Rural Transformation and Sustained Growth of Agriculture.
By Dinesh K Kapila
In India the composition of the poor, primarily concentrated in rural areas, has been changing and rural poverty is getting concentrated in agricultural labour and artisanal households and urban poverty in casual labour households. Agricultural labour households account for 41% of rural poor in 1993–94 as well as in 2004–05. The share of the self employed in agriculture among the rural poor had fallen from 32% to 21.6%. Casual labour households accounted for 62.6% in 1993–94 in urban areas and 56.5% in 2004–05. The occupational composition of rural poor varied across the States. In general, in developed states / regions poverty was highly concentrated among agricultural labour households, and in contrast in backward states / regions poverty extended to other occupational groups including the self-employed in agriculture. The main focus ought to be on infrastructure, for ensuring a transformational process to be initiated in rural India. Rural development and agricultural productivity are intrinsically linked and have an organic relationship with the infrastructural development of rural India. In fact the issue of rural development is so intrinsically linked with agricultural productivity and infrastructural development that they have to be studied together.
Infrastructure" is an umbrella term for many activities referred to as "social overhead capital". The term infrastructure encompasses investments which create the base for direct economic activities and generation of income. Infrastructure is generally defined as the physical framework of facilities through which goods and services are provided to the public. The infrastructure sector covers a wide spectrum of services such as transportation (including roadways, railways, airways and water transportation); power generation, transmission and distribution; telecommunication; port handling facilities; water supply; sewage disposal; irrigation; medical; educational and other primary services. Infrastructure development is a necessary precondition for integrated development of the economy.
Rural infrastructure covers within its ambit, economic infrastructure such as transport and communication, power, irrigation, credit, marketing, storage and processing, animal husbandry, dairying and fisheries, information technology and social infrastructure namely education, health, research and extension. Investment in rural infrastructure creates new economic opportunities and activities, generates additional employment and income, facilitates and improves delivery of other rural services, enhances linkages of rural and urban areas, lowers production costs, facilitates access to institutional finance and vitally up-scales democratic processes and skills amongst the rural poor. Extending roads, schools, health clinics, electricity, better irrigation facility for crops and other services to the segment of population which needs it most also makes the process of growth more inclusive and reduces poverty. Investment in rural infrastructure (a) creates new economic opportunities and activities (b) generates additional employment and income (c) facilitates and improves delivery of other rural services and (d) enhances democratic processes and skills among the rural poor.
A study by IIM Bangalore states “There is a growing realisation that industrial growth alone cannot ensure continuous high levels of growth of a nation’s economy. The accelerated growth of agriculture is a must if overall economic growth is to be sustained which translates to investments in rural areas. Increasingly, rural development as a driver of growth is being debated. It is well known that impediments to urban infrastructure hampers urban development, and now it is recognised that Rural Infrastructure can alone act as the catalyst of rural economic growth”. This underlines the absolute need to focus on rural infrastructure while planning for rapid and sustainable development of the rural areas. The main source of funding for rural infrastructure remains the Government of India through a vast number of schemes as also the State Governments, supplemented by funding by NABARD from its Rural Infrastructure Development Fund. As of today, the private sector association remains limited.
The Scenario
India is a nation with over 300 million poor people, a number that has barely declined over the last three decades of development. Therefore the Eleventh Five Year Plan addressed the task on priority for reducing the numbers of the poor frontally. It is clear
that rapid growth will be essential to reduce the number of the poor and for sustainable poverty reduction, but for growth to benefit the poor disproportionately, it will have to be accompanied by more rapid employment expansion than hitherto, greater investment in
health, education, water/sanitation, and child nutrition than so far, and directly targeted poverty-reduction programmes, specially catering to the specific characteristics of rural India with its tremendous variations.
Pertinently, the regional variations in the nature, content and pace of development in the country have resulted in the emergence of sub-regional pockets of endemic poverty which is both structural (degraded resource base) and systemic (poor capital formation) in character. These pockets are mainly inhabited by tribal population. Topography, demography and the state of rural infrastructure are also germane to rural development. The need is to address the issue of increasing regional imbalance in economic growth by identifying the core activities for development both under financial and the real sector and infrastructure development. That is to say, ensuring development in an integrated manner, with financial services as the focus and dovetailing socio - economic infrastructure and human aspects of development could accelerate the push out of poverty. There is an imperative need for agencies / stakeholders to work together to promote inclusive growth with equity. The attempt should be to improve the contribution of the primary and secondary sectors to the nation’s / state’s GDP, make well directed investments in infrastructure, ensure delivery of essential services such as health and education and provide better livelihood opportunities for people, keeping in mind local resources and skill endowments. Above all, any plan must aim to sustain both the pace and scope for development. In addition, given the sheer magnitude of problems and their multiplicity, it is imperative to attempt integrated planning with prioitisation of thrust areas. The Rural Non Farm Sector (RNFS) requires to be upscaled at an exponential pace to generate employment and to reduce the dependence on the agricultural sector for absorbing manpower. This implies the need to introduce skill development, technological interventions and infrastructural support for the RNFS.
Capital formation in agriculture sector especially after the liberalisation and globalisation of the Indian economy has been a cause of concern for the policy makers and planners. Keeping in view the fact that still 60-70 % of the population resides in the rural areas and derive their livelihood from agriculture & related activities, it is of utmost importance to bring about desired changes viz. in crop rotation, adoption of latest available scientific techniques in the field of agriculture for production & productivity enhancement, putting in place the required infrastructure in order to accelerate the pace of agriculture development etc. The efforts in the above direction complimented with promotion of value addition for realisation of remunerative prices for the agriculture produce can provide the required stimulus for the growth of agri-business. The above interventions required to bring in a holistic & integrated development of agri-based rural economies not only requires adequate but also timely credit flow to the masses. Thus, the investment & production credit potential need to be made known not only to farmers/artisans/other entrepreneurs but bankers also. The focus on financial inclusion of the GOI / RBI / NABARD are timely interventions to facilitate credit flow to the deprived regions / areas or to the unreached.
The Planning Commission and Related Views.
The Mid-Term Appraisal (MTA) for the Tenth Five Year Plan of the Planning Commission had drawn attention to the loss of dynamism in agriculture and allied sectors after the mid-1990s. In fact, during the last decade or so Indian agriculture has faced a number of severe challenges, superimposed on the long-term demographics. Recent Eleventh Five Year Plan trends that have raised concern regarding food security, farmers’ income, and poverty are :
• Slowdown in growth.
• Widening economic disparities between irrigated and rain-fed areas.
• Increased vulnerability to world commodity price volatility following trade liberalization. This had an adverse effect on agricultural economies of regions growing crops such as cotton and oilseeds.
• Uneven and slow development of technology.
• Inefficient use of available technology and inputs.
• Lack of adequate incentives and appropriate institutions.
• Degradation of natural resource base.
• Rapid and widespread decline in groundwater table, with particularly adverse impact on small and marginal farmers.
• Increased non-agricultural demand for land and water as a result of the higher overall GDP growth and urbanization.
• Aggravation in social distress as a cumulative impact of the above, reflected in an upsurge in farmers’ suicides.
The preponderance of small and marginal farmers / holdings, have implications for productivity and diversification of agriculture.
Period Total Economy Agri and Allied Sectors Crops and Livestock
Pre Green Revolution1951-52 to 1967-68 3.69 2.54 2.65
Green Revolution1968 – 69 to 1980-81 3.52 2.44 2.72
Wider Technology Period 1981-82 to 1990-91 5.40 3.52 3.65
Early Reforms Period 1991-92 to 1996-97 5.69 3.66 3.68
Ninth Plan 1997-98 to 2001-02 5.52 2.50 2.49
Tenth Plan Period
2002-03 to 2004-05 6.60 0.89 0.89
and
2002-03 to 2006-07 7.77 2.47 2.51
And
2005-06 to 2006-07 9.51 4.84 4.96
Source: National Accounts Statistics 2008 (New Series), Central Statistical Organization, Ministry of Statistics and Programme Implementation, New Delhi.
TABLE - Growth Rates of National State Domestic Product (NSDP) from Agriculture - State Growth Rate in in Relationship to Rainfed Area
State Rainfed Area Growth Rate 1984-85 to 1995-96 Growth Rate 1995-96 to 2004-05
Punjab 3 4.00 2.16
Haryana 17 4.60 1.98
UP 32 2.82 1.87
TN 49 4.95 -1.36
WB 49 4.63 2.63
Bihar 52 -1.71 3.51
AP 59 3.18 2.69
Gujarat 64 5.09 0.48
Kerala 85 3.60 -3.54
Maharashtra 83 6.66 0.10
MP 74 3.63 -0.23
Odisha 73 -1.18 0.11
All India 60 3.62 1.85
Source: National Accounts Statistics, (State Series) Central Statistical Organization, Ministry of Statistics and Programme Implementation, New Delhi.
The impact of rainfed areas on agricultural production and productivity is clearly underscored by the above table. This underlines the need to build infrastructure by way of
Dams and then to construct field channels upto the field level. Maharashtra has incidentally the largest number of dams in India but its agriculture suffers due to the catchment areas not being developed. The overall impact is reduced incomes, agrarian stress, migration to urban areas etc.
A robust growth in the agricultural sector is of crucial importance for speedy development of the Indian economy. The overall growth recorded by the economy and the agriculture sector since the Seventh Plan is indicated in the following table.
