In this essay we will discuss about Indian Agriculture. After reading this essay you will learn about:- 1. Introduction to Agriculture 2. Features of Indian Agriculture 3. Intensive Method of Agriculture 4. Economic Liberalisation 5. Role in Indian Economy 6. Causes of Low Agricultural Productivity 7. Remedial Measures 8. Problems 9. Agricultural Development during Plan Period 10. Emerging Trends as a Result of Liberalisation.
- Essay on the Introduction to Agriculture
- Essay on the Features of Indian Agriculture
- Essay on the Intensive Method of Agriculture
- Essay on the Economic Liberalisation and Indian Agriculture
- Essay on the Role of Agriculture in Indian Economy
- Essay on the Causes of Low Agricultural Productivity
- Essay on the Remedial Measures to Raise Agricultural Productivity in India
- Essay on the Problems of Indian Agriculture
- Essay on the Agricultural Development during Plan Period
- Essay on the Emerging Trends in India Agriculture as a Result of Liberalisation
1. Essay on the Introduction to Agriculture:
Agriculture comprises of crop production, fruits and vegetable cultivation along with floriculture, livestock production, fisheries, agro-forestry and forestry. These are all productive activities. In India, agriculture contributes 30.3 per cent, at 1987-88 prices to the national income, employing more than seventy-five per cent of the population.
Despite being the major economic activity the productivity of the factors of production involved in agriculture is very low as compared to developed nations.
Economists, like T.W. Schult, John W. Mellor, Walter A. Lewis and others have proved that agriculture is the pre-cursor of economic development contributing to it in four-fold manners viz.; by supplying the wage goods to industrial workers, transferring surplus from agriculture to finance industrialization, utilizing the product of industry as inputs for agricultural sector, and transferring the surplus labour from agriculture to industrial jobs.
This is only possible when the productivity of each input unit is high and production increases significantly. This objective can be fulfilled when there is a transfer of technology through farmer’s education and development of infrastructure.
It is, therefore, necessary to have an inter-disciplinary approach to the total agricultural production through subsystem like research, extension, supply system, facilitating credit, and so on and so forth.
According to, Lister Brown, in his book “Seeds of Changes”â€”A study of Green Revolution, “with an increase in the output of agricultural sector in the developing countries the problem of marketing would emerge.”
Therefore, processing and marketing of the agriculture products has a significant role to play in boosting production, generation of employment and income for the farms and rural population resulting in proper rural development.
Evidences are there that the Indian are adept to make the best uses of the resources at the existing technology but they are always deprived of their justified share from the sale of their produce in the middlemen dominated marketing system thus missing the take off stage in agriculture. The business side of agriculture has been grossly neglected.
This has resulted in the poor and slow development of the farming enterprises with the consequences of low income and its allied evils. The common site in the villages is only arable farming with a couple of livestock both for draft purpose and milk production and stray fruit crops close to the farmers residence. There is hardly any mixed farming.
Now, if agriculture sector has to make a leap into the globalization of the economy it need to be diversified. It means along with crop production there must be breeding of livestock for the market, keeping of milch animals whether large like cows and buffaloes or small animals like sheep or goat as well as meat animals like beriberi goat, pig, poultry, agro-forestry, forestry, fisheries.
The time is ripe for the Indian farmers to get into the agri-business activities whether practicing specialized farming or farming diversification. Indian farmers should accept the challenges posed by the liberalization of the economy.
In this way, the farmers would be able to maximize their income at the minimum cost and would give the satisfaction to the farm family but for this he has to prepare himself and be well equipped with the modern farming techniques and the market conditions and its trend. Farmers also need to be organized to press their demand for the infrastructure facilities within the current state of knowledge of farming.
Agri-business is an off farm activity namely processing and marketing. It means that in addition to production of the farm produce farmers responsibility increases to process the output and sell them in the market either by himself or through the organization of cooperatives and through regulated markets.
The agricultural policy in India categorically emphasise that agriculture should no more remain a subsistence economy but launch itself into business and, therefore, encourage cultivators to invest in their farm business which in fact necessities the creation of an economic environment to make the agriculture business sustainable in business terms and in the economic set up within and outside the country.
In order to increase the efficiency of the farmers there is need for keeping the business flexible encouraging the farmers to invest in the outside farm business as well as allied businesses. In clear words, this means agribusiness activity start on the farm. This was categorically hinted at the Uruguay meet.
Included in the agri-business are the supply of inputs like seed, organic fertilizer, plant protection products. There is a large scope for the production of inputs indigenously like compost, oil cakes, plant protection products from neem and other plants having the insect replant qualities and fungus destroying properties.
In addition to these there are other products which are to be processed to make it directly consumable such as processing of oil seeds into oil, preparation of dal (pulses), preparation of pickles, chutney, murabbas, jam, jellies and other products from the horticultural produces, processing of meat into various products, broiler, fish curing, tobacco curing etc. use of technology in processing of milk into relatively stable and value added products, this is called dairy technology.
To encourage and sustain these activities appropriate infra-structured facilities should exist. The government of India is making efforts in this direction and even with the help of foreign investment the development of infrastructure is taking place.
The green revolution necessitated the use of inputs produced in the out of farm industries to support high yielding varieties of seeds to get the best out of its potentials.
With the degradation of environment, as it is believed to be caused by the profuse use of plant protection chemicals, fertilizers etc., now the attention of the policy makers is diverted towards sustainable agriculture to protect the environmental deprivation and to maintain the eco-balance. This demands extensive research activities.
The new agricultural policy aims at sustained food and nutritional security, enhance income generation and enlarge employment opportunities in the rural areas. These objectives can be easily attained by enlarging the meaning of agri-business activities.
The agri-business activities include the production of crops, livestock, fisheries, forestry and production of the inputs for the support of sustainable agricultural production like production of organic and bio-fertilizers, plant protection products, feeds and fodder for the livestock, feeds for the fisheries etc.
The development of agro-industries to process the agricultural produces. In addition to this, crop and livestock production and the processing of milk and meat should be conceptualized under the agri-business activities.
Thus, agri-business must be inclusive of: crop and livestock production, processing of the crop and livestock products, preparation of inputs at the farm for farming use, and marketing of the farm produce. It means the total on farm and allied activities be included in agri-business.
The twin areas under the agri-business viz., processing and the distributional activities having given high rating in the agricultural policy in India under the presumption that it will have a high potential for employment generation.
The processing and distribution will not only boost the fanners’ income but also help getting rid of the middlemen who take the biggest bite out of the consumer’s rupee instead it would go to the farmer himself. The farmers will not only serve the domestic market but will have access to the international market having a big potential under the liberalization policy adopted by the country.
India has a varied agro-climatic conditions ranging from temperate to tropical under which a variety of agricultural products are possible. Multiple cropping will keep the farmers busy round the year giving a continuous income from the farming activities ceteris paribus.
Besides, arable farming there is a lot of scope for the production of horticultural crops like fruits, vegetables, flowers. There are plantation crops such as cocoa, coconut, cashew, rubber, arecanut etc. having high export potentials. Currently, these crops are estimated to cover 13.6 million hectares yielding an annual output of 106 million tonnes which is the third highest output after Brazil and China.
Production of about 33 million tonnes of fruits in 1992-93 brought India close to top rank currently enjoyed by Brazil as the world’s largest producer of fruits. Floriculture is a new area with a high potential for export. With the development of irrigation for which the present utilization is 76.3 million hectares with a potential of 85.0 million hectares in 1993-94′ the face of Indian agriculture would definitely change.
Besides, these horticultural and floriculture products there is a great potential for fisheries and dairying industry. Poultry and small animals products will also find an important place in agri-business.
Animal husbandry sector currently accounts for over 25 per cent of the gross value of agricultural output. India’s vast livestock population offers tremendous scope for meeting domestic demand for milk, egg, meat and wool, a source of employment and scope for inter-regional trade.
The gross value of output from this sector is estimated at Rs. 58,000 crores in 1992-93 excluding output value of draft livestock. India ranks second in milk production having milk production to an extent of 60.2 million tonnes in 1992-93. Poultry is the most efficient converter of the low value food into high value nutritional food for human consumption in the short period of time.
It is becoming vital component of farm economy providing additional income opportunity to the weaker section of the society. Egg production has increased 23,718 million in 1993-94.
Fisheries play an important role in the economy generating employment for a large coastal population raising nutritional levels, augmenting food supplies and earning foreign exchange. Fish production in the country has been 46.8 lakh tonnes in 1993-94.
Level of productivity and agri-business are closely related. Unfortunately, in India, the level of productivity is very low, for example, there is a big gap between the possibility and performance.
China with approximately the same cultivable area, 140 million hectares, as India produces 392 million tonnes of food-grain from only 42 million hectares whereas India from 60 million hectares produces only 170 million tonnes, although per capita land availability is less as against India and also the percentage of land irrigated is less in China than in India.
But there is always a silver lining under the dark cloud, thus we can see that the possibilities are endless and we do have climatic advantages for boosting output.
In the post green revolution period India has made a mark in the production of food crops, plantation crops, poultry, cotton and oilseed cultivation. In addition to these evidence of emerging strength has been noted in the field of sericulture, marine and inland fisheries.
As we have already mentioned India posses a variety of climatic conditions which gives us the comparative advantage in the production of fruits, vegetables, flowers, but these were neglected in the past and there is yet no record worth mentioning of their exports.
The rich variety of medicinal plants and herbs when processed and marketed can help take care of the health of the Indian population, besides coming into on its own as the world’s pharmaceutical giant.
India has realized the importance of agri-business. In his budget speech the finance minister, Dr. Man Mohan Singh, has mentioned to set up an Agri-Business Consortium with the hope that along with the production of more food there would be more productive jobs and higher income in rural areas. May it be a second agricultural revolution with an antidote of poverty and unemployment.
