Importance of Agriculture in India
The following points emphasize the importance of agriculture in Indian Economy.
(i) Share of Agriculture in National Income
Agriculture has got a prime role in Indian economy. Though the share of agriculture in national income has come down, still it has a substantial share in GDP The contributory share of agriculture in Gross Domestic Product was 55.4% in 1950-51, 52% in 1960-61 and is reduced to 18.5% only at present. The share of the agricultural sector’s capital formation in GDP declined from 2.2% in the late 1999s to 1.9% at present.
(ii) Important Contribution to Employment
Agriculture sector, at present, provides livelihood to 65 to 70% of the total population. The sector provides employment to 58.4% of country’s work force and is the single largest private sector occupation.
(iii) Important Source of Industrial Development
Various important industries in India find their raw material from agriculture sector -cotton and jute textile industries, sugar, vanaspati etc are directly dependent on agriculture. Handloom, spinning oil milling, rice thrashing etc are various small scale and cottage industries which are dependent on agriculture sector for their raw material. This highlights the importance of agriculture in industrial development of the nation.
(iv) Importance in International Trade
India’s foreign trade is deeply associated with agriculture sector. Agriculture accounts for about 14.7% of the total export earnings. Besides, goods made with the raw material of agriculture sector also contribute about 20% in Indian exports. In other words, agriculture and its related goods contribute about 38% in total exports of die country.
National Agriculture Policy 2000
The first ever National Agriculture Policy was announced on 28 July, 2000.
Aims of the policy:
- Growth that is based on efficient use of resources and conserve our soil, water and
biodiversity. - Agricultural growth that is sustainable technologically, environmentally and
economically. - The use of biotechnology will be promoted for evolving plants which consume less
water, are drought resistant, pest resistant, contain more nutrition, give higher yields and
are environmentally safe. - Balanced and conjunctive use of biomass, organic and inorganic fertilisers and controlled
use of agrochemicals through INM and IPM will be promoted. - A major thrust will be given to diversifying agriculture through ‘Integrated Farming’.
- Rational utilisation and conservation of the country’s abundant water resources will be
promoted through Integrated Water Management practices. - Agroforestry will receive a major National Rainfed Area Authority Government has
decided to set up a thrust for efficient nutrient cycling, nitrogen fixation, organic matter
addition and for improving drainage. - Concerted efforts will be made to promote traditional practices, knowledge and wisdom
to harness them for sustainable agricultural growth. - The increases in the Minimum Support Price (MSP) for wheat and rice in recent years are
AGRICULTURE such that they have begun to have inflationary effect. - As the MSP is increased, partly under the influence of the big farm lobby, the open
market prices also move up. - Inflation results, CIP are hiked and the poor are hurt.
Vishesh Krishi Upaj Yojana
Objective
To promote export of fruits, vegetables, flowers, minor forest produce, and their value added products, by
incentivising exporters of such products.
Entitlement
Exporters of such products shall be entitled for duty credit scrip equivalent to 5% of the FOB value of exports for each licencing year commencing from April 1, 2004. The scrip and the items imported against it would be freely transferable.
Imports allowed
Duty credit may be used for import of inputs or goods including capital goods, as may be notified, provided the same
is freely importable under ITC (HS). Imports from a port other than the port of export shall be allowed under TRA (Telegraphic Release Advice) facility as per the terms and conditions of the notification issued by Department of Revenue.
Drawback
Additional customs duty/excise duty paid in cash or through debit under Visheh Krishi Upaj Yojana shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department Revenue.
Kisan Credit Card Scheme
- The Kinas Credit Card Scheme, introduced in 1998-99, as an innovative scheme to facilitate access
to short term credit by farmers. - This Scheme gained popularity and its implementation has been taken up by 27 commercial banks,
378 District Central Cooperative Banks/State - Cooperative Banks and 196 Regional Rural Banks throughout the country.
- The number of cards issued and the amount sanctioned under the scheme.
- Has increased in each successive year since its inception to reach a total of over 435.6 lakh cards.
