, climate change etc.)

• Market forces (market openness, prices, transperancey, integration with downstream sectors)

• Global factors (supply-demand, trade norms, and restrictions etc.)

Indian Agriculture in Global Ranking

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Total Area 7th

Irrigated Area 1st

Population 2nd

Economically Active

Population

2nd

Total Cereals 3rd

Wheat 2nd

Rice 2nd

Coarse grains 4th

Total Pulses 1st

Oilseeds 2nd

Fruits and Vegetables 2nd

Milk 1st

Livestock (cattle, buffaloes) 1st

Implements (Tractors) 3rd

Challenges before Agriculture

Small and fragmented land holdings

Imbalanced use of Fertilizer & Pesticides

Shortage of good quality Seeds especially for Small and Marginal Farmers

Problem of Irrigation – Wastage of Water on the One Hand and Scarcity of Water on the Other

Soil Erosion

Lack of PHM and Marketing Facilities – Storage, Transport and Cold Chain

Scarcity of Capital

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Declining Holding Size

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Regional variability

in crop productivity

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Growing Resource Constraints

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Soil erosion adding vows to

declining holding size

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SOME IMPEDIMENTS IN THE GROWTH OF

AGRICULTURAL ECONOMY

• About 85 percent operational holdings are small and marginal

lacking access to capital, technology and market for growth

• Institutional arrangements and policy support for backward and

forward linkages are highly inadequate

• Restrictive land laws have reduced occupational mobility of people

and also the poor peoples’ accessibility to land due to absence of

active lease market

• There is lack of mutually supportive agriculture - industry symbiotic

linkages that could lead to better post harvest management and

higher value addition in the agriculture sector

Small Holdings and Productivity

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Yield Improvement Slow

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Indian Yield Much Lower

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Potential Much Higher

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SRR Needs Improvement

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Fertilizer Usage Need Change

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Better Irrigation

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Better Irrigation

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Credit Availability

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Credit provision is improving

Land Consolidation Needed

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Crop Profitability

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Rising Labour Cost

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Cropping Decision Archaic

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Future Directions

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TASKS AHEAD

• Reform in the land policy for accelerated agricultural growth and

poverty reduction

• A paradigm shift from subsistence farming to market oriented

commercial agriculture

• Improve viability of small and marginal farms

• Enable small farms to benefit from agricultural diversification and value

addition

• How –

• Promote contract farming

• Legalize and liberalize land leasing

• Promote land share companies in agriculture

Reforming Land Market

• Existing Land Market in India

• Informal tenancy against both landlords and

tenants

• Lack of investment in tenanted land

• Lack of credit, compensation and subsidy

for tenanted land

• Horizontal and Vertical Consolidation of

holdings

• Utilization of Fallow Land 28

Consolidation through Marginal Holdings

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Incidences of Tenancy in Some States

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State Proportion of leased-in

holdings

Proportion of leased-in

area

Andhra Pradesh 14.66 8.95

Karnataka 5.41 3.54

Punjab 12.18 16.83

Haryana 10.94 14.40

All India 10.50 6.50

Source: NSSO 59th Round

Tenancy Among Various Size Holdings

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Source: NSSO 59th Round

State % share in total numbers of leasing-

in

% share in total area leased-in

<2 ha 2-4 ha 4-10 ha >10 ha <2 ha 2-4 ha 4-10 ha >10 ha

Andhra

Pradesh

79.53 14.53 3.63 2.31 50.85 25.69 10.84 12.63

Karnataka 75.28 16.34 4.62 3.76 37.19 26.66 15.39 20.77

Punjab 37.69 32.78 24.54 4.99 9.63 29.48 46.51 14.38

Haryana 42.88 37.00 15.89 4.22 11.80 36.74 30.78 20.67

All India 86.05 9.59 3.27 1.09 52.38 21.80 14.57 11.25

Concluding Remarks Lack of new technologies post Green Revolution have worn off

which is bcoming worrisome (BT cotton being the exception)

Very few promising seeds have been commercialised and most

other innovations are still languishing due to poor extension or

lack of investment.

Corrective action regarding fertilizer subsidy, inadequate seed

production, market rigidities and other market-distortion policies

is desperately needed

Achievement of irrigation potential given the large backlog of

previous projects need to be completed. Monsoon dependence

and erratic growth will continue to plague the sector.

Fundamental degradation in environmental parameters and lack

of good practices may impact future food security

A consistent movement of labour away from agricultural

occupations may lead to rising agricultural wages. This should

prompt greater mechanization and productivity enhancement

measures 32

Opportunities

• There are several opportunities which can

help revival of agriculture like

• Contract Farming

• Reforming Land Policy

• New Crop Technologies – Seed Fertilizer

Crop Protection

• PHM, Retail and Distribution

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