Download Importance of Agriculture in India - Xavier Institute of Management

RPLS ASSIGNMNENT
GROUP No - 7
Agriculture : How Much Important?
(For National Development)
Submitted to:
Prof. Niraj Kumar
Submitted by:
Archana. Kumari (10)
Sarath.S. Nair
(40)
Importance of Agriculture in India.
Indian Agriculture-the history
Agriculture in the form of settled cultivation in India began in the prehistoric era in the
Indo gangetic plain. Agriculture was always supported by Indian ruling class. The
priestly class was a strong patron of Agriculture. Taxes on farmers, rarely exceeding onesixth of the produce, were always kept low. Mention of Agriculture in Ramayana and
Mahabharatha itself shows its importance at that period. Archeological findings reveal
that both wheat and rice were grown as domesticated crops along the banks of Ganga in
the sixth millennium BC. Animals were also domesticated. From the age of the Vedas, it
is obvious that forests were considered important and their protection beneficial. Indus
valley was famous for fruit cultivation. The Agnipurana and Brihatsamhita refer to the
upkeep and treatment of trees. Revenue collection from the farmers was organized in a
big manner and agriculture trade dominated the business of the day.
India has got rich diversity in its flora and fauna. The annual food grain production
increased from 51 million tones in early fifties to 206 million tones in the nineties
(Enabling Agricultural Markets for the small Indian Farmer, IDF-IDEI Collaboration
on Rural Markets ,page-14-27). The darker side of Agricultural system is that
agricultural growth has been uneven across different sections of the farming community.
The agricultural sector is marked by low levels of productivity and degradation of natural
resources in some areas. Capital inadequacy, lack of infrastructure support, demand side
constraints like movement, storage and sale of agricultural products are some of the
problems. Agriculture is not just about food grains such as rice and wheat. The 4% target
growth rate in Agriculture can also be brought about through a 8% or higher rate of
growth in Horticulture. While non- cereal and non-crop output has indeed grown, the
diversification has not been enough compared to targets. The presence system of
expenditure on agriculture through input subsidies is inefficient and doesn’t help poor
farmers. the existence of participatory institutions with decentralization will facilitate
collection of right user charges provided the service quality improves. Subsidies need to
shift from inputs to investments such as farm improvements, pumps and mechanization.
The present system of subsidies focuses on primary stage of processing while
discouraging value addition and encouraging intermediation of inputs need to be
subsidized; it is possible to think of a system of input stamps that are given to targeted
resource-poor farmers, instead of the present system of subsidizing input across the board
The share of agriculture and its subsidiary industries like forestry and animal husbandry
in the national income of India is large. This share is about 1/3 of national Income.
India spent a large part of her income on fulfillment of their basic requirement.
Agriculture products form a major part of their consumption. Agriculture supplies food to
India. As food is basic need of every person, fodder is required for live stock. These live
stock are asset of a country and agriculture helps in keeping them alive. The revenue of
govt. depends largely on agriculture. The govt. gets directly revenue from the agriculture.
The transportation of food grain from one part of the country to other part by railway also
brings revenue in the coffers of govt.

Agriculture is the predominant occupation of two-third of working population for
their livelihood. 12.9% of the total population in this country own 65% of the
cultivable land. India has got 130 million hectares of cultivable land. (Indian
Economy,2004-05,Pratyogita darpan)

Agriculture is the major source of income for about three-fourths of India's
populations who live in villages. Unemployment is severing problem in India.
Agriculture is mainly labor intensive Thus, it provides employment to a large
number of people. It is also a source of self employment. It is rightly said,"
Agriculture provides work to free hands, food to serving people and source of
income to poor people."(Unknown author)

Agriculture provides not only food but also raw materials for manufacturing
industries like textiles, sugar, vegetable oil, jute and tobacco.

Agriculture is not only an important occupation of the people, but also way of
life, culture and custom. Most of the Indian customs and festivals are observed in
consonance with agriculture seasons, activities and products.
