Final Report Indu

Role of agriculture in indian GDP.
CHAPTER: 1
INTRODUCTION
1
1. INTRODUCTION
Agriculture is the backbone of Indian Economy. About 65% of Indian population

depends directly on agriculture and it accounts for around 22% of GDP. Agriculture
derives its importance from the fact that it has vital supply and demand links with the
manufacturing sector. During the past five years agriculture sector has witnessed
spectacular advances in the production and productivity of food grains, oilseeds,
commercial crops, fruits, vegetables, food grains, poultry and dairy. India has emerged as
the second largest producer of fruits and vegetables in the world in addition to being the
largest overseas exporter of cashews and spices.Further, India is the highest producer of
milk in the world.
Agriculture in India is in the hands of millions of peasant households, a bulk of which
comprise tiny land holdings with preponderance of owner cultivation. There is hardly any
direct government intervention in the production and investment decisions of the farmers
but the government does influence the legal, material and economic environment in
which farmers operate (Vaidyanathan 1996). Though tremendous progress has been
made to exploit irrigation potential in the country still two third of area under cultivation
is unirrigated and there is thus heavy dependence of production on vagaries of nature i.e.
rainfall. Irrigated areas have experienced sharp increase in productivity level and large
part of output at such farms is for market. On the other hand, productivity in unirrigated
areas has remained either stagnant or experienced very small growth and most of the
farmers in such areas produce for subsistence purpose. At overall level, agricultural
growth remained slow (below 3 percent) in the Country. Apart from that, agricultural
growth remained confined to a few well endowed pockets which has created regional
disparities.
2
1.1 RECENT SCENARIO IN INDIAN AGRICULTURE

Though green revolution has been widely diffused in irrigated areas Throughout the
country, the dry land areas have not seen benefit of technological breakthrough as
witnessed through green revolution technology. Of late, improved varieties of oilseeds
and course cereals have provided some opportunities for productivity growth in dry land
areas. A new phase was started in India’s economic policy in 1991 that marked
significant departure from the past. Government initiated process of economic reforms in
1991, which involved deregulation, reduced government participation in economic
activities, and liberalization. Though much of the reforms were not initiated to directly
affect agriculture sector, the sector was affected indirectly by devaluation of exchange
rate, liberalization of external trade and disprotection to industry. Then came new
international trade accord and WTO, requiring opening up of domestic market. Initially
there were strong apprehensions about the impact of trade liberalization on Indian
agriculture which later on turned out to be real threat for several commodities produced
in the country. All these changes raised new challenges and provided new opportunities
that required appropriate policy response. Besides, last two decades had witnessed
mainly price intervention that had a very limited coverage, and there was a sort of policy
vacuum. Because of this, there was a strong pressure on the government to come out with
a formal statement of agriculture policy to provide new direction to agriculture in the
new and emerging scenario. In response to this, government of India announced New
Agricultural Policy in July 2000.
1.2 The next phase in Indian agriculture

began in early 1980s. While there was clear change in economic policy towards
delicensing and deregulation in Industry sector, agriculture policy lacked direction and
was marked by confusion. Agricultural growth accompanied by increase in real farm
3
incomes led to emergence of interest groups and lobbies which started influencing farm
policy in the country. There has been a considerable increase in subsidies and support to
agriculture sector during this period while public sector spending in agriculture for
infrastructure development started showing decline in real term but investments by
farmers kept on Moving on a rising trend (Mishra and Chand 1995, Chand 2001). The
output growth, which was concentrated in very narrow pockets, became broad- based and
got momentum. The rural economy started witnessing process of diversification which
resulted into fast growth in non foodgrain output like milk, fishery, poultry, vegetables;
fruits etc which accelerated growth in agricultural GDP during the 1980s.This growth
seems largely market driven.
4
CHAPTER: 2
REVIEW
OF
LITERATURE
5
2. Review of Literature
India, which is one of the largest agricultural-based economies, remained closed until the
early 1990s. By 1991, there was growing awareness that the inward-looking import
substitution and overvalued exchange rate policy coupled with various domestic policies
pursued during the past four decades, limited entrepreneurial decision making in many
areas and resulted in a high cost domestic industrial structure that was out of line with
world prices. Hence the new economic policy of 1991 stressed both external sector
reforms in the exchange rate, trade and foreign investment policies, and internal reforms
in areas such as industrial policy, price and distribution
controls, and fiscal restructuring in the financial and public sectors. In addition, India’s
membership and commitment to World Trade Organization (WTO) in 1995 was a clear
sign of India’s intention to take advantage of globalization and face the challenge of
accelerating its economic growth. One measure of economic growth is given by
productivity growth as it forms
the basis for improvements in real incomes and welfare. The concept of productivity
growth gained importance for sustaining output growth over the long run as input growth
alone is insufficient to generate output growth because of diminishing returns to input
use. This paper, which examines India’s productivity growth in the agricultural sector in
the context of globalization, has three main aims. First, it examines these possible links in
the agricultural sector in general. Second, it discusses the problems and prospects for
agricultural productivity growth of various Indian states. Third, the paper highlights the
challenges of globalization and draws policy implications for the success of Indian
agriculture.
* Renuka Mahadevan, School of Economics, Universty
6
With a population of about 1.1 billion, India is expected to overtake China as the world's
most populous country by 2030. India's economy ranks as Asia's third largest, after Japan
and China, and is now one of the world's fastest growing. While growth has led to
significant reductions in poverty, India still ranks among the world's low income
countries in terms of income per capita. Nevertheless, economic growth has resulted in a
burgeoning middle-class. India's agriculture sector accounts for 18% of GDP, and
employs around 60% of the workforce. Rice, wheat, cotton, oilseeds, jute, tea, sugarcane,
milk and potatoes are India's major agricultural commodities. With its growing urban
middle-class and increasing influence in global affairs, India's policies have important
implications not only for its own economic development but also for global agricultural
markets and trade. This note first reviews India's macro reforms, followed by discussion
of the competitiveness of Indian agriculture. The evolution of India's major agricultural
policies is then described, and new policy directions and emerging challenges are
discussed. The note closes with some of the prospects for India's agri-food.
7
Chapter: 3
RESEARCH
METHODOLOGY
8
3. RESEARCH METHODOLOGY
The methods adopted to fulfill the objective of the study that included collecting primary
and secondary data. I conducted the survey in order to gather the information’s from the
knowledgeable on the issue reverent to my thesis topic.
3.1 SCOPE OF THE STUDY