Table - Growth rate of Agriculture & Allied Sector
Plan Overall GDP growth rate Agri & Allied Sector Gap
Seventh Plan (1985-1990) 6.0 3.2 2.8
Annual Plan (1990-92) 3.4 1.3 2.1
Eighth Plan (1992-97) 6.7 4.7 2
Ninth Plan (1997-2002) 5.5 2.1 3.4
Tenth Plan (2002-07) 7.6 2.3 5.2
(Source: Economic Survey, 2006-07)
A disturbing feature of the recent growth experience has been the deceleration in agricultural growth since the ninties in comparision to the overall growth of the economy during the various plan period. Agriculture growth rate fell from 3.2 per cent recorded during the period of the seventh plan to 1.3 per cent during 1990-92 (Annual Plan), though the sector revived during the Eighth Plan and achieved a growth rate of 4.7 per cent it then again plummeted to 2.3 per cent in the Tenth Plan).
The gap between the overall economy and the agriculture sector, measured by the difference in the growth rate, has widened in the last decade. It was 3.4% in the ninth plan period which increased to 5.3% by the end of the tenth plan period. With about 60 per cent of the population, still largely dependent on agriculture for their livelihood, surely this is not a good sign. Moreover, if the economy has to sustain high growth rates (i.e. above 8 per cent p.a.) agriculture needs to grow at least at 4 per cent p.a. during the 11th Plan Period (2007-2012) and the 11th plan rightly identified this aspect. Given the fact that agriculture supplies wage goods and raw materials to the industrial sector, it is even more important that the growth rate in agriculture is stepped up. A buoyant agricultural sector is, therefore, necessary to ensure food security, provide livelihood to a large proportion of the workforce, contribute to the growth of the economy by producing wage goods, raw material for industry, goods for exports, generate surpluses and provide markets for non-agricultural goods.
In the opening remarks at the 53rd meeting of the National Development Council, Prime Minister Dr. Manmohan Singh remarked, “ The importance of agriculture to our economy cannot be underestimated. Revamping the prolonged slowdown in this sector is essential for our goal of inclusive growth, for ensuring that growth benefits all sections of society and all regions of the country. The rates of growth of agriculture in the last decade have been poor and are a major cause of rural distress. Farming is increasingly become unviable activity, particularly because of the nature of landholdings. Small and marginal farming has become an unviable proposition and till we make farming viable at this scale, it would be virtually impossible to reduce rural poverty and distress.”
Thus, the task at hand of almost doubling the agricultural growth to 4% pa (from around 2% now) is formidable. This would require both short term and long term interventions / strategy that can address the problems facing Indian Agriculture today- the sector is presently going through a period of crisis and this makes the task at hand even more difficult! In the paragraphs below some aspects related to Production, Productivity and Technolgy related issues facing the sector are taken up.
Indian agriculture is going through a gradual transformation, reflected in changes in seasonal cropping pattern, with progressively larger areas under rabi crops, diversification of cropping pattern, with so-called commercial crops increasingly acquiring a larger share, changes in the input base of crop production and the growing importance of sub-sectors such as animal husbandry and fisheries.
Agricultural Production & Productivity
The total production of foodgrains, which stood at 109.25 million tonnes in 1980-81, has increased to 195.95 million tonnes in 2005-06. In the corresponding period, the production of major commercial crops (non-food crops) increased from 178.79 million tones to 327.65 million tones. It is over the years that the importance of non-food crops both in terms of area and production has undergone a shift (Table 2).
Foodgrains, whose area and production, out of the total crops, has gradually declined over the years as depicted in table 2 (Area, Production and Yield of Major Crops) is an area of concern. The reason behind fall in area and production under foodgrain is the decline in the area and production of cereals and pulses. In case of rice and wheat, the area and production have increased. The magnitude of future foodgrains requirement looks quite formidable. Even modest projections of demand for cereals in 2020 place the estimate at 260 million tonnes, as compared to the production level of 195.5 million tonnes during 2005-06. The enormous gap to be bridged between demand and supply is obvious.
Table 2: Area, Production and Yield of major Crops
(Area - mn. ha.; Prod - mn tons; Yield - kg / ha)
Crop 1980-81 1990-91 2000-01 2005-06
Area Prod Yield Area Prodn Yield Area Prod Yield Area Prodn Yield
Paddy 40.15 53.63 1.34 42.70 74.3 1.70 44.36 84.98 1.916 44.30 91.80 2.07
Wheat 22.30 36.3 1.63 24.20 55.135 2.30 25.70 69.70 2.71 26.82 69.350 2.60
Coarse Cereal 30.93 29.47 3.90 40.43 35.23 4.78 28.83 30.49 6.67 28.46 34.80 7.37
Pulses 15.87 6.0 .91 17.14 8.91 1.15 15.09 7.22 1.05 3.83* 2.74* .714*
Food
grains 109.25 125.40 7.78 124.47 173.575 9.93 113.98 192.39 12.346 99.58 195.95 12.04
Oilseeds 17.60 9.37 4.14 24.15 18.51 5.38 23.25 18.44 5.37 27.93 27.98 6.70
Cotton 7.82 7.01 .152 7.44 9.84 .225 8.50 9.5 .190 8.87 18.50 .354
Jute & Mesta 1.3 8.16 2.07 1.02 9.23 2.82 1.02 10.56 3.21 .79$ 9.97$ 2.28$
Sugarcane 2.67 154.25 57.84 3.69 241.05 65.40 4.32 295.96 68.58 4.28 281.17 65.694
Non - Foodgrain 29.39 178.79 64.20 36.30 278.63 73.83 37.09 334.46 77.35 41.08 327.65 72.75
All Crops 138.64 304.19 71.98 160.77 452.21 83.76 151.07 526.85 89.70 140.70 523.60 84.79
* For the year 2005-06 figures pertain to Arhar is only available
$ For the year 2005-06 figures pertain to jute only
(Source: CMIE, Agriculture 1995 and 2007)
Though the area and production under paddy has increased, the net availability of rice per annum (table 3) has declined from 72.2 kg in 1981 and 80.9 kgs in 1991 to 66.9 kgs in 2003. Similarly, the net availability of cereals has declined from 185 kgs in 1981 and 200 kgs in 1991 to 165 kgs in 2003. The trend is no different for pulses. All this implies that per capita foodgrains in the year 2003 is at 159.2 kgs from 186.2 kgs in 1991 (table 3). All this raises valid concerns on food security. The decline in per capita availability of foodgrains is mainly attributable to the increasing growth rate of population and decline in our productivity / yield with the supply of land being fixed.
Table - Net availability of foodgrains (per annum) in India
(kgs per year)
Year Rice Wheat Cereals Pulses Per capita Foodgrain
1981 72.20 47.30 185.10 13.70 166.00
1991 80.90 60.00 200.20 15.20 186.20
2001 69.50 49.60 161.50 10.90 151.90
2003 66.90 65.30 165.00 10.60 159.20
(Source : Statistics at a glance 2004, Ministry of Agriculture)
Analysis of new varieties of major crops (rice, wheat, maize, groundnut, mustard and sugarcane) showed significant deceleration of the growth of yield potential, with negligible increase over the last decade (table 4)
Table 4 Yield potential and yield gap of major crops in India (Source : Agricultural Strategy for the 11 th FYP : Some critical issues)
There are also large gaps between what can be attained at the farmer’s field with adoption of technology as compared to what is obtained with existing practices. The yield gaps vary considerably from crop to crop and also region to region as is clear in table 4.
In terms of agriculture productivity, India lagged far behind, not only the major developed economies but also from most of the other developing economies within South Asia (Table 5). For instance, it was less than half for rice in India, compared to China and Japan and two-third of Indonesia. The productivity of rice, maize and groundnut was much lower, i.e., 23, 62 and 21 per cent, respectively, in India as compared to the world levels.
Table 5: Crop Productivity in some of the South Asian &Developed Countries
(kg/ha.)
Country/Crop Rice Wheat Maize Sugarcane Groundnut
India 2,890 2,578 1,613 66,919 1,025
China 6,059 3,667 5,210 71,317 2,584
Indonesia 4,174 --- 2,624 67,484 1,521
USA 6,354 2,907 8,439 80,237 2,986
Japan 6,219 --- --- --- 2,452
World 3,747 2,624 4,395 64,423 1,301
Source: FAO Production Year Book.
The trend of declining production and yield rates need to be urgently arrested and reversed. With not much scope left for increases in area the rise in production is largely dependent on yield increases. The main reasons cited for low yield increases are: (a) Technological Slack, (b) Weak input delivery services and, (c) Poor infrastructure. To tackle the above essentially investment in the sector needs to be scaled up in a major way and simultaneously address the need of effective agricultural extension mechanisms.
As pointed out in the paper on Agricultural Strategy for the 11 th FYP: ‘Some critical issue our R & D in agriculture have so far focused mainly on breeding varieties that increase the yield potential of individual crops by enabling more intensive use of inputs. Such research did increase potential yields substantially in the past, but since it puts less emphasis on the efficient and sustainable use of soil nutrients and water, it is no longer leading to adequate outcome. It is this ‘technology fatigue’ that the Prime Minister has emphasized in the 53rd meeting of the NDC.
Shift from Foodgrain to Non-Foodgain Production - A Decadnal Comparision
The second table above indicated that of the total crops, the area and production under foodgrain is gradually declining and the area and production under non – foodgrains is on the rise. A decade wise analysis of the growth rates of area, production and yield of various major foodgrain and non-foodgrain crops would throw light on the status of progress of various crops.