India has a great potential to compete in the world trade and globalization of trade would be challenging but there are four-fold paths to globalization:
(1) Exporting food grains provided there is high surplus stock,
(2) Studying of domestic trends of demand and supply of all agricultural commodities so as to decide on the quantity that can be set apart to export on a continuing basis,
(3) By making the horticultural product as – value added products, and
(4) A holistic approach to a multiplicity of task bringing all tasks together to deliver the goods in strict adherence to commitments as regards the quality, time schedule for both private and government enterprises, later taking a capitalistic leadership. In this direction the farmer’s agribusiness consortium will greatly help.
The use of inputs produced outside the farm has increased the cost of cultivation despite the fact that there has been threefold increase in the output of food grains through the green revolution and white revolution too has boosted the milk output.
In order to compete in the international market the cost of production has to be within control. This could be achieved only if the farmers adopt the business like attitude. There are both internal factors and exogenous factors which help the farm business becoming a successful agri-business in the country.
The internal factors depend on the ingenuity of the individual farmer but the exogenous factors, for a successful agri-business in the country, emerge by planning a progressive infrastructure for agriculture of which there is a categorical mention in Mosher’s book, as a component of farming, commercial agricultural support activities, non-commercial agri-support activities, and agri-millieu.
Desai has elaborated on the concept of modern agricultural propounded by Mosher and says that Mosher’s concept is similar to agri-business except that agri-business include mostly commercial activities. Desai argues that in developing countries the agricultural production sub-system (APS) is at the centre of total agricultural system. The other sub-systems form the agricultural infrastructure.
The latest though for agricultural and rural development endorses Norton Raymond, E.’s concept of Getting Agriculture Moving that the most modern agriculture is a hybrid agriculture which is a joint venture of agriculture and industry.
The manner in which these infrastructures are related to agricultural production sub-systems which deals with resource use, production, and disposal of farm product at the farm level: are the development of agricultural supply sub-system (ASS) supplies all non-farm inputs to APS, the agricultural credit sub-system (ACS) makes it possible for APS to purchase inputs from ASS, the agricultural extension sub-system (AES) disseminates knowledge to APS about the use of inputs which it acquires from agricultural research sub-system (ARS) and agricultural education sub-system (AEdS), the AEdS creates researches for ARS, and executives for ASS, agricultural processing sub-system (AprS), and agricultural distribution sub-system (ADS), and extension workers for AES.
The AEdS also imparts knowledge directly to farmers. The ARS is the real innovator and feeds extension, education, processing and distribution sub-systems. The agricultural processing sub-system (AprS) depends primarily on APS for the procurement of raw materials. It links the agricultural sector with the industrial sector on the one hand and the household on the other.
The agricultural distribution sub-system (ADS) connects consumers with producers and processors. It handles all pipeline problems. The agricultural development sub-system (ADpS) is the most important sub-system and primarily organized by the government and non-commercial organizations.
It is related to all other sub-systems and in developing economy is the prime mover of agricultural growth. Its responsibility is one of social justice. The agricultural regulatory sub-system (ARgS) is primarily a government responsibility.
Thus, agri-business comprises of two distinct but interrelated exercises firstly, the organization and management of production right from the use of farm resources to harvesting, secondly, processing and marketing of the agricultural produce.
2. Essay on the Features of Indian Agriculture:
The agriculture in India was totally backward at the time of independence. Due to the application of age-old and traditional techniques applied in agriculture, the productivity was very poor. In 1950-1951, there was only 7 tractors, 62 oil engines and 16 irrigation pumpsets per lakh hectares of gross cropped areas of the country.
A very negligible amount of fertilizer (0.66 lakh tonnes in 1952-53) was also applied on agriculture. Due to its low productivity, agriculture could manage only subsistence livings to Indian farmers and the agriculture was not all commercialised. Some of this sorry state of affairs are still continuing in Indian agriculture. These are certain factors which are responsible for this poor condition of agriculture.
All these factors will broadly outline the features of Indian agriculture in the following manner:
(i) Feudal Character of Production:
The character of agricultural production in India was totally feudal at the time of independence. During those days the land tenure systems were mostly of zamindary, mahalwary and ryotwari type. The major portion i.e., about 57 per cent of the total area was under zamindary system which paved the way for exploitation of peasants by the zamindars. Even in the ryotwari system this sort of exploitation was also prevalent.
After the introduction of land reform measures by the state Governments for abolishing intermediaries since independence, the character of that feudal system did not change much. The abolition of zamindary system paved the way for the creation of absentee landlords.
This absentee landlord derived considerable economic power from their land ownership, more specifically through:
(i) Cultivation of land through hired labourers;
(ii) Leasing out the land to tenants;
(iii) Usuary and
(iv) Trading in food grains and other commodities.
Like the zamindars, this absentee landlord becomes the ruling class in India. These landlords are still exploiting the tenants and agricultural workers. About 50 per cent of the total cultivated land is in the category of underwritten or oral tenancy and a good number of tenants are still in the category of tenants at will and sub-tenants.
Moreover, there are two categories of agricultural labourers:
(i) Attached labourers and
(ii) Casual labourers.
With the growing eviction of tenants, the number of agricultural labourers is also increasing leading to an increase in the degree of poverty and misery among the rural poor.
(ii) Dualism in Labour Market:
Dualism in the labour market becomes prevalent in India as due to excessive pressure of population on land, the level of wages in the agricultural sector became considerably lower in comparison to that of industrial sector. This dualism started to exist in Indian labour market due to workers’ ignorance of better opportunities outside agriculture and also due to their inability to work in a modern industrial system.
This low level of wages in the agricultural sector is responsible for low per capita income which in turn reduces the labour productivity to a low ebb. Moreover, cheap agricultural labour paves the way for the adoption of labour-intensive cultivation and discourages mechanisation of agriculture.
(iii) Usurious Capital and Growing Indebtedness:
In Indian agriculture, the use of usurious capital is quite huge in volume and this leads to growing indebtedness among the poor farmers. During the pre- independence period, money lenders and mahajans are supplying the entire portion of agricultural credit at an exorbitant rate of interest leading to exploitation of farmers.
After independence, although the government introduced various steps such as development of co-operative credit societies, participation of banks in raising rural credit etc. but all these could not benefit the small and marginal farmers and thus they continue to depend on village money lenders to fulfill their credit requirements.
These money lenders are still charging exorbitant rates of interest manipulate their accounts and ultimately seize the land of these small and marginal farmers illegally. Thus this flow of usurious capital in agricultural credit is responsible for growing rural indebtedness in the country.
(iv) Orthodox Farming Techniques:
Indian agriculture is still characterised by the use of orthodox farming techniques. Major proportions of the agricultural operations are still depending on biological sources of energy, i.e., human and animal labour, rain water and organic manure (dung).
After the adoption of new agricultural strategy in 1966, modern techniques of production along with new HYV seeds were introduced in some states like Punjab, Haryana and Western Uttar Pradesh.
This resulted in a significant increase in agricultural productivity in those states. This has also resulted in an inter-regional technological dualism as major portion of the agricultural land continues to follow orthodox methods while only certain regions started to follow modern techniques.
Inter-personal technological dualism also started to exist in Indian agriculture as the new technology being costly continue to be adapted by only large and wealthy farmers and the small and marginal farmers in spite of their awareness, continue to follow old techniques due to financial constraints.
(v) Fluctuations in Agricultural Output:
Another notable feature of Indian agriculture is that total agricultural output of the country is subjected to much fluctuations. Dependence of Indian agriculture on monsoons is the most important factor responsible for the large-scale fluctuations in agricultural output.
Although net irrigated area of the country has increased from 20.8 million hectares in 1950-51 to 102.8 million hectares in 2006-07 but proportion of area irrigated to the total net sown area has increased from 17.5 per cent to 61 per cent only.
Thus the remaining 39 per cent of the net sown area still continues to depend on rainfall. Thus Indian agricultural operations can still be considered as the ‘gamble of monsoons’ as nature is still playing a dominant role in determining the volume of agricultural production of the country.
Moreover, due to the application of bio-chemical technology in the post-1965 period the sensitivity of output to variations in rainfall has increased. C.H. Hanumantha Rao, Sushanta K. Ray and K. Subbarao after considering this sensitivity came to the conclusion that “the fluctuations in the output of all crops, except wheat, have increased significantly in the post-green revolution period (1966-85) when compared to the pre-green revolution period (1950-65).”
(vi) Diversities in Indian Agriculture:
Presence of agricultural diversities is an another notable feature of Indian agriculture. Different regions of the country are having lot of differences in their natural conditions such as soil content, magnitude of rainfall water availability etc. same areas are facing draught conditions whereas some other areas are facing occurrence of floods.
Some more areas are facing the problem of water lagging and salinity. Moreover, there exists a considerable difference in land tenure system and labour relations among various states of the country. In respect of sub-division and fragmentation of holdings, substantial regional disparities still exist.
Thus in presence of such large diversities in Indian agriculture it is quite difficult to generalize a problem and to adopt a common single policy on agriculture for all different regions. Thus while formulating an agricultural policy all these diversities in local geographical, economic and social conditions must be taken into account.
3. Essay on Intensive Method of Agriculture:
Intensive method of agriculture is prevalent in the high population density regions of south-east Asia, e.g., India, Bangladesh, Thailand, Myanmar (Burma), China, Sri Lanka, Indonesia etc. Besides, densely populated Western Europe also practices this type of agriculture. Though common in developing nations it is also visible in rich countries like, Japan, Germany, and Netherlands etc.
Cropping Pattern in Intensive Method of Agriculture:
Intensive method of agriculture aims to maximize use of per unit area of land. It might be both labour-intensive or capital-intensive. Due to high pressure of population, even the smallest part of the land is cultivated intensely. Per capita productivity remains low but productivity per unit land always remain very high.