Different factors influenced by Agriculture sector is discussed below:
Share of Agriculture in National Income
Agriculture has got a prime role in Indian economy. Though the share of agriculture in
National income has come down since the inception of planning era in the economy but
still it has a substantial share in GDP. The contributory share of agriculture in GDP was
55.4%in 1950-51,52 % in 1960 – 61 and at present reduced to nearly 22% only .The
share of Agriculture in in gross capital formation in the early 1990s was 1.9% which
declined to 1.3% in 2002 – 03.(Indian Journal of Agricultural Economics, Vol50,No.3
pp-481)
Table-1
Share of Agricultural Exports in GDP in India.
(Rs. crore at current prices)
1970-71
1980-81
1990-91
1995-96
1998-99
GDP (TOTAL)
39708
122427
477814
1006286
1612383
GDP in Agriculture
16821
42466
135162
255613
428680
TOTAL EXPORTS
1535
6711
32558
106353
141604
Agricultural
487
2057
6019
20344
25225
Exports
Source : National Account Statistics, various issues, CSO,NewDelhi
Important contribution to Employment:
Agriculture sector at present provides livelihood to about 70% of the labor force. The
primary occupation of most of the people living in the rural area is agriculture or allied
activities. These days Agro processing Industries are coming up in big way and it thus is
providing opportunity to large number of rural people to work in these factories during
off- seasons.
Important source of Industrial development:
Various important industries in India find their raw material from agriculture sector ,
cotton and jute textile industries, sugar ,vanaspati industries etc. are directly dependent on
agriculture. Handloom, spinning, oil milling, rice thrashing etc. are various small scale or
cottage industries which are dependent on agriculture sector for their raw material. This
highlights the importance of agriculture in industrial development of the nation.
Importance in International trade
India’s foreign trade is deeply associated with agricultural sector. Value of total exports
of the country has been ranging between 15- 20%. Besides, goods made of with the raw
material of agriculture sector also contribute about 38% in the total exports of the
country. (Refer above table No.1)
India has attained self- sufficiency in food grain production in 1998.Favourable monsoon
helped in attaining a substantial increase in food grain production from174.2 million
tones in 2002-03 to 210.8 million tones in 2003- 04, due to an increase in the production
of both cereals and pulses. There was also a significant increase in the production of
oilseed and cotton in 2003-2004. However, production of sugarcane experienced a fall for
the second year in succession, mainly because of drought affecting the crop in the major
producing areas of south MP, Maharashtra and Karnataka .The oilseed production during
2003-2004 is estimated to be 25.0 million tones or 65.80 per cent over 2002- 03.The
production of cotton in 2003-2004 estimated at 13.5 million bales of 170 kg each of the
previous year. In respect of jute and mesta , the production estimated at 11.2 million
bales of 108 kg each is lower than the production of 11.4 million bales in 2002-2003.
Sugarcane production is likely to be244.8 million tones, showing a fall of 36.8 million
tones over previous year’s production of 281.6 million tones.(Indian Economy,200405,Pratyogita darpan)
Agriculture and allied sector value added registered a growth rate of 9.1 percent in 200304, reflecting the growth in physical production and remunerative prices of agricultural
goods .The growth rate of sector for 2003-04 was one of the highest in recent years ,and
only marginally lower than the previous high of 9.6% achieved in 1996-97.
A GDP at the 6% level, below the 7.7% target for the Tenth Plan, and the fact that the
growth rate has been trending down for the last 3 years is a worrying factor. Agricultural
growth has dropped to 0.9% from an average of 3.9% in the 1980’s and 3.3% in the 90’s.
Industrial growth too has slowed to below 6% from 6.6% in the last decade. There is an
urgent need to lift overall GDP growth sustainably by addressing a central issue – the
slowdown in rural incomes. The IT boom has directly impacted less than 500,000 people
– a very small proportion of our total population. A high rate of economic growth is
sustainable in the long-term only if it is broad-based and benefits a majority of our people
Although agriculture contributes less than a quarter of India’s GDP, over 70% of India’s
billion-strong population is dependent on it. This is why it is an important potential
demand base for industry and services, in addition to being the supply base for food and
raw material.