Table All India Compound Growth Rates of Area, Production and Yield of Major Crops
Crop 1980-81 to 1990-91 1990-91 to 2000-01
Area Prod Yield Area Prod Yield
Rice 0.40 3.56 3.47 0.81 1.74 0.92
Wheat 0.46 3.57 3.10 1.03 3.27 2.21
Coarse Cereals -1.34 0.40 1.62 -2.07 -0.54 1.18
Total Cereals -0.26 3.03 2.90 -0.06 1.86 1.38
Total Pulses -0.09 1.52 1.61 -0.79 -0.04 0.55
Foodgrains -0.23 2.85 2.74 -0.19 1.66 1.28
Sugarcane 1.44 2.70 1.24 0.87 2.70 0.82
Oilseeds 1.51 5.20 2.43 0.88 1.62 1.04
Cotton -1.25 2.80 4.10 2.33 1.37 -0.94
Non-foodg 1.12 3.77 2.30 1.19 2.41 0.86
All crops 0.10 3.19 2.56 0.19 1.96 1.09
Source: Agricultural Statistics at a Glance, Ministry Of Agriculture, GoI. (Quoted by G.S.Bhalla in an article published in India in a Globalising World, Academic Foundation, New Delhi (2006).
It would be pertinent to compare the growth rates during 1980-81 to 1990-91 (pre-reform) with 1990-91 to 2001-02 (post- reform) period. Based on the above Table, we can summarise the following:
i. Foodgrain production grew at CAGR of 2.85 per cent during the eighties but fell to 1.66 per cent in the nineties (lower than the population growth recorded during the nineties). In the aggregate, almost all foodgrain crops except wheat, growth rate of production fell substantially during the nineties in comparison to the eighties. In the case of rice, the rate had almost halved between the two periods and with a yield rate of 0.92 per cent the situation does not seems to very encouraging. The yield rates of all major foodgrains are also showing a slowdown in comparison to the eighties. The situation regarding pulses is very alarming – both area and production has shown negative growth rate in the nineties and the yield had had also grown at a meager 0.55 per cent (CAGR).
ii. Compared to foodgrains, the slowdown is less pronounced in non foodgrain crops. The area under non-foodgrain crops grew at CAGR of 1.19 per cent in the nineties against 1.12 per cent during the eighties.
Area and Production - Fruits and Vegetables
The area and production under various horticulture and vegetable crops have increasing since 1991-92 (see the Table below). The average area under fruits and vegetables, which was 3.8 and 5.3 million hectares, respectively, during the Ninth Plan rose to 4.7 and 6.1 million hectares in the Tenth Plan. In the corresponding period fruits production increased from 44.26 to 51.27 million tonnes. The CAGR for area under fruits during the Ninth Plan period was 1.32 per cent, which increased substantially to 11.02 per cent during the Tenth Plan (average of 4 years) reflecting the growing importance of the shift in policy (even if we take into account the low base on which the increase has been recorded).The National Horticulture Mission (NHM) launched in May 2005 intends to increase the pace of development of the horticulture sector in the coming years so as to take advantage of the growing demand for these products both internally and externally. The requirements of credit (both production and investment) for horticulture crops along with plantation crops are to be largely met from the banking sector. The projections have taken into account the above emerging shifts in favour of commercial agriculture (the area and production under fruits and vegetables can be taken as an indicator of commercialization of agriculture).
Table : Area and Production of Fruits and Vegetables
Area and Production of Fruits and Vegetables
(Area- million ha., Production- million tonnes)
Year Area Production
Fruits Vegetables Fruits Vegetables
1991-92 2.9 5.6 28.6 58.5
1997-98 3.7 4.1 43.3 72.7
1998-99 3.7 4.4 44.0 87.5
1999-00 3.8 5.6 45.5 90.8
2000-01 3.9 6.2 45.4 93.9
2001-02 4.0 6.2 43.1 88.6
2002-03 3.8 6.1 45.2 84.8
2003-04 4.8 5.9 49.2 84.8
2004-05* 5.0 6.1 53.1 91.6
2005-06* 5.2 6.3 57.6 99.4
Source: Economic Survey, Various Issues *: Estimated
From what has been observed so far about agricultural production, we can argue that the share of foodgrain consumption comes down with increases in income level (Engle’s Law) since demand for foodgains comes down and demand for high value food items go up. The Indian Economy in recent times is also seeing such a shift in the consumption pattern in the recent decades (Table 7). However, with more than 40 per cent of the expenditure in rural areas being spent on foodgrains and around 75 per cent of the population living in the countryside the concerns of food security and hence of foodgrain production cannot be wished away.
Table 7: Consumption Expenditure on Foodgrain, Fruit & Vegetables & Other food Items
(per cent)
Years
(NSS Rounds) Expenditure on Foodgrains Expenditure on Fruits & Vegetables Expenditure on Milk, Meat,Egg & Fish
Rural Urban Rural Urban Rural Urban
1972-73
(27th Round) 63.1 42.0 10.2 9.9 13.4 19.5
1987-88
(43th Round) 47.8 33.2 12.7 13.8 18.6 23.2
1993-94
(50th Round) 44.8 31.6 14.4 15.0 20.3 24.1
1999-00
(55th Round) 44.1 31.8 14.5 15.6 20.4 24.5
Source: Economic Survey 2001-02, Government of India.
Approaches / Policies being considered for corrective measures.
The Approach Paper to the Eleventh Five Year Plan accordingly suggested a holistic framework to raise agricultural output encompassing the following strategies, viz.,
i. Doubling the rate of growth of irrigated area
ii. Improving water management, rain water harvesting and watershed development
iii. Reclaiming degraded land and focusing on soil quality
iv. Bridging the knowledge gap through effective extension
v. Diversifying into high value outputs, fruits, vegetables, flowers, herbs, spices, medicinal plants, bamboo bio diesel
vi. Promoting animal husbandry and fishery
vii. Providing easy access to credit at affordable rates
viii. Improving the incentive structure and the functioning of markets
ix. Refocusing on land reforms issues
The Maharashtra Economic Development Council (MEDC), Mumbai, in its study on Contract Farming as a means of value added agriculture examined the arrangements for major crops. The study revealed that such arrangements have met with considerable success leading to crop diversification, adoption of new high value crops, increased processing and export of agri produce, productivity and income gains for farmers, enhanced credit deepening and reduced market risk associated with crop cultivation. The study revealed that contract farming was a step in the evolution of a competitive and efficient market system that would be based on adequate infrastructure, proper information flows, appropriate governance and organized futures. This could suggest a way forward, this is also indicated by such innovations by the ITC group in MP for wheat and Pepsi in Punjab and West Bengal for potatoes.
It would be germane here to discuss the case of HP, as a representative case of a state as also just to focus on the developing scenario in Agriculture and policies which can overcome the constraints. Himachal Pradesh with a total geographical area of 0.56 lakh sq km and population of 60.78 lakh accounts for 1.7 % & 0.61 % of country’s area & population respectively. The population density is 109 and 90.21 % of state population resides in the rural areas. The percentage contribution of Agriculture And Allied sectors in the Total State Gross Domestic Product in HP has declined over last few decades viz. 57.90 % (1950-51) to 55.50 % (1967-68) to 26.50 % (1990-91) to 14.47% in 2009-10.
Though, the share of agriculture (including horticulture & animal husbandry) has shown a declining trend in recent years, yet it continues to be the backbone of the state’s economy in terms of employment and contribution to the State’s Gross Domestic Product. Eighty seven percent of the operational land holdings are upto 2 ha. size with the average size being 1.04 ha. About 68% of the land holdings are less than or equal to 1.0 ha. Apple is the significant crop of the State. The other major crops grown are wheat, maize, vegetables, paddy, barley and pulses. Other crops grown on a limited scale include ragi, millets, gram, oilseeds, potato and dry ginger and the major cash crops being apple, vegetables, potato and ginger. Agriculture in HP is mainly dependent on rainfall as only less than one fourth of the area is irrigated. The gross cropped area depending on the monsoon hovers around 8.97 lakh ha. The area under HYVs is primarily under maize, wheat and paddy. Kuhls are the main source of irrigation accounting for irrigation in about 78% of the irrigated area. Soil erosion is the biggest challenge for the state’s agriculture. Non-availability of local skilled and unskilled manpower leads to abject dependence on migrant labourers
During 2010-11, the production of fruit crops was 10.27 lakh MT out of which the Apple, the most important fruit crop accounted for 86.8% of the total fruit production in the state. The total area under fruit crops is 2.08 lakh ha. Of which area under apple plantations is 1.0 lakh Ha. (48%). Thus, there is an imperative need to explore and harness the vast horticultural potential existing in the state through increasing the area, productivity & diversification. This would require immediate addressing of backward & forward linkages along with development of processing sector. The contribution of major livestock products during 2010-11 was 9.07 lakh tonnes of milk, 1639 tonnes of wool, 102 million eggs and 3610 tonnes of meat. However, production of poultry products in the state were negligible and the state mainly depended on imports from the neighbouring states for the same.
An All India Apex Developmental Bank had in its Developmental Plan for the State addressed the issue of increasing regional imbalance in economic growth by identifying the core activities for development both under financial and real sector and infrastructure development. The attempt was to improve the contribution of primary and secondary sectors to State GDP, make well directed investments in infrastructure, ensuring delivery of essential services such as health and education and providing better livelihood opportunities for people, keeping in mind local resources and skill endowments. Above all, it aimed to sustain both the pace and scope for development.