In this region generally large proportion of the people are dependent on primary form of economic activity or agriculture. The intensity of farming is often so high that even marginal lands are also put to cultivation. The percentage of fallow land remain very low.
To intensify the production, agricultural inputs like fertilizer, HYV seeds, crop rotation measures, irrigation facilities are always given proper care. Total capital investment is generally higher in developed west-European countries while it is much lower in less developed countries of south-east Asia.
Characteristic Features of Intensive Method of Agriculture:
(i) Smaller Farm Size:
This type of agriculture is prevalent in densely populated countries. These countries are in south-east Asia where more than 50% of the people are directly engaged in agriculture. So pressure on land is very high. Availability of per capita land is very low.
It is as low as .19 hectare in India, .08 hectare in China, .15 hectare in Germany and .06 hectare in Netherland in 1994. The average size of the farmlands are also low. It is less than 1 hectare in India and .5 hectare in China. Due to the existence of law of inheritance, this farm size is decreasing over the year, fragmenting existing farms.
(ii) High Intensity of Labour Participation:
Intensive farming is generally practiced in densely populated countries. To enhance productivity, maximum labourers are engaged in agriculture and production process become labour intensive. In countries like China, India, Bangladesh etc. â€”due to over-emphasis on agricultural sector and lack of diversified economic occupationâ€”even huge number of labour are disguisedly employed in agricultural activities. Gradually intensive farming is now becoming mechanized in most part of the world. W. Europe, Japan, S. Korea are now engaging more machines in the cultivation process.
(iii) High Productivity:
Due to dearth of land and over-dependence on agriculture, efforts are made to maximize productivity per unit land. Sometimes, productivity per unit land is three times higher than in similar land that practice extensive farming method.
(iv) Low Per Capita Output:
Labour is abundant and cheaper. Thus, emphasis is not given to maximize per capita productivity, instead, all efforts are given to maximize production per unit area of land.
(v) Emphasis on Cereal:
Due to huge population pressure, food-grain production receives highest priority in this type of agriculture. Overemphasis on rice production is the typical characteristic feature in intensive farming in S.E. Asia.
(vi) Dependence on Climate:
Climate plays a very important role in intensive farming in Monsoon Asia. Productivity suffers due to flood or draught condition. Timely occurrence of monsoon and rainfall distribution is the most important aspect of intensive cultivation is S.E. Asia.
(vii) Dependence on Soil:
Riverine fertile alluvial delta regions of Ganga, Brahmaputra, Mekong, Irrawaddy and several other large Asian rivers provide excellent conditions for intensive rice farming.
(viii) Low Marketability:
Despite high intensity of farming, due to heavy population pressure, internal consumption of cereal is very high in these countries. Very little is really left after consumption as surplus for marketing purpose. Only the European counterpart of intensive farming region is able to export its product to international market.
(ix) Emphasis on Multiple Cropping:
Land is considered to be most important asset to the cultivators in S.E. Asia and W.Europe. So, all efforts are generally made to utilize land all over the year. Multiple croppingâ€”or, at least, double cropping system is prevalent in most parts of the intensive farming region.
(x) Emphasis on Manual/animal Force:
Use of animal and human labour for tilling and harvesting land is an age-old practice in Asia. Even today, millions of catties are used for tilling and harvesting the crops in S.E. Asian countries.
(xi) Lack of Modern Technology:
Due to gross non-participation in commercial or export market, these farmers mostly are unable to introduce high-tech machines. Poverty of the farmers leads to low investment that hinders productivity. Low productivity is the root cause of low surplus and low marketability.
Non-presence of marketability leads to little surplus and, ultimately to poverty. This vicious cycle prohibits introduction of new technology in most of the Asian countries.
4. Essay on Economic Liberalisation and Agriculture:
Agricultural sector of India is now standing on the crossroads of development particularly after the introduction of economic liberalisation in the country since 1991. Here the economic liberalisation has made attempt to reduce government interferences and has removed unnecessary restrictions in economic activities and has been encouraging privatisation of the economy.
Under this new economic liberalisation wave, the agricultural sector of the country is facing the challenges to rationalise its activities and to face international competition in marketing its products as well as in its factors market.
Under the present trend of globalisation and the set up of international trade under World Trade Organisation (WTO) regime, there will be considerable reduction in production subsidies paid by developed countries to their farmers and the rolling back of some of the non-tariff barriers which have restricted agricultural trade.
These provisions will provide benefit to India as the agricultural exports of the country enjoy a comparative and competitive advantage. Therefore, India’s agricultural exports will receive a welcome stimulus, at a time when the incentive structures in the domestic economy are beginning to work to their advantage.
Agricultural subsidies in India are not facing any problem as value of such subsidies in India is not only far below the 10 per cent limit but also negative. But the major problem which the agricultural sector of the country is going to face is increase in the price of agricultural inputs like HYV seeds, fertilizers, pesticides etc. due to the introduction of the system of product patents. Thus from the Indian perspective, the effect of globalisation and WTO regime on Indian agriculture is a kind of mixed bag with the plus points outweighing the minus.
No doubt the new WTO arrangements will definitely raise the prices of agricultural inputs but with this India’s market opportunities in exports of agricultural commodities would increase. Thus Indian agriculture and agri-business should get the kind of boost it has never known by exposing itself to the larger world market.
The farm lobby would see major growth in exports in superior rice, vegetables, fruits, fisheries and meat products, vegetable oil processed products and flowers. The reduction in export subsidies on agriculture by developed countries will make Indian agricultural exports more competitive in world markets.
Thus Mr. Bibek Deb Roy of Indian Institute of Foreign Trade (IIFT) was of the view that “If agriculture is liberalised there will be higher input prices. But there will also be higher output prices and it is slightly unfair to look at the hike in input prices alone.”
Thus under the present context, it can be finally observed that under the new GATT agreement, whatever negative aspects the Indian agriculture will face that can be suitably neutralized by responding to its positive aspects. Thus if the Indian agriculture can meet the challenges and opportunities open to it and if the developed countries do not put any trade barrier before the flow of Indian agricultural exports then India will definitely be able to overcome this threat and also become successful to gain sufficiently from this new world trade regime.
5. Essay on the Role of Agriculture in the Indian Economy:
Agriculture is considered as the backbone of the Indian economy. More than 70 per cent of our total population earn their livelihood from agriculture.
The following are some of the important points which explain the role of agriculture in the economy of our country:
(i) Contribution to National Income:
From the very beginning, agriculture is contributing a major portion to our national income. In 1950-51, agriculture and allied activities contributed about 59 per cent of the total national income. Although, the share of agriculture has been declining gradually with the growth of other sectors but the share still remained very high as compared to that of the developed countries of the world.
For example, the share of agriculture has declined to 54 per cent in 1960-61, 48 per cent in 1970-71, 40 per cent in 1980-81 and then to 19.0 per cent in 2014-15,’ whereas in U.K. and U.S.A. agriculture contributes only 3 per cent to the national income of these countries.
(ii) Source of Livelihood:
In India over two-thirds of our working population are engaged directly on agriculture and also similarly depend for their livelihood. According to an estimate, about 66 per cent of our working populations are engaged in agriculture at present in comparison to that of 2 to 3 per cent in U.K. and U.S.A., 6 per cent in France and 7 per cent in Australia.
Thus the employment pattern of our country is very much common to other under-developed countries of the world.
(iii) Source of Food Supply:
Agriculture is the only major source of food supply as it is providing regular supply of food to such a huge size of population of our country. It has been estimated that about 60 per cent of household consumption is met by agricultural products.
In recent years, India became more or less self- sufficient in respect of food supply although India had to face a serious shortfall in food production during the last three decades leading to import of food grains from foreign countries to the extent of 5 per cent of total requirements.
(iv) Role of Agriculture for Industrial Development:
Agriculture in India has been the major source of supply of raw materials to various important industries of our country. Cotton and jute textiles, sugar, vanaspati, edible oil plantation industries (viz. tea, coffee, rubber) and agro-based cottage industries are also regularly collecting their raw materials directly from agriculture.
About 50 per cent of income generated in the manufacturing sector comes from all these agro-based industries in India. Moreover, agriculture can provide a market for industrial products as increase in the level of agricultural income may lead to expansion of market for industrial products.
(v) Commercial Importance:
Indian Agriculture is playing a very important role both in the internal and external trade of the country. Agricultural products like tea, coffee, sugar, tobacco, spices, cashew nuts etc.. are the main items of our exports and constitute about 50 per cent of our total exports.
Besides manufactured jute, cotton textiles and sugar also contribute another 20 per cent of the total exports of the country. Thus nearly 70 per cent of India’s exports are originated from agricultural sector. Further, agriculture is helping the country in earning precious foreign exchange to meet the required import bill of the country.
(vi) Source of Government Revenue:
Agriculture is one of the major sources of revenue to both the central and state Governments of the country. The Government is getting a substantial income from rising land revenue. Some other sectors like railway, roadways are also deriving a good part of their income from the movement of agricultural goods.
(vii) Role of Agriculture in Economic Planning:
The prospect of planning in India also depends much on agricultural sector. A good crop always provides impetus towards a planned economic development of the country by creating a better business climate for the transport system, manufacturing industries, internal trade etc.
A good crop also brings a good amount of finance to the Government for meeting its planned expenditure. Similarly a bad crop lead to a total depression in business of the country, which ultimately lead to a failure of economic planning. Thus the agricultural sector is playing a very important role in a country like India and the prosperity of the Indian economy still largely depends on agricultural sector.
Thus from the foregoing analysis it is observed that agricultural development is the basic precondition of sectoral diversification and development of the economy.