Agricultural growth has a strong multiplier effect across the economy. A modest
incremental growth of 3% in agriculture would lead to another 2.6% growth for the
manufacturing sector, taking overall GDP growth up by 1.7% - closer to the 8% mark and
our Tenth Plan ambitions. The recently announced National Agriculture Policy is timely.
It is now essential for both Government and industry to take some bold initiatives to
ensure its implementation and bring about another structural change – a Food Revolution.
With monsoon dependence, growth in agriculture was volatile and it declined to 1.1 per
cent in 2004-05, but in the current year, despite calamities, growth is likely to be higher.
But we are nowhere near the targeted growth rate of 4 per cent for the Tenth Plan.
Another concern is low productivity, with only 40 per cent of the net sown area under
irrigation. (Outlook India, Jan 16,2006 issue)
If the on-going projects are completed, another 14 million hectares would come under
irrigation. Wasteland development and reclamation is another area of importance, with 64
million hectares being categorized as wasteland.
PROBLEMS IN INDIAN AGRICULTURE:
1).Indiscriminate use of HYVs and declining productivity: A quarter of a century after
India ushered in the green revolution, some agronomists hold the indiscriminate use of
high yielding varieties (HYV seeds), chemical fertilizers and pesticides responsible for
the problems and warn that entry of MNCs in the farm sector would spell further doom
“Increased inputs are no longer translating into increased outputs”. Hard pressed to step
up productivity in the face of declining soil fertility, the small farmers ended up incurring
huge debts to buy expensive high yield seeds and pesticides. And when their crops failed,
they committed suicides which are very common in the states of Punjab, Andhra Pradesh
and Maharashtra.
.While Indian exports in the years of liberalization have made no great strides, in fact
only declined, the entry of multi-nationals in the seeds, chemical fertilizers and pesticides
sector has hit the Indian farmers hard.
2.Structural problems: Indian agricultural is beset with structural problems which have
to be addressed at the earliest. Liberalization in the industry is more important for
agriculture as it would help in the import of technology which also suggests that large
holdings and mechanization can go a long way in making agriculture profitable. "The
situation today is not critical. But if we don't re- orient ourselves we'll land into a crisis,''
says minister of state for agriculture. Free trade or globalization is a two way trend
.Harmful effects of emerging genetic engineering technologies and the "dangerous'' shift
towards cash crops at the cost of food grains demands for a new agriculture policy based
on the sustainability of agriculture and survival of small and marginal farmers.
3).Lack of proper Agricultural policies: there is need for appropriate policy changes
for Indian agriculture to emerge as an important force for economic growth, poverty
alleviation and competitiveness in the global economy. Also there is a need for broadbased agricultural growth strategy for reducing poverty and achieving food security, and
the place of science, technology and public policies in such a strategy. despite agriculture
having emerged as a vibrant sector characterized by adequate availability of food, the
sector still grapples with the paradox of persistent hunger. Malnutrition and 'hidden
hunger' - insufficient intake of micronutrients - have continued to affect vast numbers of
people, with serious public health consequences. Despite huge surpluses of basic food
grains, large numbers of people remain hungry because they lack the resources to
purchase all the food they need. This is despite the fact that reform measures effected
since 1991 have resulted in India emerging as one of the world's fastest growing and most
resilient economies. The process of economic policy reforms needs to extend much more
thoroughly into the food and agriculture sector and emphasis should be laid on making
agriculture more market-oriented which does not reduce the importance of sound and
transparent public administration. In fact, effective government at both the Centre and
State level is a crucial component of reform. Reforms in the agriculture sector should
encompass measures both on the input and output side, R & D, education, and the
transition to a more market-oriented agricultural policy will need to be accompanied by
reform of safety net programmes. With appropriate policy changes, the much highlighted,
globalization can be made to work for the poor and hungry.