The Strategic Development Plan was prepared on the basis of prioritizing of critical development areas out of thrust areas already identified in various plan documents. The thrust areas identified include Production of cash crops through adoption of precision farming practices (Poly-House cultivation and related irrigation structures), Diversification of Agriculture through adoption of Micro-irrigation and other related infrastructure., Rejuvenation of old apple orchards , Promoting cultivation of medicinal and aromatic plants under contract farming mode, Development of floriculture on commercial lines, Fruit and Vegetable Preservation (as about 20-25 percent of the fruit production goes waste), Organic cultivation in fruits especially Apple, Development of animal husbandry (100% coverage of breedable cows and buffaloes, identification of elite cows, reduction of contagious diseases, making available more number of exotic rams, encourage Self Help Groups to adopt poultry farming, rehabilitation of all stray cattle in Gosadans, etc), Fisheries Development (strengthening of Carp and Trout farms, improvement in management practices, Intensification of aquaculture practices through Fish Farmer's Development Agencies, Revival of Riverine fisheries by setting up Mahseer fish farms, Extension of commercial trout farming technology in private sector), Development of rural infrastructure ( irrigation, Power, Rural Connectivity, Rail Transport, Rural Drinking Water Supply, Housing ) and Other Sectors such as Tourism, Natural Resource Management and Watershed Development, Education and Health & Family Welfare. Each state will have to strategise accordingly for facilitating a push in Agriculture and enhancing rural incomes.
Infrastructure Development and Socio-economic benefits
Any number of studies indicate that investments in agriculture and more importantly in rural infrastructure have led to improvement in access to modern agro-economic practices, improved accessibility to input markets, reduction in cost of transportation, increased frequency of visits of extension staff etc. Construction of rural roads and bridges has brought about changes in asset holding pattern, increase in availability of jobs, increased credit absorption, improvement in access to education and health, improved quality of life etc. A shift in cropping pattern and increased cropping intensity and yields were observed in areas covered under irrigation projects. Flood protection projects have helped in reducing fallow lands, crop damage and enhanced protection to human and animal life in the operational area. Safe drinking water has improved public health. Enhanced incomes by way of productivity increases due to stepped up extension activities have led to improved nutritional intake. This only indicates the importance of investing in rural infrastructure across a wide spectrum for giving a push to Agricultural and Rural development, the move has to be integrated and prioritised.
Concerns about Completion of Projects
There are concerns about the completion of infrastructural projects / programmes across India primarily due to :
w Lengthy Procedural formalities post sanction i.e. Administrative / technical approval, expenditure sanction.
w Delay in Obtaining forest and environmental clearances.
w Delay in land acquisition and payment of compensation for the same.
w Changes made in project design after sanction.
w Contract Management problems.
w Manpower constraints due to low recruitment in recent years.
w Lack of technological tools at field levels.
These need the attention of the governments incase the Rural areas and the agricultural sector are to contribute effectively to the growth in GDP.
Suggestions for Strengthening Infrastructure in the States – Some High Priority Areas for enabling economic development
Based on the above observations and inputs, it is suggested that the following areas / sectors need to be focused upon for enhancing production / productivity, specially of the rural economy. Strengthening rural infrastructure can lead to lower production costs, agricultural expansion by increasing yields, improve farmers’ access to markets and ensure availability of institutional finance. This would lead to greater economic activities and augment the offtake of credit. The broad identification of such sectors is as below –
.Based on the District / State Agricultural Plans which should reflect a State’s agricultural growth objectives - infrastructure needs for growth potential areas like agriculture, horticulture, livestock, poultry and fishery need to be identified.
The setting up of a District Level Forum in States for prioritization and implementation of rural infrastructure projects would be beneficial.
The potential for roads (road density in a district vis s vis road density required) needs priority as also improved communication facilities (telecommunication, both landline and mobile).
The GOI / State Governments needs to enhance the capability of implementing departments for project formulation and execution.
Training of farmers needs to be stepped up in both traditional sectors for improving productivity and in newly emerging areas for stabilizing diversification.
Low prices of agricultural commodities at the farm gate for vegetables / horticultural produce are a concern as are marketing and transportation problems including for farm forestry. A lack of effective integral linkages between the retail outlets and the farmer are another concern.
Rural haats / mandis need to be encouraged as also modern market yards inclusive of private sector participation. Rural godowns also need to be facilitated, specially of smaller capacity.
There is a need to evolve techniques for enhancing productivity of farming in higher hilly reaches / dryland areas. Mechanisation of agriculture needs to be stepped up as also of commercial infrastructure for enhancing productivity. Seed processing / seed banks need to be encouraged. The usage of power tillers needs to be stepped up.
The Diversification of Agriculture to Horticulture will need the support of processing and marketing infrastructure. Specialized medicinal plant nurseries are required. Cold stores / chains / cold storage units if encouraged would facilitate diversification.
As regards the Dairy sector, data analysis suggests that Fodder banks need to be set up and the installing of BMCS / AMCS / indigenous milk manufacturing units needs encouragement. Milk processing units alongwith refrigerated tankers / vans for procurement / sale are also required. Milk cooperative societies need to be revitalized and animal fairs organized. Milk routes need to be increased as this acts as an important forward linkage.
Formation /Activation of Water Users Association for maintenance of irrigation structures needs priority. The maintenance of irrigation infrastructure and its upkeep needs priority and the command area of irrigation projects needs comprehensive development. Source management plans of river systems need to be formulated by the states to cater to the increasing demand from the industrial and domestic sector.
Flood prone areas require protection to save rural assets and cropped areas. Drainage facilities need to be improved in low lying areas / valleys / agricultural fields etc. Rain water harvesting / check dams need to be encouraged where feasible and watershed management projects taken up in suitable areas on priority.
The Poultry sector needs infrastructure to be created (within or near the main centres in the concerned districts) for hatcheries, egg grading, packing and cold storages.
The Fisheries Sector requires measures where appropriate on rivers / streams / canals dams for stocking with fish seed and Hi-tech regional laboratories with mobile units to cater to the needs of the fish farmers. It is also suggested that fish farmers societies be organized and they may be supplied items of common facilities such as deboning machines for transportation & cold stores / refrigeration etc.
The provision of Sewerage facilities in villages is an evolving demand and a phased approach to provide the same may be considered as the population increases in semi urban / large villages.
In Rural Non Farm Sector, infrastructural gaps such as water supply, quality electricity supply, internal roads, road / rail links, etc would be facilitators. Agro / Food processing industrial units and infrastructure needs to be stepped up. Common facilities such as effluent treatment plants, servicing centres etc at industrial estates in rural areas would be facilitators. Common service centres and skill development need to be stepped up.
A drive for encouraging entrepreneurship is required coupled with access to skill development and credit. Integrated farming / Producer Companies need to be encouraged for ensuring more on farm employment to be generated as at present farmers are under employed.
Encouraging the grouping of Farmers Clubs and facilitating their access to extension services such as Reuters Services on weather conditions.
Enhancement of the role of the private sector by sharing finances and risk in infrastructure projects through the public-private partnership (PPP) model, specially for commercially oriented infrastructure can be considered to step up the pace of investment.
Health and educational infrastructure needs to be expanded and strengthened for enhancing capacity building of the population.
Construction, Monitoring and Supervising Organisations (CMSO) need to be appointed to ensure independent quality assurance in all infrastructure projects being implemented.
The country lacks detailed district wise or long term plans for infrastructure development and these need to be introduced on priority and dovetailed with financial allocations.
The dryland / mountainous areas require enhanced attention as they are not in the loop of development to the extent required.
Maintenance of rural assets maybe catered to by the setting up of dedicated funds.
Rural lifestyles are getting upgraded and aspiration levels increasing and these need to be catered to by improved rural infrastructure in the state.
Core Concerns & Suggestions
To summarise, the main concerns could be as follows -
Issue One - The market for agricultural land is under-developed on account of lack of proper land revenue records, lack of property rights, etc.
Issue Two - There is uneven development of big dams and irrigation projects without much complementarities with small and micro irrigation.
Issue Three - There are collusive and other anticompetitive practices in wholesale trade of agricultural products.
Issue Four - There is lack of incentives to farmers to enhance agricultural productivity.
Issue Five – The sheer number of farmers dependent on agriculture results in under employment and lower incomes as also lower productivity by distorting economies of scale.
The five main core suggestions are as follows -
Suggestion One - The States need to prioritise the implementation of upgradation of land revenue records, amendments to land tenancy law, development of the market for land lease, etc.
Suggestion Two - Public investment in irrigation should be complemented with private investment (through small and micro irrigation such as drip/sprinkling irrigation) by offering incentives/disincentives such as continuationx/withdrawal of tax on agricultural income.
Suggestion Three - The Agricultural Produce Market Committee Act should be amended to impart competition in wholesale trade of agricultural products by allowing the private sector to build, own and operate such markets and the state governments (with conditions to pass those incentives to local governments) will have to be incentivised to take care of expected revenue loss.
Suggestion Four - There should not be any restriction on internal movement and external trade of agricultural products except subjecting them to well-defined price and quantity triggers.
Suggestion Five – Focus on the Rural Non Farm sector to absorb manpower and to facilitate employment generation. This needs stepped up skill development, financial literacy and infrastructural support.
==============================================================
The author is Assistant General Manager at NABARD Shimla. The views expressed are his own and do not reflect the views of his employer in any manner.
the tables are pasting correctly, if anyone wants the data, he may kindly e-mail.