An increasing marketable surplus of agricultural output is very much essential in India for:
(i) Increasing supply of food and raw materials at non-inflationary prices;
(ii) Widening the domestic market for industrial products through higher purchasing capacities in the rural sector;
(iii) Facilitating inter-sectoral transfers of capital needed for industrial development along with infra-structural development;
(iv) Increasing foreign exchange earnings through increasing volume of agricultural exports.
6. Essay on the Causes of Low Agricultural Productivity:
Factors which are responsible for this backwardness or low productivity in Indian agriculture can be conveniently grouped under three broad headings:
(a) General Factors,
(b) Institutional Factors, and
(c) Technological Factors.
A. General Factors:
1. Overcrowding in Agriculture:
In India agricultural sector is very much overcrowded. Too many people of India depend on agriculture. Since 1901, about 70 per cent of Indian population has been depending on agriculture. In 1981, total number of agricultural population in India is 48 crore.
But to this unrelenting pressure of population and lack of alternative employment opportunities outside agriculture, the size of holding is becoming smaller and smaller with the gradual sub-division and fragmentation of land.
This has resulted in the fall in per capita land area, disguised unemployment and fall in the marginal productivity of labour to even zero or negative level. Due to this over-crowdedness, the area of cultivated land per cultivator has declined substantially from 0.43 hectare in 1901 to 0.20 hectare in 1991.
2. Socio-Economic Factors:
Various socio-economic factors like farmer’s conservative outlook, ignorance, illiteracy, superstitions etc. stand in the way of adoption of modern technology in Indian agriculture. Unless this discouraging rural atmosphere is changed, it is not at all possible to modernize and improve the condition of agriculture in this country.
3. Natural Factors:
Nature still dominates agriculture in this country. It is said to be a gamble of monsoons. The rains are totally uncertain in India. Sometimes rains are insufficient or sometimes to a much of rain resulting in heavy floods both of which cause widespread damage and destruction.
Other natural calamities such as hailstorm, frost or attack by pest and insects are also of common occurrence in India. All these natural factors always go against the Indian farmers in stepping up their agricultural productivity.
4. Lack of Adequate Finance:
Indian agriculture still remains backward due to its inadequate financial provision. Until recently, farmers have to depend much on the village money lenders, who charges exorbitant rate of interest and resorts to unfair practices like manipulation of accounts etc. for which the cultivator had to lose his land and become a landless agricultural labourer.
Other sources of finance, viz., co-operative, banks, financial institutions and Government although exist but their contributions are almost insignificant in quantity.
5. Lack of Productive Investment:
There is near absence of productive investment in Indian agriculture as the investment in land is found less attractive than the alternative investment in jewellery, trade and money lending.
6. Inadequate Marketing System:
The marketing system of agricultural products in India is totally defective and inadequate. In the absence of proper marketing and storage facilities, farmers are deprived of due prices of their agricultural products and have to go for even distress sale after harvests at a very low price.
Thus the middlemen take away a major chunk of the profit as the farmers are not even guaranteed fair and remunerative prices of their products.
B. Institutional Factors:
The following are some of the institutional factors which are equally responsible for the backwardness of Indian agriculture:
1. Small Size of Holdings:
The average size of agricultural holdings in India is very small and uneconomic and it is even less than 2 hectares or 5 acres. Besides, the agricultural holdings in India are fragmented too. With such uneconomic and fragmented holding, no scientific cultivation with improved implements, seeds etc. is ever possible, Small size of holdings leads to waste of time, labour, capital and cattle power, improper utilization of irrigation facilities, quarrels, litigation etc. All these have resulted low yield in Indian agriculture.
2. Defective Pattern of Land Tenure:
Land tenure system in India is totally defective and it is standing in the way of its agricultural development. Even after the abolition of zamindari system and enactment of tenancy legislations, the position of tenants is still far from satisfactory.
The cultivator has to pay high rent to the landlords and is subject to frequent ejectment by the landlord. All these have led to lack of incentive and confidence on the part of cultivators to make provision for any permanent development on their land. Further, there are delay in implementation of land reforms and uncertainty about the rights of the farmers of land.
C. Technological Factors:
The following technological factors are also responsible for low agricultural productivity in Indian agriculture:
1. Traditional Methods of Cultivation:
The farmers in India have been adopting orthodox and inefficient method and technique of cultivation. As they are tradition bound and poor thus they could not adopt modern efficient methods adopted by western countries of the world. These farmers were relying on centuries old wooden plough and other implements.
It is only in recent years that the Indian farmers have started to adopt improved implements like steel ploughs, seed drills, harrows, hoes etc. to a limited extent only. Thus the adoption of traditional methods is responsible for low agricultural productivity in India.
2. Lack of High Yielding Seeds:
Indian farmers are still applying seeds of indifferent quality. They have no sufficient financial ability to purchase good quality high yielding seeds. The supply of high yielding seeds is also minimum in the country. Thus the farmers are mostly applying traditional variety of seeds whose average yield is just half of the yield of improved high yielding variety.
3. Scanty Use of Fertilizer:
Indian farmers are not applying sufficient quantity of fertilisers on their lands. Constant cultivation of land causes deterioration of the fertility of soil. For the revitalization of soil fertility and to use fallow land for cultivation, application of various types of fertiliser is urgently required.
But the poor cultivators cannot afford to purchase costly chemical fertilisers for its application on their lands. Thus in India, the use of both chemical fertiliser and even farmyard dung manure is totally inadequate.
4. Inadequate Irrigation Facilities:
Indian agriculture is .still suffering from lack of assured and controlled water supply through artificial irrigation facilities. Thus the Indian farmers have to depend much upon rainfall which is neither regular nor even. Whatever irrigation potential that has been developed in our country, a very limited number of farmers can avail these facilities.
As for example before independence, only 19 per cent of the total land was irrigated in India. But in-spite of vigorous programme of major and minor irrigation projects undertaken since 1951, the proportion of irrigated land to total net sown area now comes to be about 59 per cent in 2006-07.
Thus in the absence of assured and controlled water supply, the agricultural productivity in India is bound to be low.
5. Lack of Agricultural Research:
Agricultural research in India is still very poor in comparison to its requirements. Whatever research is being conducted, its result is not even made available to the farmers fully for its application. Thus many chronic problems of agricultural operation faced by the farmer still remain largely unattended.
Thus we have seen that there is gross absence of many basic facilities in Indian agriculture and all these have resulted in low agricultural productivity and also backwardness of the agricultural sectors of the country.
7. Essay on the Remedial Measures to Raise Agricultural Productivity in India:
Backwardness of the agricultural sector and the low agricultural productivity are the two serious problems of the Indian economy.
For improving the lot of the agricultural sector and for raising agricultural productivity in India the following’ measures should be undertaken:
(i) Consolidation of Holdings:
Consolidation of holding is a first step towards the modernisation of Indian agriculture and this should be done immediately by enacting proper legislation required in this regard. Uneconomic small farms should be properly consolidated and small fragmented holdings should also be consolidated by forming’ co-operatives and co-operative farming societies.
(ii) Overcoming Natural Factors:
Proper steps should be undertaken to overcome various problems of agriculture resulted from natural factors. All these steps include extensive flood control measures, creation of adequate irrigation facilities and supplying adequate quantity of pesticides and insecticides.
(iii) Application of Modern Techniques:
Indian farmers must apply modern techniques of cultivation by utilizing modern implements, applying adequate quantity of fertilisers, using high yielding variety of seeds, by adopting scientific rotation of crops and careful crop planning. Agricultural research should be carefully intensified and fruits of research should be made available to the Indian farmers.
(iv) Economic Measures:
Economic measures must be adopted in order to make the Indian agriculture more remunerative. Proper steps must be undertaken for the improvement of farm organisation and land management. Besides, steps must be taken for the establishment of different types of agro-based industries in rural areas; provision also be made for adequate credit and marketing facilities.
Moreover, the Government must introduce minimum price support policy, guarantee minimum prices of the agricultural produce of the country and implement crop-insurance scheme to cover the various risks in agriculture.
(v) Human Development:
For the improvement of agricultural productivity in India, the quality of farmers should be improved and they should be imparted with adequate general and technical education. Adequate public health measures should also be undertaken in the rural areas.
Farmers should shed off their fatalism and adopt themselves with changing ideas. Thus the agricultural productivity in India can be improved with the adoption of aforesaid measures in the agricultural sector of the economy.
8. Essay on the Problems of Indian Agriculture:
In a less developed country like India, agriculture has been considered as the primary occupation. In a country like India, agricultural practices followed by most of the peasants are not managed on commercial lines. Rather, it is still maintained at the level of subsistence farming so as to meet the requirement of food for the entire family throughout the year.
Although about 69 per cent of the working population are engaged in agriculture but the sector is not yet organised in a rational manner. Most of the working units are still maintained at the household or the family level instead of a commercially viable organised farming unit.
This trend has resulted a poor show in agricultural practices and yield and also in respect of its marketable surpluses. In spite of domination among all the sectors, agricultural sector in India has been subjected to a number of problems.
The following are some of the important problems responsible for this poor state of Indian agriculture:
(i) Inequality in Land Distribution:
The distribution of agricultural land in India has not been fairly distributed. Rather there is a considerable degree of concentration of land holding among the rich landlords, farmers and money lenders throughout the country. But the vast majority of small farmers own a very small and uneconomic size of holdings, resulting to higher cost per units.
Moreover, a huge number of landless cultivators has been cultivating on the land owned by the absentee landlords, leading to lack of incentives on the part of these cultivators.
(ii) Land Tenure System:
The land tenure system practiced in India is suffering from lot of defects. Insecurity of tenancy was a big problem for the tenants, particularly during the pre-independence period. Although the land tenure system has been improving during the post-independence period after the introduction of various land reforms measures but the problem of insecurity of tenancy and eviction still prevails to some extent due to the presence of absentee landlords and benami transfer of land in various states of the country.