The scope of my study to analyze the basic aspect about agriculture. Its provide the
current information that whats going in Indian agriculture and its contribution in Indian
GDP.
3.2 OBJECTIVES OF THE STUDY

The over all objective of the thesis is to throw light on “Decline in the share of agriculture in Indian
GDP: and role of Agro-Marketing in the revival of agriculture”
3.2.1 SUB OBJECTIVE
 To find out factors affecting growth of agriculture sector.
 To find out the effects of decline in agriculture sector on the Indian economy.
 To find out solutions for the revival of Indian agriculture sector after analyzing
different Interventions adopted in India and different countries.
 To find out how Agro-Marketing can help in the revival of Indian agriculture sector
and how to use it for overall change in the agriculture sector?
9
3.3 RESEARCH DESIGN

Research Type
Descriptive method is used in the research.
3.4 DATA COLLECTION METHODS

Data will be collected for the study.
Secondary Sources – The secondary sources used are already in existence

in the form of books, internet periodicals and institutes brochures.
Magazines Indian Krishi.
Journals Asia-Pacific Development Journal
Websites: www.google.com
www.scribd.com
10
CHAPTER: 4
FINDINGS
11
4.1 Agriculture in India – Past, present and future
India, which is one of the largest agricultural-based economies, remained closed until the
early 1990s. By 1991, there was growing awareness that the inward-looking import
substitution and overvalued exchange rate policy coupled with various domestic policies
pursued during the past four decades, limited entrepreneurial decision making in many
areas and resulted in a high cost domestic industrial structure that was out of line with
world prices. Hence the new economic policy of 1991 stressed both external sector
reforms in the exchange rate, trade and foreign investment policies, and internal reforms
in areas such as industrial policy, price and distribution
controls, and fiscal restructuring in the financial and public sectors. In addition, India’s
membership and commitment to World Trade Organization (WTO) in 1995 was a clear
sign of India’s intention to take advantage of globalization and face the challenge of
accelerating its economic growth. One measure of economic growth is given by
productivity growth as it forms the basis for improvements in real incomes and welfare.
The concept of productivity growth gained importance for sustaining output growth over
the long run as input growth alone is insufficient to generate output growth because of
diminishing returns to input use. This paper, which examines India’s productivity growth
in the agricultural sector in the context of globalization, has three main aims. First, it
examines these possible links in the agricultural sector in general. Second, it discusses
the problems and prospects for agricultural productivity growth of various Indian states.
Third, the paper highlights the challenges of globalization and draws policy implications
for the success of Indian agriculture.
4.1.1 Structure of the Indian Agriculture
12
India’s agricultural area is vast with total arable and permanent cropland of 170 million
hectares in 2003- 2005. It has the second largest arable area in the world after the United
States. OECD in it’s 2007 agricultural policy monitoring report notes that Indian
agriculture is dominated by a large number of small scale holdings that are
predominantly owner occupied. The average size of holding in the late nineties was about
1.4 hectares and continues to decline, as farms are usually divided on inheritance. Out of
India’s 116 million farmers, around 60% have less than 1 hectare and together they farm
17% of the land. The share of medium to large farms (above 4 hectares) is very small at
just over 7% of all holdings, but these
farms account for around 40% of the land. The implication is that many of the very small
farms are subsistence holdings, with low investment and little productivity growth.
13
4.1.2 AGRICULTURAL DEVELOPMENT STRATEGY ADOPTED BY JAMAICA
14
Agribusiness Management practices adopted by Thailand Orchid cooperative:
Thailand is regarded as an agricultural country. The agricultural sector has played an