-------------------------------------
By Dinesh K Kapila
In India the composition of the poor, primarily concentrated in rural areas, has been changing and rural poverty is getting concentrated in agricultural labour and artisanal households and urban poverty in casual labour households. Agricultural labour households account for 41% of rural poor in 1993–94 as well as in 2004–05. The share of the self employed in agriculture among the rural poor had fallen from 32% to 21.6%. Casual labour households accounted for 62.6% in 1993–94 in urban areas and 56.5% in 2004–05. The occupational composition of rural poor varied across the States. In general, in developed states / regions poverty was highly concentrated among agricultural labour households, and in contrast in backward states / regions poverty extended to other occupational groups including the self-employed in agriculture. The main focus ought to be on infrastructure, for ensuring a transformational process to be initiated in rural India. Rural development and agricultural productivity are intrinsically linked and have an organic relationship with the infrastructural development of rural India. In fact the issue of rural development is so intrinsically linked with agricultural productivity and infrastructural development that they have to be studied together.
Infrastructure" is an umbrella term for many activities referred to as "social overhead capital". The term infrastructure encompasses investments which create the base for direct economic activities and generation of income. Infrastructure is generally defined as the physical framework of facilities through which goods and services are provided to the public. The infrastructure sector covers a wide spectrum of services such as transportation (including roadways, railways, airways and water transportation); power generation, transmission and distribution; telecommunication; port handling facilities; water supply; sewage disposal; irrigation; medical; educational and other primary services. Infrastructure development is a necessary precondition for integrated development of the economy.
Rural infrastructure covers within its ambit, economic infrastructure such as transport and communication, power, irrigation, credit, marketing, storage and processing, animal husbandry, dairying and fisheries, information technology and social infrastructure namely education, health, research and extension. Investment in rural infrastructure creates new economic opportunities and activities, generates additional employment and income, facilitates and improves delivery of other rural services, enhances linkages of rural and urban areas, lowers production costs, facilitates access to institutional finance and vitally up-scales democratic processes and skills amongst the rural poor. Extending roads, schools, health clinics, electricity, better irrigation facility for crops and other services to the segment of population which needs it most also makes the process of growth more inclusive and reduces poverty. Investment in rural infrastructure (a) creates new economic opportunities and activities (b) generates additional employment and income (c) facilitates and improves delivery of other rural services and (d) enhances democratic processes and skills among the rural poor.
A study by IIM Bangalore states “There is a growing realisation that industrial growth alone cannot ensure continuous high levels of growth of a nation’s economy. The accelerated growth of agriculture is a must if overall economic growth is to be sustained which translates to investments in rural areas. Increasingly, rural development as a driver of growth is being debated. It is well known that impediments to urban infrastructure hampers urban development, and now it is recognised that Rural Infrastructure can alone act as the catalyst of rural economic growth”. This underlines the absolute need to focus on rural infrastructure while planning for rapid and sustainable development of the rural areas. The main source of funding for rural infrastructure remains the Government of India through a vast number of schemes as also the State Governments, supplemented by funding by NABARD from its Rural Infrastructure Development Fund. As of today, the private sector association remains limited.
The Scenario
India is a nation with over 300 million poor people, a number that has barely declined over the last three decades of development. Therefore the Eleventh Five Year Plan addressed the task on priority for reducing the numbers of the poor frontally. It is clear
that rapid growth will be essential to reduce the number of the poor and for sustainable poverty reduction, but for growth to benefit the poor disproportionately, it will have to be accompanied by more rapid employment expansion than hitherto, greater investment in
health, education, water/sanitation, and child nutrition than so far, and directly targeted poverty-reduction programmes, specially catering to the specific characteristics of rural India with its tremendous variations.
Pertinently, the regional variations in the nature, content and pace of development in the country have resulted in the emergence of sub-regional pockets of endemic poverty which is both structural (degraded resource base) and systemic (poor capital formation) in character. These pockets are mainly inhabited by tribal population. Topography, demography and the state of rural infrastructure are also germane to rural development. The need is to address the issue of increasing regional imbalance in economic growth by identifying the core activities for development both under financial and the real sector and infrastructure development. That is to say, ensuring development in an integrated manner, with financial services as the focus and dovetailing socio - economic infrastructure and human aspects of development could accelerate the push out of poverty. There is an imperative need for agencies / stakeholders to work together to promote inclusive growth with equity. The attempt should be to improve the contribution of the primary and secondary sectors to the nation’s / state’s GDP, make well directed investments in infrastructure, ensure delivery of essential services such as health and education and provide better livelihood opportunities for people, keeping in mind local resources and skill endowments. Above all, any plan must aim to sustain both the pace and scope for development. In addition, given the sheer magnitude of problems and their multiplicity, it is imperative to attempt integrated planning with prioitisation of thrust areas. The Rural Non Farm Sector (RNFS) requires to be upscaled at an exponential pace to generate employment and to reduce the dependence on the agricultural sector for absorbing manpower. This implies the need to introduce skill development, technological interventions and infrastructural support for the RNFS.
Capital formation in agriculture sector especially after the liberalisation and globalisation of the Indian economy has been a cause of concern for the policy makers and planners. Keeping in view the fact that still 60-70 % of the population resides in the rural areas and derive their livelihood from agriculture & related activities, it is of utmost importance to bring about desired changes viz. in crop rotation, adoption of latest available scientific techniques in the field of agriculture for production & productivity enhancement, putting in place the required infrastructure in order to accelerate the pace of agriculture development etc. The efforts in the above direction complimented with promotion of value addition for realisation of remunerative prices for the agriculture produce can provide the required stimulus for the growth of agri-business. The above interventions required to bring in a holistic & integrated development of agri-based rural economies not only requires adequate but also timely credit flow to the masses. Thus, the investment & production credit potential need to be made known not only to farmers/artisans/other entrepreneurs but bankers also. The focus on financial inclusion of the GOI / RBI / NABARD are timely interventions to facilitate credit flow to the deprived regions / areas or to the unreached.
The Planning Commission and Related Views.
The Mid-Term Appraisal (MTA) for the Tenth Five Year Plan of the Planning Commission had drawn attention to the loss of dynamism in agriculture and allied sectors after the mid-1990s. In fact, during the last decade or so Indian agriculture has faced a number of severe challenges, superimposed on the long-term demographics. Recent Eleventh Five Year Plan trends that have raised concern regarding food security, farmers’ income, and poverty are :
• Slowdown in growth.
• Widening economic disparities between irrigated and rain-fed areas.
• Increased vulnerability to world commodity price volatility following trade liberalization. This had an adverse effect on agricultural economies of regions growing crops such as cotton and oilseeds.
• Uneven and slow development of technology.
• Inefficient use of available technology and inputs.
• Lack of adequate incentives and appropriate institutions.
• Degradation of natural resource base.
• Rapid and widespread decline in groundwater table, with particularly adverse impact on small and marginal farmers.
• Increased non-agricultural demand for land and water as a result of the higher overall GDP growth and urbanization.
• Aggravation in social distress as a cumulative impact of the above, reflected in an upsurge in farmers’ suicides.
The preponderance of small and marginal farmers / holdings, have implications for productivity and diversification of agriculture.
Period Total Economy Agri and Allied Sectors Crops and Livestock
Pre Green Revolution1951-52 to 1967-68 3.69 2.54 2.65
Green Revolution1968 – 69 to 1980-81 3.52 2.44 2.72
Wider Technology Period 1981-82 to 1990-91 5.40 3.52 3.65
Early Reforms Period 1991-92 to 1996-97 5.69 3.66 3.68
Ninth Plan 1997-98 to 2001-02 5.52 2.50 2.49
Tenth Plan Period
2002-03 to 2004-05 6.60 0.89 0.89
and
2002-03 to 2006-07 7.77 2.47 2.51
And
2005-06 to 2006-07 9.51 4.84 4.96
Source: National Accounts Statistics 2008 (New Series), Central Statistical Organization, Ministry of Statistics and Programme Implementation, New Delhi.
TABLE - Growth Rates of National State Domestic Product (NSDP) from Agriculture - State Growth Rate in in Relationship to Rainfed Area
State Rainfed Area Growth Rate 1984-85 to 1995-96 Growth Rate 1995-96 to 2004-05
Punjab 3 4.00 2.16
Haryana 17 4.60 1.98
UP 32 2.82 1.87
TN 49 4.95 -1.36
WB 49 4.63 2.63
Bihar 52 -1.71 3.51
AP 59 3.18 2.69
Gujarat 64 5.09 0.48
Kerala 85 3.60 -3.54
Maharashtra 83 6.66 0.10
MP 74 3.63 -0.23
Odisha 73 -1.18 0.11
All India 60 3.62 1.85
Source: National Accounts Statistics, (State Series) Central Statistical Organization, Ministry of Statistics and Programme Implementation, New Delhi.
The impact of rainfed areas on agricultural production and productivity is clearly underscored by the above table. This underlines the need to build infrastructure by way of
Dams and then to construct field channels upto the field level. Maharashtra has incidentally the largest number of dams in India but its agriculture suffers due to the catchment areas not being developed. The overall impact is reduced incomes, agrarian stress, migration to urban areas etc.
A robust growth in the agricultural sector is of crucial importance for speedy development of the Indian economy. The overall growth recorded by the economy and the agriculture sector since the Seventh Plan is indicated in the following table.