(iii) Sub-Division and Fragmentation of Holdings:
In India, the average size of holding is expected to decline from 1.5 hectares in 1990-91 to 1.3 hectares in 2000-01. Thus the size of agricultural holding is quite uneconomic, small and fragmented. There is continuous sub-division and fragmentation of agricultural land due to increasing pressure of population and breakdown of the joint family system and also due to forced selling of land for meeting debt repayment obligations.
Thus the size of operational holdings has been declining year by year leading to increase in the number of marginal and small holdings and fall in the number of medium and large holdings.
All these have resulted in continuous sub-division and fragmentation of land holdings in the country. This increasing trend of sub-divisions and fragmentation has resulted in the efficient use of land almost impossible leading to the problem of increasing volume of capital equipment on the farm along with low productivity.
(iv) Cropping Pattern:
The cropping pattern which shows the proportion of the area under different crops at a definite point of time is an important indicator of development and diversification of the sector. Food crops and non-food or cash crops are the two types of crops produced by the agricultural sector of the country.
As the prices of the cash crops are becoming more and more attractive therefore, more and more land have been diverted from the production of food crops into cash or commercial crops. This has been creating the problem of food crisis in the country. Thus after 50 years planning the country has failed to evolve a balanced cropping pattern leading to faulty agricultural planning and its poor implementation.
(v) Instability and Fluctuations:
Indian agriculture is continuously subjected to instability arising out of fluctuations in weather and gamble of monsoon. As a result, the production of food-grains arid other crops fluctuates widely leading to continuous fluctuation of prices of agricultural crops. This has created the element of instability in the agricultural operation of the country.
(vi) Conditions of Agricultural Laborers:
Agricultural labourers are the most exploited unorganised class in the rural population of the country. From the very beginning, landlords and Zamindars exploited these labourers for their benefit and converted some of them as slaves of bonded labourers and forced to continue the system generation after generation.
All these led to their wretched condition and total deprivation. After 68 years of independence, the situation improved marginally. But as they remain unorganised, economic exploitation of these workers still continues.
The level of income, the standard of living and the rate of wages remained abnormally low. Total number of agricultural workers has increased from 55.4 million in 1981 to 74.6 million in 1991 which constituted nearly 23.5 per cent of the total working population of the country.
This increasing number has been creating the problem of surplus labour or disguised unemployment, which in turn is pushing their wage rates below the subsistence level.
(vii) Poor Farming Techniques and Agricultural Practices:
The farmers in India have been adopting orthodox and inefficient method and technique of cultivation. It is only in recent years that the Indian farmers have started to adopt improved implements like steel ploughs, seed drills, barrows, hoes etc. to a limited extent only.
Most of the farmers were relying on centuries old wooden plough and other implements. Such adoption of traditional methods is responsible for low agricultural productivity in the country.
(viii) Inadequate Use of Inputs:
Indian agriculture is suffering from inadequate use of inputs like fertilisers and HYV seeds. Indian farmers are not applying sufficient quantity of fertilisers on their lands and even the application of farmyard dung manure is also inadequate. Indian farmers are still applying seeds of indifferent quality.
They have no sufficient financial ability to purchase good quality high yielding seeds. Moreover, the supply of HYV seeds is also minimum in the country.
(ix) Inadequate Irrigation Facilities:
Indian agriculture is still suffering from lack of assumed and controlled water supply through artificial irrigation facilities. Thus the Indian farmers have to depend much upon rainfall which is neither regular nor even. Whatever irrigation potential that has been developed in our country, a very limited number of our farmers can avail the facilities.
In spite of vigorous programme of major and minor irrigation projects undertaken since 1951, the proportion of irrigated land to total cropped area now comes to about 53 per cent in 1998-99. Therefore, in the absence of assured and controlled water supply, the agricultural productivity in India is bound to be low.
(x) Absence of Crop Rotation:
Proper rotation of crops is very much essential for successful agricultural operations as it helps to regain the fertility of the soil. Continuous production of cereals on the same plot of land reduces the fertility of the soil which may be restored if other crops like pulses, vegetables etc. are grown there.
As the farmers are mostly illiterate, they are not very much conscious about the benefit of crop rotation. Therefore, land loses its fertility to a considerable extent.
(xi) Lack of Organised Agricultural Marketing:
Indian farmers are facing the problem of low income from their marketable surplus crops in the absence of proper organised markets and adequate transportation facilities. Scattered and sub-divided holdings are also creating serious problem for marketing their products.
Agricultural marketing in India is also facing the problem of marketing farmers’ produce in the absence of adequate transportation and communication facilities. Therefore, they fell into the clutches of middlemen for the speedy disposal of their crops at an uneconomic and cheaper price.
(xii) Instability in Agricultural Prices:
Fluctuation in the prices of agricultural products poses a big threat to Indian agriculture. For the interest of the farmers, the Government should announce the policy of agricultural price support so as to contain a reasonable income from agricultural practices along with providing incentives for its expansion. Stabilisation of prices is not only important for the growers but also for the consumers, exporters, agro-based industries etc.
In India, the movement of prices of agricultural products is neither smooth nor uniform, leading a fluctuating trend. In the absence of proper price support and marketing support, prices of agricultural products has to go down beyond the reasonable limit so as to create a havoc on the financial conditions of the farmers.
Again the exorbitant prices charged by the middlemen on agricultural crops also pose a serious threat to the consumers. Thus price, fluctuation may lead to disaster as both falling and rising prices of agricultural crops are having its harmful impact on the society as well as on the economy of the country.
(xiii) Agricultural Indebtedness:
One of the greatest problems of Indian agriculture is its growing indebtedness. Farmers are borrowing a heavy amount of loan regularly for meeting their requirements needed for production, consumption and also for meeting their social commitments. Thus the debt passes from generation to generation.
Indian farmers fall into the debt trap as a result of crop failure, poor income arising out of low prices of crops, exorbitantly high rate of interest charged by the moneylenders, manipulation and use of loan accounts by the moneylenders and use of loan for various unproductive social purposes.
Although they borrow every year but they are not in a position to repay their loans regularly as because either loans are larger or their agricultural production is not sufficient enough to repay their past debt. Thus the debt of farmers gradually increases leading to the problem of rural indebtedness in our country.
Thus it is quite correct to observe that “Indian farmer is born in debt, lives in debt and dies in debt.”
9. Essay on the Agricultural Development during Plan Period:
During the introduction of economic planning, the condition of Indian agriculture was very poor and serious. During that period, i.e., on the eve of First Five Year Plan, Indian farmers were adopting primitive method of cultivation. Farmers were having huge burden of debt and thus they donâ€™t have any financial capacity and knowledge for adopting modern method of cultivation.
Excluding some small areas, most of the agriculturally operated area were dependent upon rainfall which are again erratic due to vagaries of monsoon. Although agriculture was overburdened with about 70 percent of the working population engaged in cultivation but the country was not self sufficient in respect of food grains and had to import food grains regularly.
Thus on the eve of introduction of planning the condition of Indian agriculture was deplorable.
Objectives of Planning for the Development of Agricultural Sector:
The planning commission finalised the following four broad objectives initially for the development of agricultural sector:
(i) Raising agricultural production:
To raise agricultural production by bringing more area under cultivation, by raring yield per hectare through intensive cultivation with the application of improved inputs like HYV seeds, fertilizers, irrigation etc.
(ii) Raising employment opportunities:
The agriculture sector should generate adequate number of additional employment opportunities in the rural areas for enhancing the income level of rural people.
(iii) Reducing excessive dependence on agriculture:
Indian planning has also set another objective of reducing excessive dependence on agricultural sector and to reduce number of people working on land. Accordingly, the surplus labour in the agricultural sector can be shifted to secondary and tertiary sectors.
(iv) Reduction income inequality in the rural areas:
The plan aims at reducing income inequality in rural areas and should distribute surplus land among small and marginal farmers. This should be done in rural areas for attaining high degree of equality and justice. Although most of these objectives were followed in our all plans but in actual practice more stress has been laid on increasing production ignoring the other objectives.
It is only in recent years stress has been given on the development of allied sector along with the development of agriculture. Thus in order to develop agriculture and allied sector in balanced form all the above mentioned four objectives should be given due importance in the coming years.
Strategy followed by Planning for the Development of Agricultural Sector:
The following are some of the important strategy followed by planning in India for the development of agricultural sector:
1. Increasing agricultural production:
Five year plans in India have given due stress on raising agricultural productivity and also for increasing employment. Various programmes undertaken by the country in this regard include: introducing Community Development Programmes, agriculture extension services throughout the country, extension of irrigation facilities, arranging supply of fertilisers, pesticides HYV seeds, agricultural machinery, expansion of infrastructure and institutional credit.
2. Reducing pressure of population:
In order to reduce pressure of population on land, Five Year Plans have taken strategy to set up and strengthen agro-based industries and handicrafts in rural areas for encouraging shift of population from agriculture to industries and service sectors.
3. Attaining equality and justice:
In order to attain equality and justice in the rural sector of the country, our plans have taken strategy from the very beginning by introducing land reforms for removal of intermediaries, tenancy legislation for protection of tenants, ceiling on land holdings and distribution of surplus and among landless cultivators, small and marginal farmers and waiving farm than to provide relief to indebted poor farmers etc.
Pattern of Investment made under Plans for the Agricultural Sector:
It would be better to look into the pattern of investment made in the agricultural sector under the different Five Year Plans, which can be shown as follows:
It is observed from records that with the increase in total plan outlay in each plan, the outlay on agriculture and irrigation also increased considerably. However, the outlay on agriculture and irrigation as percentage of total plan outlay was highest during the First Plan, i.e. 31 per cent and the some percentage varied between 20 to 24 per cent in all other plans.
