Animesh Singh Chauhan

21/2052

B.A. Hons. (Political Science)

4th Semester

General Elective: Indian Economy II

Introduction:

The Indian economy is largely dependent on agriculture, which employs over 50% of the workforce and
contributes about 15% to the country's GDP. Agriculture in India has been facing several challenges,
including declining land productivity, shortage of credit, inadequate irrigation, inadequate market linkages,
and fragmented landholdings. Over the years, the government has implemented various policies and programs
to address these issues and improve agricultural growth. This paper aims to analyze the policies and
performance of the Indian economy with respect to agriculture, focusing on credit, labor, land reforms, market
and pricings, and regional variations, as suggested in the survey conducted by Behera, Bhagirath, and Pulak
Mishra in 2007 titled "Acceleration of Agricultural Growth in India: Suggestive Policy Framework."

Credit:

Credit is one of the critical inputs for agricultural growth. The Indian government has taken several measures
to enhance credit availability to farmers, such as expanding the coverage of institutional credit, setting up
cooperative banks, and providing subsidies on interest rates. However, the credit flow to the agriculture sector
has been insufficient due to various reasons, including inadequate reach of formal financial institutions, high
transaction costs, and the absence of a unified credit policy.

The survey conducted by Behera, Bhagirath, and Pulak Mishra suggests that the government should focus on
enhancing credit availability to farmers by expanding the coverage of formal financial institutions, particularly
in rural areas. The government should also create a unified credit policy that caters to the diverse credit needs
of farmers, including short-term and long-term credit, crop loans, and investment credit.
Labor:

The Indian agricultural sector is heavily dependent on labor, particularly on migrant workers who move from
rural to urban areas during the off-season. However, labor availability in agriculture has been declining over
the years due to various reasons, including increasing non-agricultural employment opportunities and a lack of
incentives for workers to remain in agriculture.

The survey suggests that the government should focus on enhancing labor productivity in agriculture by
improving working conditions, providing social security benefits, and promoting skill development programs
for workers. The government should also create an enabling environment for farmers to adopt labor-saving
technologies and techniques, which can reduce their dependence on labor.

Land Reforms:

Land reforms are crucial for promoting agricultural growth in India. Landholdings in India are fragmented,
with small and marginal farmers constituting a significant portion of the farming community. The government
has implemented various land reform measures over the years, including tenancy reforms, ceiling laws, and
land consolidation programs. However, the impact of these measures has been limited, and land fragmentation
continues to be a significant challenge for agriculture in India.

The survey suggests that the government should focus on implementing land consolidation programs more
effectively, particularly in areas where land fragmentation is high. The government should also provide
incentives for farmers to consolidate their landholdings voluntarily. In addition, the government should
promote land leasing, which can enable small and marginal farmers to access larger tracts of land and increase
their productivity.

Market and Pricing:

Market and pricing policies are crucial for ensuring that farmers get a fair price for their produce and for
promoting agricultural growth. The Indian government has implemented various policies to support
agriculture markets, including setting up of agricultural produce market committees (APMCs), minimum
support prices (MSPs), and procurement programs. However, these policies have not been very effective in
ensuring remunerative prices to farmers.

The survey suggests that the government should focus on enhancing market efficiency by removing
restrictions on interstate trade, promoting electronic trading platforms, and strengthening contract farming
arrangements. The government should also reform the MSP and procurement programs to make them more
effective in ensuring fair prices to farmers.

Regional Variations:

India's agriculture sector faces significant regional variations due to differences in climate, soil, and water
availability. The government has implemented several policies to address this issue, such as the Rashtriya
Krishi Vikas Yojana (RKVY) scheme, which provides funding for state-specific agricultural development
plans. In addition, the government has also introduced the National Agricultural Insurance Scheme to provide
crop insurance to farmers against natural calamities such as droughts, floods, and cyclones.

Recent Initiatives:

In the last phase (2005-2013) few efforts have been made to address these issues – arresting the decline in
investment in agriculture, making farming viable and improving farmers’ income, increasing food production
and providing economic access to food to large sections of population. Rashtriya Krishi Vikas Yojana
(RKVY) was started in 2007 mainly with the objectives of incentivizing states to increase investment in
agriculture (because agriculture is a state subject) and use this investment to address felt needs of the farmers.
To meet these two objectives, it has been made mandatory for states to maintain or increase their trend growth
in expenditure on agriculture (as a proportion of total expenditure), and also make district agricultural plans
(DAP) through a bottom-up planning process for the entire state. States must meet both these requirements to
be able to access RKVY funds. The initial results show improvement in the growth rate of GCFA after the
program as compared to the preceding period. The agri-GDP growth rate has also been higher and more stable
during this period (Fig 1 and Fig 2). However, people’s participation in preparation of district agricultural
plans has been minimal. The second major program is aimed to increase food production by the end of the
11th FYP. The National Food Security Mission (NFSM) was launched in 2007 with the limited objective of
increasing the production of rice, wheat and pulses by 10, 8 and 2 million tonnes respectively by the end of
the 11th FYP. The program, like the green revolution period, focused on select districts across the country for
each crop. Results indicate that the program has managed to achieve the targeted production for each of the
crops. The third programme is the National Food Security Act (NFSA), with the main objective of providing
economic access to food. Under this program an entitlement of 35 kg of food-grain per month per AAY
household and 25 kg per month per priority household (to be decided by the state governments) at a price of
3/2/1 for rice/wheat/millets for three years have been created. In all, about 75 per cent of the rural and 50 per
cent of the urban population is covered. Another feature of the program is provision of other benefits such as
maternal and child support, support to destitute and homeless.

Challenges:

Despite the government's efforts, the agriculture sector still faces several challenges. Climate change, for
example, has a significant impact on crop yields, and the sector is particularly vulnerable to extreme weather
events such as droughts and floods. Additionally, farmers face a lack of access to modern technology and
inputs, leading to low productivity and inefficient farming practices. Furthermore, the agriculture sector
suffers from inadequate infrastructure, including storage and transport facilities, which can lead to wastage
and lower prices for farmers.

Conclusion:

In conclusion, the Indian agriculture sector plays a significant role in the country's economy. The government
has implemented various policies to support the sector's development and address challenges such as credit,
labor, land reforms, market and pricing, and regional variations. However, there is still much to be done to
improve the sector's performance. The government must continue to focus on providing necessary
infrastructure, technology, and funding to promote agricultural development and ensure food security for the
country.