Table - Growth rate of Agriculture & Allied Sector
Plan Overall GDP growth rate Agri & Allied Sector Gap
Seventh Plan (1985-1990) 6.0 3.2 2.8
Annual Plan (1990-92) 3.4 1.3 2.1
Eighth Plan (1992-97) 6.7 4.7 2
Ninth Plan (1997-2002) 5.5 2.1 3.4
Tenth Plan (2002-07) 7.6 2.3 5.2
(Source: Economic Survey, 2006-07)
A disturbing feature of the recent growth experience has been the deceleration in agricultural growth since the ninties in comparision to the overall growth of the economy during the various plan period. Agriculture growth rate fell from 3.2 per cent recorded during the period of the seventh plan to 1.3 per cent during 1990-92 (Annual Plan), though the sector revived during the Eighth Plan and achieved a growth rate of 4.7 per cent it then again plummeted to 2.3 per cent in the Tenth Plan).
The gap between the overall economy and the agriculture sector, measured by the difference in the growth rate, has widened in the last decade. It was 3.4% in the ninth plan period which increased to 5.3% by the end of the tenth plan period. With about 60 per cent of the population, still largely dependent on agriculture for their livelihood, surely this is not a good sign. Moreover, if the economy has to sustain high growth rates (i.e. above 8 per cent p.a.) agriculture needs to grow at least at 4 per cent p.a. during the 11th Plan Period (2007-2012) and the 11th plan rightly identified this aspect. Given the fact that agriculture supplies wage goods and raw materials to the industrial sector, it is even more important that the growth rate in agriculture is stepped up. A buoyant agricultural sector is, therefore, necessary to ensure food security, provide livelihood to a large proportion of the workforce, contribute to the growth of the economy by producing wage goods, raw material for industry, goods for exports, generate surpluses and provide markets for non-agricultural goods.
In the opening remarks at the 53rd meeting of the National Development Council, Prime Minister Dr. Manmohan Singh remarked, “ The importance of agriculture to our economy cannot be underestimated. Revamping the prolonged slowdown in this sector is essential for our goal of inclusive growth, for ensuring that growth benefits all sections of society and all regions of the country. The rates of growth of agriculture in the last decade have been poor and are a major cause of rural distress. Farming is increasingly become unviable activity, particularly because of the nature of landholdings. Small and marginal farming has become an unviable proposition and till we make farming viable at this scale, it would be virtually impossible to reduce rural poverty and distress.”
Thus, the task at hand of almost doubling the agricultural growth to 4% pa (from around 2% now) is formidable. This would require both short term and long term interventions / strategy that can address the problems facing Indian Agriculture today- the sector is presently going through a period of crisis and this makes the task at hand even more difficult! In the paragraphs below some aspects related to Production, Productivity and Technolgy related issues facing the sector are taken up.
Indian agriculture is going through a gradual transformation, reflected in changes in seasonal cropping pattern, with progressively larger areas under rabi crops, diversification of cropping pattern, with so-called commercial crops increasingly acquiring a larger share, changes in the input base of crop production and the growing importance of sub-sectors such as animal husbandry and fisheries.
Agricultural Production & Productivity
The total production of foodgrains, which stood at 109.25 million tonnes in 1980-81, has increased to 195.95 million tonnes in 2005-06. In the corresponding period, the production of major commercial crops (non-food crops) increased from 178.79 million tones to 327.65 million tones. It is over the years that the importance of non-food crops both in terms of area and production has undergone a shift (Table 2).
Foodgrains, whose area and production, out of the total crops, has gradually declined over the years as depicted in table 2 (Area, Production and Yield of Major Crops) is an area of concern. The reason behind fall in area and production under foodgrain is the decline in the area and production of cereals and pulses. In case of rice and wheat, the area and production have increased. The magnitude of future foodgrains requirement looks quite formidable. Even modest projections of demand for cereals in 2020 place the estimate at 260 million tonnes, as compared to the production level of 195.5 million tonnes during 2005-06. The enormous gap to be bridged between demand and supply is obvious.
Table 2: Area, Production and Yield of major Crops
(Area - mn. ha.; Prod - mn tons; Yield - kg / ha)
Crop 1980-81 1990-91 2000-01 2005-06
Area Prod Yield Area Prodn Yield Area Prod Yield Area Prodn Yield
Paddy 40.15 53.63 1.34 42.70 74.3 1.70 44.36 84.98 1.916 44.30 91.80 2.07
Wheat 22.30 36.3 1.63 24.20 55.135 2.30 25.70 69.70 2.71 26.82 69.350 2.60
Coarse Cereal 30.93 29.47 3.90 40.43 35.23 4.78 28.83 30.49 6.67 28.46 34.80 7.37
Pulses 15.87 6.0 .91 17.14 8.91 1.15 15.09 7.22 1.05 3.83* 2.74* .714*
Food
grains 109.25 125.40 7.78 124.47 173.575 9.93 113.98 192.39 12.346 99.58 195.95 12.04
Oilseeds 17.60 9.37 4.14 24.15 18.51 5.38 23.25 18.44 5.37 27.93 27.98 6.70
Cotton 7.82 7.01 .152 7.44 9.84 .225 8.50 9.5 .190 8.87 18.50 .354
Jute & Mesta 1.3 8.16 2.07 1.02 9.23 2.82 1.02 10.56 3.21 .79$ 9.97$ 2.28$
Sugarcane 2.67 154.25 57.84 3.69 241.05 65.40 4.32 295.96 68.58 4.28 281.17 65.694
Non - Foodgrain 29.39 178.79 64.20 36.30 278.63 73.83 37.09 334.46 77.35 41.08 327.65 72.75
All Crops 138.64 304.19 71.98 160.77 452.21 83.76 151.07 526.85 89.70 140.70 523.60 84.79
* For the year 2005-06 figures pertain to Arhar is only available
$ For the year 2005-06 figures pertain to jute only
(Source: CMIE, Agriculture 1995 and 2007)
Though the area and production under paddy has increased, the net availability of rice per annum (table 3) has declined from 72.2 kg in 1981 and 80.9 kgs in 1991 to 66.9 kgs in 2003. Similarly, the net availability of cereals has declined from 185 kgs in 1981 and 200 kgs in 1991 to 165 kgs in 2003. The trend is no different for pulses. All this implies that per capita foodgrains in the year 2003 is at 159.2 kgs from 186.2 kgs in 1991 (table 3). All this raises valid concerns on food security. The decline in per capita availability of foodgrains is mainly attributable to the increasing growth rate of population and decline in our productivity / yield with the supply of land being fixed.
Table - Net availability of foodgrains (per annum) in India
(kgs per year)
Year Rice Wheat Cereals Pulses Per capita Foodgrain
1981 72.20 47.30 185.10 13.70 166.00
1991 80.90 60.00 200.20 15.20 186.20
2001 69.50 49.60 161.50 10.90 151.90
2003 66.90 65.30 165.00 10.60 159.20
(Source : Statistics at a glance 2004, Ministry of Agriculture)
Analysis of new varieties of major crops (rice, wheat, maize, groundnut, mustard and sugarcane) showed significant deceleration of the growth of yield potential, with negligible increase over the last decade (table 4)
Table 4 Yield potential and yield gap of major crops in India (Source : Agricultural Strategy for the 11 th FYP : Some critical issues)
There are also large gaps between what can be attained at the farmer’s field with adoption of technology as compared to what is obtained with existing practices. The yield gaps vary considerably from crop to crop and also region to region as is clear in table 4.
In terms of agriculture productivity, India lagged far behind, not only the major developed economies but also from most of the other developing economies within South Asia (Table 5). For instance, it was less than half for rice in India, compared to China and Japan and two-third of Indonesia. The productivity of rice, maize and groundnut was much lower, i.e., 23, 62 and 21 per cent, respectively, in India as compared to the world levels.
Table 5: Crop Productivity in some of the South Asian &Developed Countries
(kg/ha.)
Country/Crop Rice Wheat Maize Sugarcane Groundnut
India 2,890 2,578 1,613 66,919 1,025
China 6,059 3,667 5,210 71,317 2,584
Indonesia 4,174 --- 2,624 67,484 1,521
USA 6,354 2,907 8,439 80,237 2,986
Japan 6,219 --- --- --- 2,452
World 3,747 2,624 4,395 64,423 1,301
Source: FAO Production Year Book.
The trend of declining production and yield rates need to be urgently arrested and reversed. With not much scope left for increases in area the rise in production is largely dependent on yield increases. The main reasons cited for low yield increases are: (a) Technological Slack, (b) Weak input delivery services and, (c) Poor infrastructure. To tackle the above essentially investment in the sector needs to be scaled up in a major way and simultaneously address the need of effective agricultural extension mechanisms.
As pointed out in the paper on Agricultural Strategy for the 11 th FYP: ‘Some critical issue our R & D in agriculture have so far focused mainly on breeding varieties that increase the yield potential of individual crops by enabling more intensive use of inputs. Such research did increase potential yields substantially in the past, but since it puts less emphasis on the efficient and sustainable use of soil nutrients and water, it is no longer leading to adequate outcome. It is this ‘technology fatigue’ that the Prime Minister has emphasized in the 53rd meeting of the NDC.
Shift from Foodgrain to Non-Foodgain Production - A Decadnal Comparision
The second table above indicated that of the total crops, the area and production under foodgrain is gradually declining and the area and production under non – foodgrains is on the rise. A decade wise analysis of the growth rates of area, production and yield of various major foodgrain and non-foodgrain crops would throw light on the status of progress of various crops.