Foodgrains Procurement and Stocks in India
- Food grains procurement by the Government serves the dual purpose of providing support prices to the farmers and of building up public stocks of food grains. Procurement operations are carried out by the Food Corporation of India (FCI) and the state agencies designated by State Government Procurement prices are based on support prices recommended by CACP (Commission for Agricultural Costs and Prices).
- Food stocks are maintained by the Central Government for 3 purposes:
- Meeting the prescribed minimum buffer stock norms for food security.
- For monthly release of food grains for supply through PDS (Public Distribution System).
- For market intervention to augment supply so as to help moderate the open market prices.
National Commission on Farmers
The National Commission on Farmers (NCF) chaired by Dr. M.S. Swaminathan submitted five Reports between December 2005 and October, 2006. Key recommendations of the Commission are incorporated in the Revised Draft National Policy for Farmers. These include: asset reforms covering land, water, livestock and bio resources; farmer-friendly support services covering extension, training and knowledge, connectivity, credit and insurance; assured and remunerative marketing; inputs and delivery services; and curriculum reforms in the agriculture universities. Other major initiatives recommended include bringing Agriculture in the Concurrent List of the Constitution; setting up of a National Food Security and Sovereignty Board; universalization of Public Distribution System (PDS); setting up of an Indian Trade Organization; making the Commission on Agriculture Cost and Prices into an autonomous statutory organization with MSP at least 50 per cent more than the cost of production, and launch of a Rural Non- farm Livelihood Initiative (RNFLI). RNFLI when implemented would be able to absorb higher number of people dependent on agriculture.
Buffer Stock in India
- The years 2001-02 and 2002-03 witnessed high levels of stock buildup in the central pool. Food grains stocks reached a peak of 64.7 million tonnes, an all time record in June 2002.
The year 2003-04 witnessed a general easing in the food grains stocks with relatively lower procurement of rice and wheat following a bad agricultural year in 2002-03 and relatively high off-take of food grains especially for drought-related relief operations and under the welfare schemes.
- The steady reduction, in stocks prompted the Government to stop fresh allocation of rice and wheat for export with effect from August 2003, which has continued till date.
The year 2004-05 started with a much lower stock of 20 million tonnes on April 1, 2004, down from 32.8 million tonnes on April 1, 2003. Stocks however, remained consistently higher than the buffer requirement during 2004-05 with sufficient procurement of rice and wheat and relatively lower off-take than in the previous year. On April 1, 2005, the stock at 17.40 million tonnes was above the buffer norm of 16.2 million tonnes.
Various Schemes
Micro-irrigation
A Centrally Sponsored Scheme on micro-irrigation was launched in January, 2006 for covering a total area of 6.2 lakh ha. The scheme aims to achieve greater water use efficiency to result in enhanced productivity and better quality of produce.
National Bamboo Mission
Department of Agriculture and Cooperation has launched the National Bamboo Mission with 100 per cent central assistance at a total cost of Rs.568.23 crore, including an outlay of Rs.90 crore during 2006-07 (Tenth Plan) and the first four years of the Eleventh Plan.
Livestock Insurance
Livestock Insurance Scheme was approved in February 2006 for its implementation during the remaining part of 2005-06, and in 2006-07 on a pilot basis in 100 selected districts across the country with a total outlay of Rs. 120 crore. The scheme aims at protecting the farmers against losses due to un-timely death of animals. National Fisheries Development Board has been set up to realize the untapped potential of fishery sector with the application of modern tools of research and development including biotechnology. The Board was registered in July, 2006.
Rehabilitation Package for distressed farmers
A special relief package for farmers was announced for 31 districts in Andhra Pradesh, Maharashtra^ Karnataka and
Kerala where there was high incidence of farmers’ suicides. As regards credit, the package envisages:
- waiving of interest on overdue loans as on July 1, 2006 so that farmers have no past burden. This would make them eligible for fresh loan from the banking system.
