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ECONOMIC SURVEY VOLUME 2


CHAPTER 7

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ECONOMIC SURVEY VOLUME 2 CHAPTER 7

CHAPTER -7

AGRICULTURE AND FOOD MANAGEMENT

OVERVIEW OF AGRICULTURE AND ALLIED SECTORS

• Fluctuating growth rates of agriculture and allied sectors – as more than 50% of agriculture in
India is rainfall dependent which aggravate the production risks.

Year Growth rate (in %)


2012-13 1.5
2013-14 5.6
2014-15 (-) 0.2
2015-16 0.7
2016-17 4.9

• Gross Capital Formation (GCF) to GVA has been showing a fluctuating trend from 18.2% in 2011-
12 to 16.4% in 2015-16.
• The Gross Capital Formation in agriculture and allied sectors as a proportion to the total GCF
showed a decline from 8.3 per cent in 2014-15 to 7.8 per cent in 2015-16. This decline can be
attributed to reduction in private investment.

CROP PRODUCTION

As per the Fourth Advance Estimate for 2016-17, the country achieved a record production of food
grains estimated at 275.7 million tons, which is higher by 10.6 million tons than the previous record
production of food grains in 2013-14.
The production of rice is estimated at 110.2 million tons during 2016-17 which is also a new record.

Crops Growth (in %) Reason of growth


Wheat 6.6 - Very good rainfall during monsoon
Bajra 21.5 2016-17
Pulses 40.4 - Various policy initiatives taken by the
Oilseeds 27.1 Government
Gram 32.1

Kharif Production 2017-18

As per the First Advance Estimates, kharif food grains production during 2017-18 is estimated at 134.7
million tons which is expected to be lower by 3.9 million tonnes from the production of 138.5 million
tons during 2016-17.

DYNAMICS OF AGRICULTURAL GROWTH


There has been a gradual structural change in agriculture – the share of livestock in GVA has been rising
gradually while the share of the crop sector in GVA has been on the decline (impacting sources of
incomes of the farm households.
Need of reorientation in policies-

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ECONOMIC SURVEY VOLUME 2 CHAPTER 7

Strengthening the value chain by focusing on allied activities like dairying and livestock development
along with gender-specific interventions.

Policy for Women Farmers:

With growing rural to urban migration by men, there is ‘feminisation’ of agriculture sector, with
increasing number of women in multiple roles as cultivators, entrepreneurs, and labourers.
The following measures have been taken to ensure mainstreaming of women in agriculture
sector:
• Earmarking at least 30% of the budget allocation for women beneficiaries in all
ongoing schemes and development activities.
• Initiating women centric activities to ensure benefits of various beneficiary-
oriented programs/schemes reach them.
• Focusing on women self-help group (SHG) to connect them to micro-credit
through capacity building activities and to provide information and ensuring their
representation in different decision-making bodies.
• Recognizing the critical role of women in agriculture, the Ministry of Agriculture
and Farmers Welfare has declared 15th October of every year as Women
Farmer’s Day.

Need of gender-specific interventions: An ‘inclusive transformative agricultural policy’ should


aim at gender-specific interventions to raise productivity of small farm holdings, integrate women
as active agents in rural transformation, and engage men and women in extension services with
gender expertise.

CROPPING PATTERN

- India ranks first, with 179.8 Mha (9.6% of the global net cropland area) of net cropland area
according to United States Geological Survey 2017.
- The Index of Crop Diversification has been computed to examine whether there has been major
changes in the cropping patterns across States.
- Two of the States HP and Jharkhand have shown increasing values in crop diversification
while Odisha (80% of the cropped area under rice) and Punjab (wheat and paddy 83%)
follow monoculture facing issues such as – declining productivity, lower fertilizer response
ratio, degradation of soil health and declining profitability of cultivation.
- Need to diversify into high value crops and horticulture crops: to improve soil health,
productivity and reduce risk( as inverse relationship between change in crop diversification
index and variability of output)
- Crop Diversification Programme is being implemented in the original green revolution
states to diversify paddy areas towards less water requiring crops (like oilseeds, pulses,
coarse cereals) and shifting of tobacco farmers to alternative crops in tobacco growing
states.

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INPUT MANAGEMENT IN AGRICULTURE

Operational Holdings by Educational Status


• The educational level of farmers has a significant impact on the capacity of farmers to adopt and
inculcate new methods of cultivation and input management.
• As per Input Survey (2011-12), about 69.3% of farmers were literate.

% of farmers Level of education


22.5 Class V
22.7 Middle Class
15.4 Secondary
5.2 Senior Secondary
1.3 Technical diploma
2.1 Graduation and above

Use of Inputs by Agricultural Holdings


• The use of inputs like fertilizers, hybrid seeds and organic manure are critical in increasing
productivity in agriculture.

• In order to promote Seed Replacement Rate (SRR) and Varietal Replacement Rate (VRR), Seed
Project entitled, “Seed Production in Agricultural Crops” is being implemented.
• However, the use of fertilizers and hybrid seeds can bring about better yields if there is
adequate coverage of irrigation since agriculture in India is largely rainfed.

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Irrigation
• The all India percentage of net irrigated area to total cropped area was 34.5%, which makes a
large segment of cultivation dependent on rainfall.
• Only 2 states – Punjab and UP have more than 50% net irrigated area to total cropped area and
only 7 states have above 34% in 2014-15.
• To increase the coverage of irrigated area- Prime Minister’s Krishi Sinchayee Yojana (PMKSY)
was launched in 2015 with an outlay of Rs.50,000 crore in five years.