Table All India Compound Growth Rates of Area, Production and Yield of Major Crops
Crop 1980-81 to 1990-91 1990-91 to 2000-01
Area Prod Yield Area Prod Yield
Rice 0.40 3.56 3.47 0.81 1.74 0.92
Wheat 0.46 3.57 3.10 1.03 3.27 2.21
Coarse Cereals -1.34 0.40 1.62 -2.07 -0.54 1.18
Total Cereals -0.26 3.03 2.90 -0.06 1.86 1.38
Total Pulses -0.09 1.52 1.61 -0.79 -0.04 0.55
Foodgrains -0.23 2.85 2.74 -0.19 1.66 1.28
Sugarcane 1.44 2.70 1.24 0.87 2.70 0.82
Oilseeds 1.51 5.20 2.43 0.88 1.62 1.04
Cotton -1.25 2.80 4.10 2.33 1.37 -0.94
Non-foodg 1.12 3.77 2.30 1.19 2.41 0.86
All crops 0.10 3.19 2.56 0.19 1.96 1.09
Source: Agricultural Statistics at a Glance, Ministry Of Agriculture, GoI. (Quoted by G.S.Bhalla in an article published in India in a Globalising World, Academic Foundation, New Delhi (2006).
It would be pertinent to compare the growth rates during 1980-81 to 1990-91 (pre-reform) with 1990-91 to 2001-02 (post- reform) period. Based on the above Table, we can summarise the following:
i. Foodgrain production grew at CAGR of 2.85 per cent during the eighties but fell to 1.66 per cent in the nineties (lower than the population growth recorded during the nineties). In the aggregate, almost all foodgrain crops except wheat, growth rate of production fell substantially during the nineties in comparison to the eighties. In the case of rice, the rate had almost halved between the two periods and with a yield rate of 0.92 per cent the situation does not seems to very encouraging. The yield rates of all major foodgrains are also showing a slowdown in comparison to the eighties. The situation regarding pulses is very alarming – both area and production has shown negative growth rate in the nineties and the yield had had also grown at a meager 0.55 per cent (CAGR).
ii. Compared to foodgrains, the slowdown is less pronounced in non foodgrain crops. The area under non-foodgrain crops grew at CAGR of 1.19 per cent in the nineties against 1.12 per cent during the eighties.
Area and Production - Fruits and Vegetables
The area and production under various horticulture and vegetable crops have increasing since 1991-92 (see the Table below). The average area under fruits and vegetables, which was 3.8 and 5.3 million hectares, respectively, during the Ninth Plan rose to 4.7 and 6.1 million hectares in the Tenth Plan. In the corresponding period fruits production increased from 44.26 to 51.27 million tonnes. The CAGR for area under fruits during the Ninth Plan period was 1.32 per cent, which increased substantially to 11.02 per cent during the Tenth Plan (average of 4 years) reflecting the growing importance of the shift in policy (even if we take into account the low base on which the increase has been recorded).The National Horticulture Mission (NHM) launched in May 2005 intends to increase the pace of development of the horticulture sector in the coming years so as to take advantage of the growing demand for these products both internally and externally. The requirements of credit (both production and investment) for horticulture crops along with plantation crops are to be largely met from the banking sector. The projections have taken into account the above emerging shifts in favour of commercial agriculture (the area and production under fruits and vegetables can be taken as an indicator of commercialization of agriculture).
Table : Area and Production of Fruits and Vegetables
Area and Production of Fruits and Vegetables
(Area- million ha., Production- million tonnes)
Year Area Production
Fruits Vegetables Fruits Vegetables
1991-92 2.9 5.6 28.6 58.5
1997-98 3.7 4.1 43.3 72.7
1998-99 3.7 4.4 44.0 87.5
1999-00 3.8 5.6 45.5 90.8
2000-01 3.9 6.2 45.4 93.9
2001-02 4.0 6.2 43.1 88.6
2002-03 3.8 6.1 45.2 84.8
2003-04 4.8 5.9 49.2 84.8
2004-05* 5.0 6.1 53.1 91.6
2005-06* 5.2 6.3 57.6 99.4
Source: Economic Survey, Various Issues *: Estimated
From what has been observed so far about agricultural production, we can argue that the share of foodgrain consumption comes down with increases in income level (Engle’s Law) since demand for foodgains comes down and demand for high value food items go up. The Indian Economy in recent times is also seeing such a shift in the consumption pattern in the recent decades (Table 7). However, with more than 40 per cent of the expenditure in rural areas being spent on foodgrains and around 75 per cent of the population living in the countryside the concerns of food security and hence of foodgrain production cannot be wished away.
Table 7: Consumption Expenditure on Foodgrain, Fruit & Vegetables & Other food Items
(per cent)
Years
(NSS Rounds) Expenditure on Foodgrains Expenditure on Fruits & Vegetables Expenditure on Milk, Meat,Egg & Fish
Rural Urban Rural Urban Rural Urban
1972-73
(27th Round) 63.1 42.0 10.2 9.9 13.4 19.5
1987-88
(43th Round) 47.8 33.2 12.7 13.8 18.6 23.2
1993-94
(50th Round) 44.8 31.6 14.4 15.0 20.3 24.1
1999-00
(55th Round) 44.1 31.8 14.5 15.6 20.4 24.5
Source: Economic Survey 2001-02, Government of India.
Approaches / Policies being considered for corrective measures.
The Approach Paper to the Eleventh Five Year Plan accordingly suggested a holistic framework to raise agricultural output encompassing the following strategies, viz.,
i. Doubling the rate of growth of irrigated area
ii. Improving water management, rain water harvesting and watershed development
iii. Reclaiming degraded land and focusing on soil quality
iv. Bridging the knowledge gap through effective extension
v. Diversifying into high value outputs, fruits, vegetables, flowers, herbs, spices, medicinal plants, bamboo bio diesel
vi. Promoting animal husbandry and fishery
vii. Providing easy access to credit at affordable rates
viii. Improving the incentive structure and the functioning of markets
ix. Refocusing on land reforms issues
The Maharashtra Economic Development Council (MEDC), Mumbai, in its study on Contract Farming as a means of value added agriculture examined the arrangements for major crops. The study revealed that such arrangements have met with considerable success leading to crop diversification, adoption of new high value crops, increased processing and export of agri produce, productivity and income gains for farmers, enhanced credit deepening and reduced market risk associated with crop cultivation. The study revealed that contract farming was a step in the evolution of a competitive and efficient market system that would be based on adequate infrastructure, proper information flows, appropriate governance and organized futures. This could suggest a way forward, this is also indicated by such innovations by the ITC group in MP for wheat and Pepsi in Punjab and West Bengal for potatoes.
It would be germane here to discuss the case of HP, as a representative case of a state as also just to focus on the developing scenario in Agriculture and policies which can overcome the constraints. Himachal Pradesh with a total geographical area of 0.56 lakh sq km and population of 60.78 lakh accounts for 1.7 % & 0.61 % of country’s area & population respectively. The population density is 109 and 90.21 % of state population resides in the rural areas. The percentage contribution of Agriculture And Allied sectors in the Total State Gross Domestic Product in HP has declined over last few decades viz. 57.90 % (1950-51) to 55.50 % (1967-68) to 26.50 % (1990-91) to 14.47% in 2009-10.
Though, the share of agriculture (including horticulture & animal husbandry) has shown a declining trend in recent years, yet it continues to be the backbone of the state’s economy in terms of employment and contribution to the State’s Gross Domestic Product. Eighty seven percent of the operational land holdings are upto 2 ha. size with the average size being 1.04 ha. About 68% of the land holdings are less than or equal to 1.0 ha. Apple is the significant crop of the State. The other major crops grown are wheat, maize, vegetables, paddy, barley and pulses. Other crops grown on a limited scale include ragi, millets, gram, oilseeds, potato and dry ginger and the major cash crops being apple, vegetables, potato and ginger. Agriculture in HP is mainly dependent on rainfall as only less than one fourth of the area is irrigated. The gross cropped area depending on the monsoon hovers around 8.97 lakh ha. The area under HYVs is primarily under maize, wheat and paddy. Kuhls are the main source of irrigation accounting for irrigation in about 78% of the irrigated area. Soil erosion is the biggest challenge for the state’s agriculture. Non-availability of local skilled and unskilled manpower leads to abject dependence on migrant labourers
During 2010-11, the production of fruit crops was 10.27 lakh MT out of which the Apple, the most important fruit crop accounted for 86.8% of the total fruit production in the state. The total area under fruit crops is 2.08 lakh ha. Of which area under apple plantations is 1.0 lakh Ha. (48%). Thus, there is an imperative need to explore and harness the vast horticultural potential existing in the state through increasing the area, productivity & diversification. This would require immediate addressing of backward & forward linkages along with development of processing sector. The contribution of major livestock products during 2010-11 was 9.07 lakh tonnes of milk, 1639 tonnes of wool, 102 million eggs and 3610 tonnes of meat. However, production of poultry products in the state were negligible and the state mainly depended on imports from the neighbouring states for the same.
An All India Apex Developmental Bank had in its Developmental Plan for the State addressed the issue of increasing regional imbalance in economic growth by identifying the core activities for development both under financial and real sector and infrastructure development. The attempt was to improve the contribution of primary and secondary sectors to State GDP, make well directed investments in infrastructure, ensuring delivery of essential services such as health and education and providing better livelihood opportunities for people, keeping in mind local resources and skill endowments. Above all, it aimed to sustain both the pace and scope for development.