important role in contributing to the economy of Thailand throughout history. Although
the contribution of the agricultural sector to the Thai economy is decreasing, agriculture
is still important, with 41% of the total land area or 21 million hectares devoted to
agriculture. Agriculture is the main occupation of the Thai people employing about
one-third of the labor force. The history of agricultural cooperatives in Thailand can be
traced back to 1914, when the Thai economy opened to international trade. In 1916, the
Thai government created the first cooperative society, it was known as a "village credit
cooperative". With a view to facilitate financing support to cooperatives and their
members, the government set up the "Bank for Cooperative" in 1947. In 1966, the "Bank
for Agriculture and Agricultural Cooperative (BAAC)", a state enterprise, was
established to be a financial center for agricultural cooperatives as well as individual
15
farmers. In 1969, the government changed the status of agricultural cooperatives from
unlimited societies to limited ones. This year, the Agricultural Cooperative Federation of
Thailand was also established as the apex agricultural cooperative of the country.
Current situation of Agricultural co-operatives in Thailand:

As of January 2006, the Cooperative Movement of Thailand was composed of 6,712
primary cooperatives with an individual membership of 9,684,508 or about 14% of the
total population of the country. The cooperatives in the agricultural sector occupied the
largest. It had a total of 4,137 primary cooperatives with 5,950,809 individual members.
These represented more than 60% of the total primary societies as well as the total
individual membership of the cooperatives of the country. The cooperative intends to
participate in both national and international orchid exhibitions. With this approach
customers will get to know more about the company and the customers network will then
enlarge. The cooperative does not encourage giving the discount rate system since the
margin is extremely small. Yet the promotion method the cooperative plans to use is to
giving additional free amount of orchids when purchasing.
Source: From Website of Thailand Orchid Co-op limited
4.1.3 BIOTECH CROP AS AGRICULTURAL INTERVENTION:
Global Status of Biotech Crops in 2004:

2004 is the penultimate year of the first decade of the commercialization of genetically
modified (GM) or transgenic crops, now often called biotech crops, as referred to
consistently in this Brief. In 2004, the global area of biotech crops continued to grow for
the ninth consecutive year at a sustained double-digit growth rate of 20%, compared with
15% in 2003. 90% of the beneficiary farmers were resource-poor farmers from
developing countries, whose increased incomes from biotech crops contributed to the
alleviation of poverty. USA, Argentina, Canada, Brazil, China, Paraguay, India, South
Africa, Uruguay, Australia, Romania, Mexico, Spain and the Philippines. During the
period 1996-2004, the accumulated global biotech crop area was 385 million hectares or
951 million acres, equivalent to 40% of the total land area of the USA or China, or 15
times the total land area of the UK. The continuing rapid adoption of biotech crops
16
reflects the substantial improvements in productivity, the environment, economics, health

and social benefits realized by both large and small farmers, consumers and society in
both industrial and developing countries.
4.1.4 INDIAN AGRICULRURE: ITS ISSUES AND CHALLENGES
Although agriculture contributes only 22% of India’s GDP, its importance in the
country’s economic, social, and political fabric goes well beyond this indicator. The rural
areas are still home to some 72 percent of the India’s 1.1 billion people, a large number
of whom are poor. Most of the rural poor depend on rain-fed agriculture and fragile
forests for their livelihoods. The sharp rise in food grain production during India’s Green
Revolution of the 1970s enabled the country to achieve self-sufficiency in food grains
and stave off the threat of famine. Agricultural intensification in the 1970s to 1980s saw
an increased demand for rural labor that raised rural wages and, together with declining
food prices, reduced rural poverty. Sustained, although much slower, agricultural growth
in the 1990s reduced rural poverty to 26.3 percent by 1999/00. Since then, however, the
slowdown in agricultural growth has become a major cause for concern. India’s rice
yields are one-third of China’s and about half of those in Vietnam and Indonesia. With
the exception of sugarcane, potato and tea, the same is true for most other agricultural
commodities. The Government of India places high priority on reducing poverty by
raising agricultural productivity. However, bold action from policymakers will be
required to shift away from the existing subsidy-based regime that is no longer
sustainable, to build a solid foundation for a highly productive, internationally
competitive, and diversified agricultural sector.
4.1.5NEW AGRICULTURAL POLICY AND CHALLENGES IN INDIAN

