Raising Agricultural Productivity and Making Farming Remunerative for Farmers*

As a source of livelihood, agriculture (including forestry and fishing) remains the largest sector of Indian Economy. While its output share fell from 28.3% in 1993-94 to 14.4% in 201112, employment share declined from 64.8% to 48.9% over the same period. Therefore, almost half of the workforce in India still remains dependent on agriculture. Given the low share of this workforce in the GDP, on average, it earns much lower income poorer than its counterpart in industry and services. Therefore, progress in agriculture has a bearing on the fate of the largest proportion of the low income population in India. The paper identifies five important aspects of agriculture that need immediate attention to bring economic advantages to millions of farm families. First, output per hectare, which is a common measure of agricultural productivity, remains low for many crops when compared to many other countries. There are also large regional variations within the country. Reasons include low and faulty input uses, poor access to modern technology and no real technological breakthrough in recent times. Second, on average, farmers do not realize remunerative prices due to limited reach of the minimum support prices (MSP) and an agricultural marketing system that delivers only a small fraction of the final price to the actual farmer. Third, the farm size of the majority of the household has declined to unviable levels inducing farmers to leave land and look for better job opportunities elsewhere. Because landleasing laws make it risky to lease land, increasingly, productive land is being left uncultivated. Changes in the land leasing laws may bring consolidation of land holding at operational level and attract better investment along with access to credit and relief to tenants. Fourth, relief measures in the event of natural disasters are inadequate and suffer from procedural inefficiencies and delays. The risk adaptation measures are poorly executed and have not worked effectively. This situation needs to be rectified with at least minimum quick relief to farmers for crop loss in case of natural calamities. Finally the potential of the eastern region needs to be harnessed with suitable interventions. This region is unique for its suitability to the production of certain commodities. However, taking advantage of this potential would require institutional support and investment in technological innovations. The paper offers ideas on how these problems can be addressed so as to accelerate agricultural growth and bring remunerative prices to farmers. 1 The Current Status of Indian Agriculture Since 1970-71, trend growth in Indian agriculture has been approximately 3%, above that in population but well below that in the entire economy consisting of agriculture, industry and services. By implication, while per-capita agricultural output has seen a steady rise, the share of agriculture in the Gross Domestic Product (GDP) has fallen. The rise in per-capita agricultural production has gone a long way toward easing pressure on meeting food and nutrition security of the country. Unfortunately, however, growth in agricultural output is characterised by fluctuations; each high growth period is followed by a phase of low growth. This cyclical pattern has reflected itself in annual growth rates of approximately 3% in the 10 th Plan, 4% in the 11 th Plan and just 1.7% during the first three years of the 12 th Plan. Specific sub sectors, most notably crop segment, are subject to occasional severe negative shocks leading to serious distress. Crop production in the country is dominated by cultivation of paddy in Kharif and wheat in Rabi seasons. These two crops cover about 38 per cent of gross cropped area in the country. Cereals including coarse cereals occupy more than half of the total land under cultivation. Table 1: Distribution of gross cropped area across major crops Year TE 2001-02 TE 2013-14