In India the prioritization of subsidies to different crops has been done which calls for so
many loop holes in the system itself. Therefore government should follow an open trade
policy, and not impose import curbs or give incentives for production of any particular
crop.
India has decided competitive advantage in food grains. Yet incentives were provided for
self-sufficiency in oil seeds to such an extent that over the last decade as much as 12
million hectares under cereal cultivation were diverted to oil seed production. The
government invested Rs 137 crore in floriculture infrastructure to promote its export, but
earned a mere Rs 32 crore in return. India can buy only one fourth of the food it could
have grown with these export earnings. In an open trade regime farmers would have
benefited more by exporting commodities they were good at and economically importing
items like oilseeds. Cultivation of staple grains should be encouraged to ensure food
security and stresses on the need for switching over to organic fertilizers to sustain soil
fertility. Agricultural research, must make use of all relevant tools, including molecular
biology, conventional approaches, and better utilization of farmers' own knowledge, to
help meet the needs of poor farmers and regions. Alongside these public investments,
agriculture should be more market-oriented, with better targeted safety nets to ensure that
the transition from controls and subsidies does not leave poor people worse off. At the
same time, agricultural policy needs to shift from the heavy emphasis on food grains to
more diversified and higher value added activities.
Further, globalization can be shaped to benefit the poor with needed shifts in domestic
food and agricultural policy, which in turn would go a long way in assuring that the rural
poor have a stake in export opportunities that can facilitate their participation in markets
and enhance their political voice. For these policy shifts to be effective, there isan
immediate need for developing countries and their allies to convince the developed
countries to reduce their trade barriers to developing countries' exports and other trade
distorting policies. (www.eximbankindia.com)
4).Lack of integrated approach towards wasteland development:
There is an urgent need to make use of wastelands and distribute it among small
farmers. National Commission on Agriculture estimated that 175 million hectares of land
was under some form of degradation and was in need of attention. According to the
Commission, all rained paddy lands in the country were subject to water and wind
erosion and thus in the 175 million hectares, the Commission included 85 million
hectares of cultivated land too. Of the remaining 90 million hectares, there would be 35
million hectares of degraded and barren forestland and the rest 5 million hectares would
constitute common and revenue lands. According to the nine-fold land classification, out
of 304 million hectares of land in India for which records are available, roughly 40
million hectares are considered totally unfit for vegetation. It is either urban and under
other non-agricultural uses such as roads and rivers, or is under permanent snow, rocks
and deserts. The break-up of the remaining 284 million hectares of land that is fit for
vegetation is as follows.
Million Hectares
Uncultivated land
142
Cultivated land
67
Fallow/cultivable wastes/pastures/groves
55
Total area of cultivable lands
264
The above land-use classification, however, does not say anything about the extent of
land degradation or loss in productivity over time due to various natural and man-made
causes. Not only are cultivable wastes and pastures consider highly degraded, that is,
producing biomass much below their potential, even a substantial part of cultivated and
forest lands have lost their productivity due to inappropriate land-use and land overexpatiation.(Article by Dr.N.C.Saxena,secretary,Planning Commission,GOI,New Delhi)
But developing wastelands is no easy task, given the gradual decline in public outlays in
agricultural infrastructure at the cost of growth rate in subsidies.
With most of plan money funding subsidies in fertilizers, the state has little resources for
spending on modernizing programmes or on projects that could raise irrigation levels and
bring more land under agriculture A whopping 63 per cent of the arable land is still
rainfed,. noting that growth in productivity and yield is directly proportionate to the rate
at which irrigation levels are going to raise.