Initiative 2015-16 2016-17 2017-18 (Target)


Per Drop More Crop Rs. 1556.7 cr Rs. 1991.2 cr Rs. 3400 cr
Area brought under 5.7 lakh ha 8.4 lakh ha 12 lakh ha
micro-irrigation

Agricultural Mechanization
• Farm mechanization and crop productivity has a direct correlation- saves time & labour,
reduces drudgery, cut down production cost in the long run, reduces post-harvest losses, boosts
crop output and farm income.
• At present, Indian farmers are adapting farm mechanization at a faster rate in comparison to
recent past. Indian tractor industries have emerged as the largest in the world and account for
about one-third of total global tractor production.
• Need to enhance the level of farm mechanization in the country- estimated that percentage of
agricultural workers of total work force would drop to 25.7% by 2050 from 58.2% in 2001
• Human power availability in agriculture also increased from about 0.043 KW/ ha in 1960-61 to
about 0.077 KW/ha in 2014-15. However, as compared to tractor growth, increase in human
power in agriculture is quite slow.
Shift towards use of mechanical and electrical sources of power (from 7% in 1960-61 to about
90% in 2014-15)
• Need to consolidate land holdings to reap the benefits of agricultural mechanization

MITIGATING RISKS IN AGRICULTURE: CROP INSURANCE AND CROP LOSS


• The NSSO Report indicated that a very small share of agricultural households engaged in crop
production activities was insuring their crops. For wheat and paddy, less than 5% of the
cultivating agricultural households insured their crops.

Pradhan Mantri Fasal Bima Yojana (PMFBY)

- A yield index based crop insurance scheme launched in 2016.


- provides comprehensive coverage of risks from pre-sowing to post harvest against
natural non-preventable risks
- Uniform premium to be paid by farmer of 2% for all Kharif crops and 1.5% for all Rabi
crops and 5% for commercial and horticultural crops.
- During 2016-17, the target of 30 percent of the Gross Cropped Area (GCA) in the country
for PMFBY has been achieved. The target for 2017-18 has been kept at 40% of GCA.

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• Need of proper awareness along with enhanced geographical coverage and simplification of
procedures – as major reasons for not insuring the crops- lack of awareness, improper coverage
and reach and complicated procedures and lack of resources etc.

Policy to promote Climate Smart Agriculture (CSA):

Climate-smart agriculture (CSA) is an approach that helps to guide actions needed to transform
and reorient agricultural systems to effectively support development and ensure food security
in a changing climate.
It aims to tackle 3 main objectives:
(i) sustainably increasing agricultural productivity and incomes,
(ii) adapting and building resilience to climate change
(iii) reducing and/or removing greenhouse gas emissions wherever possible
Mainstreaming CSA
- climate resilient technologies are being demonstrated in 153 model villages under KVK
covering 23 states under “National Innovations on Climate Resilient Agriculture”
(NICRA)
- 623 contingency plans have been prepared so far and hosted on ICAR /DAC websites

AGRICULTURAL CREDIT AND MARKETING INITIATIVES

• Credit is a critical input in achieving high productivity and overall production in the agricultural
sector. A sum of Rs.20339 crore has been approved by the Government of India in 2017-18 to
meet various obligations.
• The electronic National Agriculture Market (e-NAM) was launched by Government on April,
2016 aims at integrating the dispersed APMCs through an electronic platform and enable price
discovery in a competitive manner, to the advantage of the farmers.

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• Farmers need to store their produce in the accredited warehouses, to avail themselves of post-
harvest loans (to avoid distress sales). The loans are available to KCC (Kisan Credit Card) holding
small and marginal farmers at interest subvention of 2% on such storages for a period of 6
months.

Interest Subvention Scheme (ISS) is a scheme which will help farmers avail short term crop
loans up to Rs. 3 lakh payable within 1 year at only 4% p.a.

It will be implemented by NABARD and RBI.

The salient features are-

AGRICULTURAL RESEARCH AND MANAGEMENT


• Agricultural R&D is the main source of innovation, which is needed to sustain agricultural
productivity growth in the long-term. The actual expenditure of DARE/ICAR has increased from
Rs. 5393 crore in 2010-11 to Rs. 6800(BE) crore during 2017-18.
• A total 209 new varieties/hybrids tolerant to various biotic and abiotic stresses with enhanced
quality have been developed for Cereals, Pulses, Oilseeds, Commercial and Forage crops.

FOOD MANAGEMENT
The food security system in India is managed by intertwined organizational framework between Centre
and States that involves centralized and decentralized procurement of food grains through price support
operations, allocation and distribution of food grains at reasonable prices to consumers/beneficiaries
through TPDS (Targeted Public Distribution System) and the maintenance of buffer stocks for price
stabilization.

Economic cost of food grains to FCI

Pooled cost of grains (weighted MSP of stock) + procurement incidentals + cost of distribution

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There has been an increase in the economic cost (both wheat and rice) due to increase in MSPs and
proportionate increase in the incidentals.

Open Market Sale Scheme (Domestic)

FCI on the instructions from the Government sells excess stocks out of Central Pool through
Open Market Sale Scheme (Domestic) [OMSS (D)] to achieve following objectives:
1. To enhance the supply of food grains during the lean season and deficit regions
2. To moderate the open market prices
3. To offload the excess stocks
4. To reduce the carrying cost of food grains

THE WAY FORWARD


The transformation of agriculture and allied sector is imminent by way of appropriate policy
interventions related to prices, trade, adoption of Climate Smart Agriculture, increased focus on small,
marginal and women farmers.
Though the share of agriculture and allied sector in GVA is on the decline, in the quest for inclusive
economic development in India, agriculture sector will remain an engine of broad based growth which
will reduce inequalities and provide food security.

ECONOMIC SURVEY VOLUME 2 CHAPTER 7 WWW.ANUJJINDAL.IN

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