Agriculture and Allied Sector in India and Its Contribution in Economy


Agriculture is defined as the art, science and business of producing crops and livestock for economic purpose. Livestock, fisheries poultry comes under the allied agricultural activities.

Agriculture is the primary source of livelihood for about 58% of India’s population. Gross Value Added by agriculture, forestry, and fishing was estimated at Rs. 19.48 lakh crore (US$ 276.37 billion) in FY20. Share of agriculture and allied sectors in gross value added (GVA) of India at current prices stood at 17.8 % in FY20.

According to the Food and Agriculture Organization, “India is the world’s largest producer of milk, pulses and jute, and ranks as the second largest producer of rice, wheat, sugarcane, groundnut, vegetables, fruit and cotton. It is also one of the leading producers of spices, fish, poultry, and livestock and plantation crops.”  

Agriculture has been the mainstay of Indian economy since ages. Even before independence, agriculture was a significant sector due to its high share in employment and livelihood creation. Due to its share in the economy and dependence of about half of the population on agriculture, it is considered as the backbone of the country and India is known as an agrarian country.

Market Size

The Economic Survey of India 2020-21 report stated that in FY20, the total food grain production in the country was recorded at 296.65 million tonnes—up by 11.44 million tonnes compared with 285.21 million tonnes in FY19

For FY22, the government has set a record target for farmers to raise food grain production by 2% with 307.31 million tonnes of food grains. In FY21, production was recorded at 303.34 million tonnes against a target of 301 million tonnes.

Production of horticulture crops in India was estimated at a record 326.6 million metric tonnes (MMT) in FY20 as per third advance estimates, an increase of 5.81 million metric tonnes over FY20.

India has the largest livestock population of around 535.78 million, which translates to around 31% of the world population

Milk production in the country is expected to increase to 208 MT in FY21 from 198 MT in FY20, registering a growth of 10% y-o-y. 

After remaining stagnant for the last three years, the export of agriculture and allied products during 2020-21 grew 17.34 per cent to $41.25 billion. 


Contribution of Agriculture Sector towards GDP

As per Provisional Estimates of Annual of National Income, released by National Statistical Office (NSO), Ministry of Statistics and Programme Implementation on 31st May 2021, the share of Agriculture and Allied Sectors in Gross Value Added (GVA) of the country during the last three years at current prices is given below.

Year

Percentage Share of GVA of Agriculture and Allied sector to Total Economy

2018-19

17.6

2019-20

18.4

2020-21

20.2

As per First Revised Estimates of National Income for 2019-20 released on on 29th January 2021, Gross Capital Formation (GCF) in agriculture and allied sectors at current prices during the last three  years (latest available) is given below.

Year

Gross Capital Formation (GCF) of Agriculture, forestry and fishing at Current Price (in Rs. Crore)

2017-18

3,62,706

2018-19

4,07,842

2019-20

4,46,044


Cropping Seasons in India

There are three distinct crop seasons in the northern and interior parts of the country, namely Kharif, rabi, and Zaid.

  • The Kharif season: The crops which are grown in the Kharif season require a good amount of water, thus the sowing of Kharif crops largely coincides with the onset of the Southwest Monsoon.
  • The Rabi season: The sowing of rabi crops begins with the onset of winter in October- November and the harvesting is done in March-April. The celebration of the festival Holi can be related to a good harvest in the month of March- April.
  • The Zaid season: It is a short duration summer cropping season beginning after harvesting of rabi crops, the cultivation of watermelons, cucumbers, vegetables, and fodder crops during this season is done on irrigated lands.

Issues with Agriculture in India

Land Size:

Decreasing Area: Area under agriculture has been shrinking, it reduced from 159.5 million hectares (mn ha) in 2010-11 to 157 mn ha in 2015-16.

Increase in Land Holdings: The number of operational holdings has been rising (increased from 138.3 million to about 146 million) owing to increasing population.
  • This leads to falling average landholdings’ size of farmers, which has come down from 1.2 ha to about 1.08 ha.
Forced Selling: Smaller landholdings produce smaller pockets of produce, aggregation of which becomes essential for even a trolley-load to be carried to an Agricultural Produce Market Committee (APMC) mandi or a nearby market.
  • Due to small holdings caused by fragmentation, small and marginal farmers are forced to sell their produce at the farm gate itself.
  • This is especially so in states that have a weak network of APMC mandis.
No Access to Modern Technology: Bringing new technologies and practices to such a large number of smallholders scattered over a vast countryside and integrating them with the modern input and output markets is a huge challenge for Indian agriculture.

More Farm Labourers than Farmers:

A farmer is usually a farm owner, while employees of the farm are farm labourers, farmhands, etc.

Employment in Agri-sector: As per recent estimates from the Labour Bureau, 45% of India’s workforce is employed in agriculture. .

Labours in Agri-sector: According to Census 2011, 55% of the agri-workforce comprises agri-labourers.

No support for Labours: It is tough to drive or sustain growth in agriculture since farm labourers get no policy support or incentive to invest in farming.

Owners Getting the Benefit: All benefits like seed kit, fertilizers, pesticides, farm machinery, micro-irrigation, land development assistance etc. are meant only for those who can prove land ownership.


Minimum Support Price (MSP) and Related Issues:

Selective Procurement: The government declares MSP for 23 crops, only wheat and paddy (rice) are procured in large quantities as they are required to meet the requirement of the Public Distribution System (PDS), which is about 65 million tonnes.

Stagnant Rates of MSP: The government declaration of Minimum support prices do not increase at par with increase in cost of production.

Unequal Access: The benefits of this scheme do not reach all farmers and for all crops. There are many regions of the country like the north-eastern region where the implementation is too weak.

Non Scientific Practices: MSP leads to non-scientific agricultural practices whereby the soil, water are stressed to an extent of degrading ground water table and salinization of soil.

Agricultural Production (India’s Position in World Agriculture)


Agricultural Production (India’s Position in World Agriculture)

Largest producer of milk.

Largest producer of millets in the world

Largest producer of jute.

Largest producer of ginger.

Largest producer of bananas.

Largest producer of castor oil seeds.

Largest producer of mangoes.

Largest producer of safflower oil seeds.

Largest producer of papayas.

Largest producer of cottonseed (As per International Cotton Advisory Committee (ICAC) report for the month of March 2017)

Second largest producer of tea, the first position being held by China.

Second largest producer of sugarcane, the first position being held by Brazil.

Second largest producer of wheat, the first position being held by China.

Second largest producer of onions, the first position being held by China.

Second largest producer of potatoes, the first position being held by China.

Second largest producer of garlic, the first position being held by China.

Second largest producer of rice, the first position being held by China.

Second largest producer of cement., next to China.

Second largest producer of silk, the first position being held by China.



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