In order to get an idea about the pattern of investment in the agricultural sector, an explanation in necessary related to meaning of agricultural sector. During the first three Five Year Plan, “agricultures sector was consisting of agriculture and allied sectors (horticulture, animal husbandry and fisheries) and also irrigation and flood control.
However, in the successive plans, “rural development” and “special area programmes” were added and then “irrigation and flood control” was omitted.
The outlay on agriculture as shown in Table 7.3 is composed of:
(i) Agriculture and allied sectors, special area programmes and rural development up to Fifth Five Year Plan and then.
(ii) From Sixth Plan onwards, agriculture and allied sectors also include research and education. Rural development has also been omitted.
The pattern of investment on agriculture in different five year plans is shown in table 7.3. It is observed that with the increase in total outlay in each plan, the outlay on agriculture and allied sectors had also increased considerable. But the percentage of plan outlay on agriculture and allied sectors to total plan outlay varied from 11.3 per cent to 14.9 per cent during the First Plan to Fifth Plan period.
During this period, agriculture sector includes, special area programmes, animal husbandry rural development, forestry and wild life. But from the Sixth Plan onwards this sector includes only animal husbandry, research and education only. However, from Sixth Plan to Eleventh Plan, the share of agriculture and allied sector varied between 3.7 per cent (11th Plan) to 5.9 per cent (Seventh Plan).
In order to increase agricultural production in the country, the Planning Commission undertook various programmes for soil conservation, irrigation, land reclamation, introducing better ploughs and improved agricultural implements, adoption of scientific practices, dry land farming, increasing supply of fertilizers and manures, etc.
Plans also made attempt to bring considerable institutional changes like land reforms, introducing community development programmes and agricultural extension services, improving basic facilities like power, transportation, marketing and others. Since the Third Plan onwards, greatest emphasis was laid on “new agricultural strategy of intensive cultivation based on new HYV seeds and fertilizer.
Progress of Agriculture under Five Year Plans in India:
Five year plans in India made its attempt for the development of agricultural sector and accordingly tried to increase the production of agricultural crops by fixing targets for respective plan period. However, the progress attained under different plans varied widely.
Progress during First Four Plans (1951-1974):
As the country was facing food crisis, the First Plan set its aim to solve this food problem and also tried to improve the agro raw materials like raw jute, raw cotton, oil seeds etc. Accordingly, the plan allocated 14.9 per cent of total plan outlay on agriculture.
Table 7.3(a) shows that in respect of production of food grains, the country could produce 67 million tonnes as against the target of 62 million tonnes. Moreover, the target in respect of production of oilseeds was marginally exceeded but there were shortfall in realising targets in respect of sugarcane, jute, cotton etc.
1. Production of food grains, oilseeds and sugarcane in million tonnes.
2. Production of Cotton in millions of bales of 180 kgs each.
3. Production of Jute in millions of bales of 170 kgs each.
Source: Plan documents and Economic Surveys.
However, the progress achieved during the Second, Third and the Fourth Plan in respect of agriculture was not satisfactory. Excluding sugarcane, the production targets fixed for other agricultural crops were not met showing shortfall in realising targets. In respect of food grains although the target was fixed at 81 million tonnes, 100 million tonnes and 129 million tonnes during the Second.
Third and Fourth Plan but the actual realised were 80 million tonnes, 72 million tonnes and 104 million tonnes respectively showing shortfalls in realising targets. Similarly, the targets fixed in respect of raising production of oil seeds, cotton and jute were also not fulfilled.
However, during the Fourth Plan, a systematic attempt was made for extending the application of science and technology for improving agricultural practices.
During the Fourth Plan, the production of food grains was raised to 104 million tonnes as compared to the targets of 129 million tonnes but the production of sugarcane was raised to 140 million tonnes. But the Fourth Plan failed to realise targets in respect of raising production of oilseeds, cotton and jute.
Thus, although the new agricultural strategy or green revolution was introduced during the Third Plan but it failed to realise its targets during the Third and Fourth Plan.
Progress of Agriculture from the Fifth Plan Onwards:
The Fifth Plan (1974-79) made sincere attempt for the development of agriculture and allied sector and allocated an outlay of Rs 4,870 crore (12 per cent of the total outlay) clearly setting its targets. After the declaration of emergency in 1975, progress attained by agriculture was steady and the plan target was realized.
However, the Janata Party Government terminated the Fifth Plan in March 1978, a year ahead of full terms. However, the actual production of food grains in last year of the Fifth Plan reached the level of 132 million tonnes (as shown in table 7.3(a) as compared to its target of 125 million tonnes, and thus exceeded the targeted production for the first time.
The Sixth Plan (1980-85) was very much successful in its agricultural front. The agricultural sector achieved the growth rate of 4.3 per cent as against the growth target of 3.8 per cent. Total production of food grains reached at 152 million tonnes in 1983-84 as against the target of 154 million tonnes. This success was hailed by the government at Second Green Revolution.
Which the First Green Revolution introduced since 1967-68 made the application of new high yielding varieties of Mexican wheat and dwarf rice varieties, the Second Green Revolution introduced from 1983-84 arranged the expansion in supplies of various inputs and services to farmers, agricultural extension and better management.
Moreover, the First Green Revolution was very much confined mainly to Punjab, Haryana and Western Uttar Pradesh. But the Second Green Revolution was spread to eastern and central states including eastern U.P., Madhya Pradesh, West Bengal, Bihar and Orissa which could attain considerable progress in its agriculture in recent years. However, during the Sixth Plan, now of the targets of agricultural crops (excluding oilseeds) was realised [Refer Table 7.3(a)],
The Seventh Plan 1985-90, the Eighth Plan (1992-97) and the Ninth Plan (1997-2002) also put special emphasis on development of agriculture. These plans undertook specific projects like special rice production programme in the eastern region, national watershed programme for rainfed agriculture, national oilseeds development projects, social forestry etc.
However, the Seventh Plan failed to reach the target in case of all major crops except cotton as shown in Table 7.3(a). But the level of production of food grains could reach 171 million tonnes at the end of the plan. The Eight Plan (1992-97) could adopt the strategy of development and set the targets in agricultural front in a round manner.
Moreover, blessed with favourable weather and climatic conditions, most of its targets related to oilseeds, jute, sugarcane and cotton were over fulfilled excepting food grains whose output at the end of the plan was 199 million tonnes as compared to it, target of 210 million tonnes.
Progress of Agriculture during the Ninth Plan:
The Ninth Plan could not attain much success in respect of agricultural development. Although the draft Ninth Plan set a target to attain annual average growth rate 3.9 per cent in agriculture and allied sector but during the Ninth Plan it attained 2.7 per cent growth rate. During the Ninth Plan period the actual production of food grains was only 212 million tonnes as compared to its target to 234 million tonnes.
In respect of production of oilseeds, sugarcane, cotton and jute, achievements were much below the targets and also less than the base level (1996-97). The index of agricultural production (1981-82 = 100) increased from 165.3 in 1997-98 to 175.9 in 2001-02. Thus the agriculture and allied sector have shown a mixed performance during the period the Ninth Plan.
Progress of Agriculture during the Tenth Plan:
The Tenth Plan adopted “Regionally Differentiated Strategy” for the development of agriculture along with sustainable development of natural resources. Accordingly, the plan gave stress on reclamation of waste land, rain water harvesting and conservation and envisaged radical thrust in crop diversification.
The Tenth Plan introduced schemes related to production and distribution quality seeds, fertilizers, plant nutrients, soil testing, pest management and farm tools and implements. The Plan also encouraged organic farming and use of organic fertilizers.
Although the draft Tenth Plan set a target to attain annual average growth rate of 3.97 per cent in agriculture and allied sector, but during the Tenth Plan it attained (-) 7.2 per cent growth in 2002-03, 10.0 per cent in 2003-04, 6.0 per cent in 2005-06 and 2.7 per cent in 2006-07.
There by the overall growth rate in agriculture during the Tenth Plan was only 1.7 per cent. Total production of food grains increased from 179.4 million tonnes in 2002-03 to 208.6 million tonnes in 2005-06 and then to 217.3 million tonnes in 2006.07. The index of agricultural production (1981-82 = 100) increased from 178.8 in 2001-02 to 181.0 in 2003-04 and then to 200.7 in 2006-07. Thus the agriculture and allied sector has shown a mixed performance during the Tenth Plan.
Development of Agriculture during the Eleventh Plan:
Although the agricultural sector of the country is having a great potential but the growth rate of the sector is very low. The greatest challenge before the Eleventh Plan is to double the growth rate of agriculture so achieved in the Tenth Plan. This will require steps both on the demand side as well as the supply side. On the demand side there is evidence that farmers face adverse demand conditions.
Prices received for the agricultural products have also failed to keeps face with the costs or the general price level and as a result profitability of the sector has declined. The supply side challenge of doubling agricultural growth as also formidable. This is mainly because no dramatic technological breakthrough comparable to the green revolution is presently visible.
However, there is urgent need for taking agriculture into a higher growth trajectory of 4 per cent annual growth and such target can only be met with improvement in the scale as well as of quality of agricultural reforms undertaken by the various states and agencies at the various levels.
These reforms must aims at efficient use of resources and conservation of soil, water and ecology on a sustainable basis and in holistic framework which much incorporate financing of rural infrastructure such as water, roads and power.
The Approach Paper of the Eleventh Plan has aptly highlighted such holistic framework and suggested the following strategy to raise agricultural output:
(a) Doubling the rate of growth of irrigated area;
(b) Improving water managements rain water harvesting and watershed development;
(c) Reclaiming degraded land focusing on soil quality;
(d) Bridging the knowledge gap through effective expansion;
(e) Diversifying into high value outputs, fruits, vegetables, flowers, herbs and spices, medicinal plants, bamboo, bio diesel but with adequate measures to ensure food security; if) promoting animal husbandry and fishery;
(g) Providing easy access to credit at affordable rates;
(h) Improving the incentive structure and functioning of market, if necessary, through state intervention for improving the prices of agricultural produce and
(i) Refocusing on land reforms issues.