- The overdue loans of the farmers as on July 1, 2006 will be rescheduled over a period of 3—5 years with a one year moratorium,
- A credit flow of Rs. 21,422 crore will be ensured in these 31 districts in 2006-07.
Rainfall Insurance Scheme-"Varsha Bima"
AICIL introduced Rainfall Insurance Scheme known as “Varsha Bima” during 2004 south-west monsoon period. Varsha Bima provided for five different options suiting varied requirements of fanning community: (i) seasonal rainfall insurance based on aggregated rainfall from June to September, (ii) sowing failure insurance based on rainfall between June 15 and August 15, (iii) rainfall distribution insurance with the weight assigned to different weeks between June and September, (iv) agronomic index constructed on the basis of water requirements of crops, (v) a catastrophe option covering extremely adverse deviation of 50 per cent and above in rainfall during the season. During kharif 2006, the scheme is being implemented as Varsha Bima-2006 in and around 150 districts/rain gauge station areas covering 16 states across the country.
Capital Formation in Indian Agriculture
The share of the agricultural sector’s capital formation in GDP declined from 2.2 per cent in the late 1990s to 1.9 per cent in 2005-06 (Table 8.19). This disturbing decline was partly due to the stagnation or fall in public investment in irrigation, particularly since the mid-1990s. However, there is indication of a reversal of this trend with public sector investment in
agriculture accelerating since 2002-03.
Agricultural Marketing
Ministry of Agriculture had formulated a model law on agricultural marketing in consultation with State/UT Governments to bring about marketing reforms in line with emerging trends. This model Act enables establishment of private markets/yards, direct purchase centres, consumers/farmers markets for direct sale, and promotion of public-private-partnership (PPP) in the management and development of agricultural markets in the country. It also provides for exclusive markets for onions, fruits, vegetables and flowers. Regulation and promotion of contract farming arrangement has also been made a part of this legislation. A provision has also been made for constitution of State Agricultural Produce Standards Bureau for promotion of grading, standardization and quality certification of agricultural produce.
Big Push to Agriculture- Second Green Revolution
The urgent need for taking agriculture to a higher trajectory of 4 per cent annual growth can be met only with improvement in the scale as well as quality of agricultural reforms undertaken by various States and agencies at various levels. These reforms must aim at efficient use of resources and conservation of soil, water and ecology on a sustainable basis, and in a
holistic framework. Such a holistic framework must incorporate financing of rural infrastructure such as water, roads and power. The Approach Paper to the Eleventh Five Year Plan has aptly highlighted such a holistic framework and suggested the following strategy to raise agricultural output:
- doubling the rate of growth of irrigated area
- improving water management, rain water harvesting and watershed development.
- reclaiming degraded land and focusing on soil quality
- bridging the knowledge gap through effective extension
- diversifying into high value outputs, fruits, vegetables, flowers, herbs and spices, medicinal plants, bamboo, bio-diesel, but with adequate measures to ensure food security
- promoting animal husbandry and fishery
- providing easy access to credit at affordable rates
- improving the incentive structure and functioning of markets
- refocusing on land reforms issues.
Production of Important Crops in Three Largest Producing States (Production Million Tonnes)
Crops / Groups of Crops |
States |
|
I. Food Grains |
|
|
Rice |
West Bengal |
|
Wheat |
Uttar Pradesh |
|
Maize |
Andhra Pradesh |
|
Total Coarse Cereal |
Maharashtra |
|
Total Pulses |
Madhya Pradesh |
|
Total Food Grains |
Uttar Pradesh |
|
II. Oilseeds |
|
|
Groundnut |
Gujarat |
|
Rapeseed and Mustard |
Rajasthan |
|
Soyabean |
Madhya Pradesh |
|
Sunflower |
Karnataka |
|
Total Oilseeds |
Rajasthan |
|
III. Other Cash Crops |
|
|
Sugarcane |
Uttar Pradesh |
|
Cotton |
Gujarat |
|
Jute and Mesta |
West Bengal |
|
Potato |
Uttar Pradesh |
|
Onion |
Maharashtra |
|
Production in million bales of 170 kg each |
|