The Strategic Development Plan was prepared on the basis of prioritizing of critical development areas out of thrust areas already identified in various plan documents. The thrust areas identified include Production of cash crops through adoption of precision farming practices (Poly-House cultivation and related irrigation structures), Diversification of Agriculture through adoption of Micro-irrigation and other related infrastructure., Rejuvenation of old apple orchards , Promoting cultivation of medicinal and aromatic plants under contract farming mode, Development of floriculture on commercial lines, Fruit and Vegetable Preservation (as about 20-25 percent of the fruit production goes waste), Organic cultivation in fruits especially Apple, Development of animal husbandry (100% coverage of breedable cows and buffaloes, identification of elite cows, reduction of contagious diseases, making available more number of exotic rams, encourage Self Help Groups to adopt poultry farming, rehabilitation of all stray cattle in Gosadans, etc), Fisheries Development (strengthening of Carp and Trout farms, improvement in management practices, Intensification of aquaculture practices through Fish Farmer's Development Agencies, Revival of Riverine fisheries by setting up Mahseer fish farms, Extension of commercial trout farming technology in private sector), Development of rural infrastructure ( irrigation, Power, Rural Connectivity, Rail Transport, Rural Drinking Water Supply, Housing ) and Other Sectors such as Tourism, Natural Resource Management and Watershed Development, Education and Health & Family Welfare. Each state will have to strategise accordingly for facilitating a push in Agriculture and enhancing rural incomes.
Infrastructure Development and Socio-economic benefits
Any number of studies indicate that investments in agriculture and more importantly in rural infrastructure have led to improvement in access to modern agro-economic practices, improved accessibility to input markets, reduction in cost of transportation, increased frequency of visits of extension staff etc. Construction of rural roads and bridges has brought about changes in asset holding pattern, increase in availability of jobs, increased credit absorption, improvement in access to education and health, improved quality of life etc. A shift in cropping pattern and increased cropping intensity and yields were observed in areas covered under irrigation projects. Flood protection projects have helped in reducing fallow lands, crop damage and enhanced protection to human and animal life in the operational area. Safe drinking water has improved public health. Enhanced incomes by way of productivity increases due to stepped up extension activities have led to improved nutritional intake. This only indicates the importance of investing in rural infrastructure across a wide spectrum for giving a push to Agricultural and Rural development, the move has to be integrated and prioritised.
Concerns about Completion of Projects
There are concerns about the completion of infrastructural projects / programmes across India primarily due to :
w Lengthy Procedural formalities post sanction i.e. Administrative / technical approval, expenditure sanction.
w Delay in Obtaining forest and environmental clearances.
w Delay in land acquisition and payment of compensation for the same.
w Changes made in project design after sanction.
w Contract Management problems.
w Manpower constraints due to low recruitment in recent years.
w Lack of technological tools at field levels.
These need the attention of the governments incase the Rural areas and the agricultural sector are to contribute effectively to the growth in GDP.
Suggestions for Strengthening Infrastructure in the States – Some High Priority Areas for enabling economic development
Based on the above observations and inputs, it is suggested that the following areas / sectors need to be focused upon for enhancing production / productivity, specially of the rural economy. Strengthening rural infrastructure can lead to lower production costs, agricultural expansion by increasing yields, improve farmers’ access to markets and ensure availability of institutional finance. This would lead to greater economic activities and augment the offtake of credit. The broad identification of such sectors is as below –
.Based on the District / State Agricultural Plans which should reflect a State’s agricultural growth objectives - infrastructure needs for growth potential areas like agriculture, horticulture, livestock, poultry and fishery need to be identified.
The setting up of a District Level Forum in States for prioritization and implementation of rural infrastructure projects would be beneficial.
The potential for roads (road density in a district vis s vis road density required) needs priority as also improved communication facilities (telecommunication, both landline and mobile).
The GOI / State Governments needs to enhance the capability of implementing departments for project formulation and execution.
Training of farmers needs to be stepped up in both traditional sectors for improving productivity and in newly emerging areas for stabilizing diversification.
Low prices of agricultural commodities at the farm gate for vegetables / horticultural produce are a concern as are marketing and transportation problems including for farm forestry. A lack of effective integral linkages between the retail outlets and the farmer are another concern.
Rural haats / mandis need to be encouraged as also modern market yards inclusive of private sector participation. Rural godowns also need to be facilitated, specially of smaller capacity.
There is a need to evolve techniques for enhancing productivity of farming in higher hilly reaches / dryland areas. Mechanisation of agriculture needs to be stepped up as also of commercial infrastructure for enhancing productivity. Seed processing / seed banks need to be encouraged. The usage of power tillers needs to be stepped up.
The Diversification of Agriculture to Horticulture will need the support of processing and marketing infrastructure. Specialized medicinal plant nurseries are required. Cold stores / chains / cold storage units if encouraged would facilitate diversification.
As regards the Dairy sector, data analysis suggests that Fodder banks need to be set up and the installing of BMCS / AMCS / indigenous milk manufacturing units needs encouragement. Milk processing units alongwith refrigerated tankers / vans for procurement / sale are also required. Milk cooperative societies need to be revitalized and animal fairs organized. Milk routes need to be increased as this acts as an important forward linkage.
Formation /Activation of Water Users Association for maintenance of irrigation structures needs priority. The maintenance of irrigation infrastructure and its upkeep needs priority and the command area of irrigation projects needs comprehensive development. Source management plans of river systems need to be formulated by the states to cater to the increasing demand from the industrial and domestic sector.
Flood prone areas require protection to save rural assets and cropped areas. Drainage facilities need to be improved in low lying areas / valleys / agricultural fields etc. Rain water harvesting / check dams need to be encouraged where feasible and watershed management projects taken up in suitable areas on priority.
The Poultry sector needs infrastructure to be created (within or near the main centres in the concerned districts) for hatcheries, egg grading, packing and cold storages.
The Fisheries Sector requires measures where appropriate on rivers / streams / canals dams for stocking with fish seed and Hi-tech regional laboratories with mobile units to cater to the needs of the fish farmers. It is also suggested that fish farmers societies be organized and they may be supplied items of common facilities such as deboning machines for transportation & cold stores / refrigeration etc.
The provision of Sewerage facilities in villages is an evolving demand and a phased approach to provide the same may be considered as the population increases in semi urban / large villages.
In Rural Non Farm Sector, infrastructural gaps such as water supply, quality electricity supply, internal roads, road / rail links, etc would be facilitators. Agro / Food processing industrial units and infrastructure needs to be stepped up. Common facilities such as effluent treatment plants, servicing centres etc at industrial estates in rural areas would be facilitators. Common service centres and skill development need to be stepped up.
A drive for encouraging entrepreneurship is required coupled with access to skill development and credit. Integrated farming / Producer Companies need to be encouraged for ensuring more on farm employment to be generated as at present farmers are under employed.
Encouraging the grouping of Farmers Clubs and facilitating their access to extension services such as Reuters Services on weather conditions.
Enhancement of the role of the private sector by sharing finances and risk in infrastructure projects through the public-private partnership (PPP) model, specially for commercially oriented infrastructure can be considered to step up the pace of investment.
Health and educational infrastructure needs to be expanded and strengthened for enhancing capacity building of the population.
Construction, Monitoring and Supervising Organisations (CMSO) need to be appointed to ensure independent quality assurance in all infrastructure projects being implemented.
The country lacks detailed district wise or long term plans for infrastructure development and these need to be introduced on priority and dovetailed with financial allocations.
The dryland / mountainous areas require enhanced attention as they are not in the loop of development to the extent required.
Maintenance of rural assets maybe catered to by the setting up of dedicated funds.
Rural lifestyles are getting upgraded and aspiration levels increasing and these need to be catered to by improved rural infrastructure in the state.
Core Concerns & Suggestions
To summarise, the main concerns could be as follows -
Issue One - The market for agricultural land is under-developed on account of lack of proper land revenue records, lack of property rights, etc.
Issue Two - There is uneven development of big dams and irrigation projects without much complementarities with small and micro irrigation.
Issue Three - There are collusive and other anticompetitive practices in wholesale trade of agricultural products.
Issue Four - There is lack of incentives to farmers to enhance agricultural productivity.
Issue Five – The sheer number of farmers dependent on agriculture results in under employment and lower incomes as also lower productivity by distorting economies of scale.
The five main core suggestions are as follows -
Suggestion One - The States need to prioritise the implementation of upgradation of land revenue records, amendments to land tenancy law, development of the market for land lease, etc.
Suggestion Two - Public investment in irrigation should be complemented with private investment (through small and micro irrigation such as drip/sprinkling irrigation) by offering incentives/disincentives such as continuationx/withdrawal of tax on agricultural income.
Suggestion Three - The Agricultural Produce Market Committee Act should be amended to impart competition in wholesale trade of agricultural products by allowing the private sector to build, own and operate such markets and the state governments (with conditions to pass those incentives to local governments) will have to be incentivised to take care of expected revenue loss.
Suggestion Four - There should not be any restriction on internal movement and external trade of agricultural products except subjecting them to well-defined price and quantity triggers.
Suggestion Five – Focus on the Rural Non Farm sector to absorb manpower and to facilitate employment generation. This needs stepped up skill development, financial literacy and infrastructural support.
==============================================================
The author is Assistant General Manager at NABARD Shimla. The views expressed are his own and do not reflect the views of his employer in any manner.
the tables are pasting correctly, if anyone wants the data, he may kindly e-mail.
-------------------------------------
Comments
Post a Comment