During the first two years of the Eleventh Plan, total production of food grains increased from 217.3 million tonnes in 2006-07, i.e., the last year of the Tenth Plan to 230.8 million tonnes in 2007-08 and then to 233.9 million tonnes in 2008-09 showing a growth rate of 6.2 per cent in the first year and 1.3 per cent in the second year of the plan.
Which the production of oilseeds and cotton recorded a marginal increase in its output but the production of sugarcane and jute recorded a marginal decline in its output.
Evaluation of Agricultural Development in India:
The development of agriculture during the last sixty years of planning needs to be evaluated considering the importance of the sector.
The following are some of the important observations that can be made on the development of agricultural sector of the country.
1. Slow Rate of Growth:
The average rate of growth of agricultural production in India during the period of planning, i.e. from 1951 to 2006 has been around 3.0 per cent per annum which is considerably lower as compared to that of 5.3 per cent in China, 4.4 per cent in Pakistan and 4.1 per cent in Indonesia.
2. Poor Expansion of Agricultural Area:
During the first phase of agricultural development, i.e., during 1951 to 1965, the area under agriculture expanded considerably. But since 1965, the expansion of area under agriculture has been very slow.
3. Slow Technological Changes:
Technological changes in Indian agriculture are also very slow. These changes are made in the application of HYV seeds, fertilizers, irrigation water etc. But the extent coverage of such technological changes are very narrow. Indian agriculture is still depending too much on natural factors on arrival of monsoon and distribution of rainfall throughout the season.
4. Dissimilar Growth in Productivity:
In India the growth rate of productivity is dissimilar. Although the productivity has increased considerably in respect of wheat and rice to some extent due to adoption of new technology, HYV seeds etc., but the productivity in respect of pulses, oilseeds, coarse grains remained all along poor due to non-adoption of new technology.
5. Unstable Growth Rate:
The growth rate of agricultural production in India is subjected to increasing instability due to vagaries of monsoon, natural calamities, lack of concerted and consistent approach during different plans.
6. Regional Differences:
Agricultural development in India is subjected to regional differences. The impact of Green Revolution is very much restricted to Punjab, Haryana and Western Uttar Pradesh leading to attainment of growth rate of 5.0 per cent in these states as compared to 2.0 per cent in Bihar, 1.5 per cent in Madhya Pradesh and 1.8 per cent in Assam.
7. Poor Attainment of Social Justice:
Indian agriculture has also failed to attain social justice to the desirable level. Development of agriculture in India has been unjust as it has benefited rich farmers and land lords and failed to meet the needs of poor and marginal farmers. Land reform measures have also failed to look after the needs of land less cultivators.
10. Essay on the Emerging Trends in Indian Agriculture as a Result of Liberalisation:
Following are some of important emerging trends in Indian agriculture as a result of economic liberalisation introduced in the country:
(i) Raising the Production of Food-grains:
India has been experiencing an increase in the production of food grain particularly after the introduction of new agricultural strategy (i.e., Green Revolution) in agricultural practices. Annual growth rate of 2.08 per cent was recorded during 1970s. Annual growth rate of 3.5 per cent in food grains in 1980s is the hallmark of the green revolution that enabled India to become self-sufficient in food grains and even a marginal exporter.
The decade of 1990s could not maintain this pace and annual growth rate has fallen to 1.7 per cent which is just about equal to annual population growth. Total production of food grains has increased from 176.39 million tonnes in 1990-91 to 264.8 million tonnes in 2013-14. With the increase in size of population and increase in income, the demand for food-grains is likely to rise in near future.
As per the latest estimate it is found that by 2016, the demand for food-grains is likely to rise at the rate of 2.6 per cent. If the country can maintain 4 per cent growth rate in agricultural production then after meeting its domestic demand, the country can export the surplus amount of food-grains to the foreign countries in which it has favourable position.
(ii) Diversification of Agriculture:
Agriculture is not only meeting the demand for food grains but also other needs -of development. In recent years, agricultural sector has been diversified to produce commercial crops and horticultural crops viz., fruits, vegetables, spices, cashew, areca-nut, coconut and floricultural products like flowers, orchids etc., dairy and other animal husbandry products. The demand for these products has also been increasing. Liberalisation of the economy has created ample scope for the development of agricultural sector both in terms of increased production and trade.
(iii) Increasing Trend in Horticultural Output:
The diversity of physiographic, climate and soil characteristics enables India to grow a large variety of horticultural crops which includes fruits, vegetables, spices, cashew-nut, coconut, cocoa, areca-nut, root and tuber crops, medicinal and aromatic plants etc. India is the largest producer of fruits, and second largest producer of vegetables. Total production of fruits has increased from 29.0 million tonnes in 1990-91 to 63.5 million tonnes in 2007-08.
Total production of vegetables has increased from 67.29 million tonnes in 1994-95 to 125.9 million tonnes in 2007-08. India is the largest producer of cashew. Total production of cashew has increased from 3.7 lakh tonnes in 1991-92 to 6.0 lakh tonnes in 2003-04. Total horticultural production is estimated at 265 million tonnes in 2012-13.
With the increase in the production of fruits, vegetables and other horticultural products, the value of exports of these products is also increasing. Total value of exports of fruits, vegetables and pulses has increased from Rs 216 crore in 1990-91 to Rs 5,650 crore in 2008-09. Thus horticultural exports of the country contributes nearly 25 per cent of the total agricultural exports.
(iv) Increase in Floricultural Output:
Presently about 31,000 hectares of land spread over Karnataka, Tamil Nadu, Andhra Pradesh and West Bengal are under flower production. Since the inception of liberalisation, commercial farming of floricultural activities has been increasing gradually. The demand for Indian cut flower is increasing continuously in the international market.
Total value of exports of cut flowers has increased from Rs 28.7 crore in 1994-95 to Rs 96.6 crore in 1998-99. Under the liberalised regime, India is having huge prospects of export of floricultural products in near future, which is expected to exceed Rs 200 crore mark by the year 2010. The total production of flowers during 2007-08 was 0.87 million tonnes of loose flowers and 803.5 million tonnes of cut flowers.
(v) Free Trade:
Liberalisation has removed all restrictions on the movement of agricultural produce within the country. This has facilitated expansion of trade in agricultural products, especially of food grains.
(vi) Agricultural Exports:
Another important emerging trend of agriculture under liberalisation is the increasing volume of agricultural exports and its increasing prospects in near future under the WTO regime. India is favorably placed in respect of agricultural exports as the agricultural sector is subjected to low import content, low cost of labour, favourable climatic conditions, and low unit cost of inputs.
Agricultural exports are playing an important role in expanding the activities of agricultural sector along with generating increasing number of employment opportunities and also in diversifying agricultural operations.
The Export Import Policy (Exim) 1992-97 provided ample opportunities for increasing the volume of agricultural exports. The policy has permitted exports of agricultural goods like oilseeds, edible oil, sugarcane, pulses, coconut, etc. which were prohibited earlier.
Accordingly, the total value of agricultural and allied exports of India increased from Rs 6,295.2 crore in 1991-92 to Rs 2,60,953 crore in 2013-14 which was nearly 12.90 per cent of country’s total exports as compared to that of only 10.59 per cent in 1992-93.
Trade policy reforms have provided an opportunity to Indian exporters to export agricultural products to overseas market. India has the potential to export at least 2 million tonnes of rice annually which of course includes nearly 5 lakh tonnes of high value long grain basmati rice.
In 1998 over 2 million tonnes of rice had already been exported till November 1998. In order to tap the future potential, Indian exporters are required to improve their processing and packaging facilities to meet international quality standards.
India’s share in the world trade in agricultural commodities is less than 1 per cent. For over four decades industry remained highly protective and agriculture served as a source of cheap raw materials for the domestic industry, a very large segment of which was inefficient and globally non-competitive. This had a dampening effect on the agricultural exports and investment in agriculture.
The new economic policy since 1991-92 has attempted to correct this imbalance and agriculture has now begun to see some gains through competitive exports. A number of policy changes have been introduced to make agricultural exports more viable.
Lowering of import duties on capital goods particularly for green house equipment and plant and machinery necessary for food processing industries as well as easier availability of credit for export has helped agricultural exports.
Most of the restrictions on agricultural exports have been removed. Only two items in the category of agricultural and food export are in the negative list, i.e. beef and tallow. The items on the restricted list have been drastically pruned and only a few items now remain subject to either licensing or quantitative ceiling.
Rice and wheat are emerging as major export products. Fruits, vegetables and flowers have emerged as products with immense export potential. A number of Export Oriented Units (EOUs) in the floriculture sector has already been set up. To facilitate export of perishable products, subsidy on air freight is being provided for specified items.
(vii) Food Processing:
Economic liberalisation has made ample scope for the development and expansion of food processing industry in India. Fruits and vegetables being perishable in nature are facing a huge loss worth Rs 3,000 crore every year. In order to prevent such loss, the National Horticulture Board is making necessary steps for providing infra-structure and for the packaging, storage and transportation of horticultural products.
The production of processed fruits and vegetables are providing huge number of employment and improving agricultural productivity by raising the prospects of agricultural exports. The Government is also offering necessary incentives by exempting the industry from excise duty.
In order to invite foreign capital into this industry the Government has permitted 51 per cent foreign equity partnership and also offered prompt approval of foreign technology transfer to the food processing industry of the country.
Production of processed fruits and vegetables grew by about 13 per cent in 1997 but the same has declined by about 5.2 per cent in 1997-98. However, the exports of processed fruits and vegetables are estimated to increase to Rs 889 crore in 1998-99 as compared to Rs 745 crore in 1997-98.