Slow pace of irrigation is indeed a serious constraint, which suggests the promotion of
low cost watershed management projects. Long term benefits lie in investments in
infrastructure, research, training and extension programmes that result in increase in
productivity and yields. (Indian Express, Wednesday, august19,1998)
These are the few major problems encountered by Indian Agriculture, but other related
problems we have not discussed due to content constraint, but what we feel is that if the
solution for these broad problems are worked out, other smaller and attached problems
will be taken care of.
Suggestions to improve the condition of Agriculture:
1.
10% of the food grains is annually lost because of post harvesting problems.
We know that we have reached sustainability in food grain production but lot of
food grains get wasted every year which could otherwise satisfy many poor souls.
There is a strong need for the development of storage facilities must be at the
farm level. This requires institutional credit and government must provide land at
concessional rate to the private parties to develop integrated bulk handling
systems and modern warehouses.
2. There are very few training centres for farmers with no organized institution to
perform this activity. Establishment of farm training institutes under the Industrial
Training Institutes and Agricultural Universities that have farmer training facility
and granted autonomy should be done.
3.
Setting up of National Centre for Crop Forecasting (NCCF) under the Ministry of
Agriculture. Use IT to develop a multicropping pattern, cropping intentions, crop
sizes, weather conditions, harvesting details, support prices, government stocks,
mandi wholesale and retail prices and local prices.
4.
Large amounts of land are being unutilized due to landslide, salination or water
logging. Panchayats can identify such lands and can be reclaimed through joint
cooperatives of landless farmers and agro industry for cultivation.
5. As almost 65% of population thrives on Agriculture, so there should be increment
in plan allocation for agriculture (preferably by 2%). There is a need to encourage
private sector investment in agriculture by creating Special Purpose Vehicles.
6.
Indian agriculture still depends upon monsoons and only 35% of cultivated land
is under irrigation. There is lack of maintenance and upkeep of existing irrigation
systems due to lack of funds and tube wells and pumps remain idle due to lack of
power. Medium and major irrigation projects are idle due to escalating project
costs. All future 5 year plans should concentrate on bringing at least 20 million
hectares of unirrigated land under the purview of irrigation.
References:
1)G.Venkataramani,
2003,
Making
a
smart
recovery,
Survey
of
Indian
Agriculture,41(7),19-21
2) Moitra,B.2001Agriculture production paving the way to success. Kurushethra
49(3):28-30
3) Dr.Agarwal Anupam, 2004-05,Importance of Agriculture in India, Indian
Economy:61-63
4) Government of India : Agricultural [prices in India, Directorate of economics and
statistics, department of agriculture and cooperation, Ministry of Agriculture, NewDelhi.
5) Agricultureal situation in India, Directorate of economics and statistics, department of
agriculture and cooperation, Ministry of Agriculture, NewDelhi
6) Bibek debroy,Amir ullah khan, Enabling Agricultural Markets for the small Indian
Farmer, IDF-IDEI Collaboration on Rural Markets, Book well, NewDelhi,page-14-27
7) Rao.C.H. Hanumantha (1995), “ Liberalisation of Agriculture in India : some major
issues”, Indian Journal of Agricultural Economics, Vol 50, No.3, July-September, page468-471.
8) Swaminathan, Madhura (1999):”Understanding the costs of the Food Corporation of
India”, Economic and Political weekly, December 25,page A-121-132.
9) Vaidyanathan, A.(1994) :” The employment situation: some emerging perspectives”
Economic and Political weekly, Vol.29, No.50
10) Sudha. Passi, (1998) Indian Express, August19 Wednesday; “What is wrong with
Indian Agriculture”
Sites visited:

http://www.manage.gov.in/RRSites/ agriculture.htm

http:// www.eximbankindia.com

http :// www.upgov.up.nic.in/ watershed/article.htm)
RPLS ASSIGNMENT
HOW FAT OUR CHICKENS ARE?
A STATUS REPORT ON POULTRY INDUSTRY
SUBMITTED TO
:
PROF NIRAJ KUMAR
SUBMITTED BY
:
ANOOP JOHN PEERIS (09) &
SUMANT DUBEY (45)