Production of different variety of milk products is estimated to have increased to 306 thousand tonnes in 1998 from 290 thousand tonnes in 1997. Exports of animal products (including milk products) is expected to increase to over Rs 1,100 crore in 1998-99 from Rs 910 crore in 1997-98. Marine fish harvest experienced a 2.8 per cent growth in production in 1997-98 and export of marine products is expected to increase to over Rs 5,500 crore in 1998- 99 from Rs 4,643 crore in 1997-98.
Food processing industry has received a considerable interest for development in recent times. Subsequent to the deregulation of food processing industry under the New Industrial Policy of 1991, 4,676 memoranda (IEMs) have been filed till September 1998 in various sub-sectors of the food processing industry, envisaging investment worth Rs 53,490 crore.
Besides for setting up 100 per cent Export Oriented Units/Joint Ventures in various food processing sectors, 1,078 approvals with a potential investment of Rs 18,664 crore have been granted till September 1998. Out of total investment proposals worth Rs 72,154 crore approved in this industry, the amount of foreign investment is Rs 8,940 crore.
Till September 1998, 837 projects have gone into commercial production and total foreign investment inflow in the sector till March 1998 is around Rs 1,800 crore. As on 1st January 1999, the estimated total installed capacity of fruits and vegetables processing, units in India stands at 20.8 lakh tonnes.
(viii) Rising Productivity of Agricultural Resources:
One of the important aims of liberalisation is to attain higher productivity of resources utilised for agriculture. Improvement in the productivity of resources is being done through better allocation of resources between different areas and also with the application of latest technology.
In the present regime of liberalisation, there is an emerging trend to emphasise on export oriented policies, applying new improved technologies in food processing and marketing and giving stress on planting crops as per .geographical suitability.
(ix) Developing Agriculture in Backward Areas:
In the post-Green Revolution period, application of new agricultural strategy, research and technology was very much restricted in the production of food grains, i.e. only wheat and rice. But under the liberalisation wave, with the growing demand for agricultural exports, many new areas of agricultural operations have become favourable and lucrative.
In the agriculturally backward areas, having no irrigation system, dry land farming has been initiated. The other activities like horticulture, floriculture, animal husbandry, fishery etc. have been encouraged. Application of modern improved techniques in these areas has resulted in the development of many backward areas which were previously subjected to wide spread poverty.
(x) Developing New Biological Techniques:
During the period of green revolution, increasing application of chemical fertilisers and pesticides were encouraged extensively in order to meet the growing demand for food required to feed the rising population. Rising population, ever-increasing demand for food and unlimited exploitation, of natural resources have created a grave threat to the environment as well as to the agricultural sector.
In order to save and protect the environment as well as the agricultural sector from any further damage, increasing use of biological technology for agricultural operation has been emphasised and more emphasis is being given to develop new biological technology.
(xi) Growing Trend of Unemployment in Agricultural Sector and Its Solution:
Green revolution and increasing mechanisation of agriculture have resulted fall in employment opportunities, resulting in a serious problem in the rural areas. Although many special employment programmes have been introduced to serve as a security net but increasing potentiality of the agricultural sector as emerged from the liberalisation wave should be exploited properly.
The growing trend in agricultural exports, increasing demand for horticultural and animal products in the export market has created ample opportunities and scope for employment of huge number of population. This allied sector being labour intensive can provide a lasting solution to the rural unemployment problem of the country.
(xii) Growing Volume of Subsidies:
In India, the volume of subsidies granted to agriculture, in respect of fertilizer, irrigation and electricity charges etc. have been increasing. Aggregate subsidies provided by the Central Government are estimated at Rs 36,997 crore in 2003-04 as compared with Rs 19,664 crore in 1997- 98.
Out of these total amount about 75 per cent is allotted in the area of fertilizer and food grains. Under the present era of liberalisation, although there is a move to reduce the volume of subsidies in the budget but political compulsions have prevented the government to undertake that move. In 2014-15, total amount of subsidy on fertilizers alone increased Rs 72,470 crore.
(xiii) Growing Trend of Investment in Agriculture:
Agricultural sector is experiencing a growing trend in the volume of its investment during the post-liberalisation period. But the volume of public sector investment in the agricultural sector is declining. Table 18.1 shows the trend of public and private sector investment in agriculture.
Table 18.1 reveals that total volume of investment made in agricultural sector of the country at 1980- 81 prices has declined from Rs 4,636 crore in 1980-81 to Rs 4,594 crore in 1990-91 and then subsequently increased to Rs 6,999 crore in 1996-97.
During this period the share of public sector investment which was 38.7 per cent in 1980-81 gradually declined to 25.1 per cent in 1990-91 and then subsequently to 16.2 per cent in 1996-97, i.e. from Rs 1,796 crore in 1980-81 to Rs 1,154 crore in 1990-91 and then to Rs 1,132 crore in 1996- 97.
The main reason behind the downward trend in public sector investment was the withdrawal of investment resources in favour of investment in terms of current expenditure incurred through subsidies. Such a decelerating trend is a matter of concern.
However, the private sector investment has grown substantially in the 1990s. Total volume of private investment in agriculture which was Rs 2,840 crore in 1980-81 gradually increased to Rs 3,440 crore in 1990-91 and then considerably increased to Rs 5,867 crore in 1996-97.
However, the volume of total investment in agriculture at 1993-94 prices has increased from Rs 13,523 crore in 1993-94 to Rs 20,510 crore in 2003-04. The share of public sector investment has declined from 33.0 per cent (Rs 4,467 crore) in 1993-94 to 25.6 per cent (Rs 5,249 crore) in 2003-04.
On the other hand, the share of private sector investment in agriculture has increased considerably from 67.0 per cent (Rs 9,056 crore) in 1993-94 to 74.4 per cent (Rs 15,261 crore) in 2003-04. The main factors responsible behind such increase in private investment are the incentives and encouragement being provided to the development of agricultural sector and the favourable changes being made in trade policies under the post-liberalisation period and also due to favourable prospects of agricultural exports in India under the path of globalisation.
Moreover, investment in agriculture declined from 1.6 per cent of GDP in 1993-94 to 1.3 per cent both in 1997-98 and also in 2001-02. This decline was due to fall in public investment in agriculture in recent years. Again the volume of total investment in agriculture at 2004-05 prices increased from Rs 78,848 crore in 2004-2005 to Rs 1,38,597 crore in 2008-09 (Q). The share of public sector investment has decreased from 20.5 per cent (Rs 16,189 crore) to 17.6 per cent (Rs 24,452 crore) in 2008-09.
On the other hand, the share of private sector investment in agriculture has increased relatively from 79.5 per cent (Rs 62,665 crore) in 2004-2005 to 82.4 per cent (Rs 1,14,145 crore) in 2008-09. The main reasons behind the such decrease in private investment are the increasing flow of institutional credit, especially from public sector banks, to agricultural sector and the relative slump in the prices of agricultural products.
Moreover, investment in agriculture declined from 2.2 per cent of GDP in 1999-2000 to 1.9 per cent in 2005-06. Such decline in the share of the agricultural sector’s capital formation in GDP is a matter of concern. This declining share was mainly due to the stagnation or fall in public investment in irrigation, particularly since mid-1990s.
However, there is indication of a reversal of this trend with public sector investment in agriculture reaching the highest level of Rs 12,591 crore in 2004-05 since the early 1990s. This is no doubt an encouraging trend. Moreover, the gross capital formation (GCF) in agriculture and allied sectors as proportion to the GDP in the sector stagnated around 14 per cent during 2004-05 to 2006-07.
However, there is marked improvement in this figure of GCF during the Eleventh Five Year Plan. The same figures increased to 16.03 per cent in 2007-08 and then to 19.57 per cent in 2008-09 and to 20.10 per cent in 2010-11. However, the GCF in agriculture and allied sectors relation to overall GDP has remained stagnant at around 2.5 to 3.0 per cent.
As a result, the share of GCF in agriculture and allied sector in total GFC has remained in the range of 6.6 to 8.2 per cent during 2004-05 to 2009-10. Thus, there is need to raise investment in agriculture significantly both by public and private sectors to ensure sustained target growth of 4 per cent per annum in agriculture and allied sector of the country.
(xiv) Institutionalisation of Agricultural Credit:
Under the present wave of liberalisation there is growing trend of institutionalisation of agricultural credit. In the initial stage of post-independence period Indian farmers were depending too much on unorganised sources of agricultural credit, i.e., on village money lenders, landlords, traders etc. But such non-institutional credit is very much damaging farmers’ interest as they charge exorbitantly higher rate of interest.
But with the passage of time, there is growing trend to institutionalize the flow of agricultural credit mainly through commercial banks cooperative and regional rural banks. Agricultural credit provided by various agencies rose from Rs 16,494 crore in 1993-94 to Rs 1,80,486 crore in 2005-06.
In 2012-13, it is likely to rise to Rs 5,75,000 crore. Thus under the present era of liberalisation, the farmers are showing much interest to collect loan from institutional sources and the recovery of agricultural advances has also increased from 56 per cent in 1993-94 to 63 per cent in 2010-11. Thus it is observed that liberalisation has created several favourable impacts on the agricultural sector of the country.
The emerging trends in agriculture which are very much prominent in the post-liberalisation period include the rising productivity, growing investment, diversification of the sector, application of modern techniques, development of horticulture and floriculture, growing volume of exports and development of food processing industry.
India with its rising population is in an advantageous position to develop its agricultural and allied sectors which arc mostly labour intensive. Liberalisation has provided ample scope for the modernisation and development of the agricultural sector and also to reap the maximum benefit from the increasing scope of agricultural exports arising out of the path of globalisation adopted by the economy.