AGRICULTURE:
The challenges facing Indian agriculture can be grouped in four categories

relating to:
(1) Growth
17
(2) Sustainability
(3) Efficiency and
(4) Equity.
There are also other important concerns like food security, livelihood, employment,
improvement in standard of living of agricultural population. Addressing these
challenges requires efforts on several fronts like incentive structure, infrastructure,
technology, market development, extension, regulations, input supply, tenancy etc. New
agriculture policy should address above challenges through efforts in abovementioned
areas and also provide direction to the future of agriculture in the country. The National
Agricultural Policy (NAP) document aims to attain output growth rate in excess of 4
percent per annum in agriculture sector based on efficient use of resources. It seeks to
achieve this growth in a sustainable manner and with equity. The Policy resolution than
describe in detail the strategy and policy alternatives which are grouped under the
following heads:
1. Sustainable agriculture
2. Food and nutrition security
3. Generation and transfer of technology
4. Inputs management
5. Incentive for agriculture
6. Investment in agriculture
7. Institutional structure
8. Risk management
18
19
Slow Down in Agricultural and Rural Non-Farm Growth: Both the poorest as well as the
more prosperous ‘Green Revolution’ states of Punjab, Haryana and Uttar Pradesh have
recently witnessed a slow-down in agricultural growth. Some of the factors hampering
the revival of growth are:
Poor
 composition of public expenditures: Public spending on agricultural subsidies
is crowding out productivity-enhancing investments such as agricultural research and
extension, as well as investments in rural infrastructure, and the health and education of
the rural people. In 1999/2000, agricultural subsidies amounted to 3 percent of GDP and
were over 7 times the public investments in the sector.
Over-regulation
 of domestic agricultural trade: While economic and trade reforms
in the 1990s helped to improve the incentive framework, over-regulation of domestic
trade has increased costs, price risks and uncertainty, undermining the sector’s
competitiveness.
Government
 interventions in labor, land, and credit markets: More rapid growth
of the rural non-farm sector is constrained by government interventions in factor markets
-- labor, land, and credit -- and in output markets, such as the small-scale reservation of
enterprises.
20
21
Inadequate
 infrastructure and services in rural areas.
Weak Framework for Sustainable Water Management and Irrigation:

Inequitable
 allocation of water: Many states lack the incentives, policy, regulatory,
and institutional framework for the efficient, sustainable, and equitable allocation of
water.
Deteriorating
 irrigation infrastructure: Public spending in irrigation is spread over
many uncompleted projects. In addition, existing infrastructure has rapidly deteriorated
as operations and maintenance is given lower priority.
Inadequate Access to Land and Finance:

Stringent
 land regulations discourage rural investments: While land distribution
has become less skewed, land policy and regulations to increase security of tenure
(including restrictions or bans on renting land or converting it to other uses) have had the
unintended effect of reducing access by the landless and discouraging rural investments.
Computerization
 of land records has brought to light
institutional weaknesses: State government initiatives to computerize land records have
reduced transaction costs and increased transparency, but also brought to light
institutional weaknesses.
Rural
 poor have little access to credit: While India has a wide network of rural
finance institutions, many of the rural poor remain excluded, due to inefficiencies in the
formal finance institutions, the weak regulatory framework, high transaction costs, and
risks associated with lending to agriculture.
Weak Natural Resources Management: One quarter of India’s population depends on

forests for at least part of their livelihoods.
A  purely conservation approach to forests is ineffective: Experience in India shows

that a purely conservation approach to natural resources management does not work
effectively and does little to reduce poverty.
Weak
 resource rights for forest communities: The forest sector is also faced with
weak resource rights and economic incentives for communities, an inefficient legal
framework and participatory management, and poor access to markets.
Weak delivery of basic services in rural areas:

Low
 bureaucratic accountability and inefficient use of public funds: Despite large
expenditures in rural development, a highly centralized bureaucracy with low
accountability.
22
23
4.2 FUTURE GROWTH POTENTIAL OF

INDIAN AGRICULTURE.
In the past, India has made great progress in providing food security for its
people. However the growth rate of agriculture has decreased from 3.2 during 1985-90
(seventh plan) to 2.1 during 1997-2002 (Ninth plan). There has also been a decline in the
growth rate of foodgrain production from 3.22 (1960) to 1.23 (1997). Foodgrain
production is becoming a matter of concern again. The challenge facing the country is in
24
achieving a higher production of food production over the next 2–3 decades (Daniel
2000). According to a study by Bhalla et.al (1999), baseline projection for total cereal
demand in 2020 is 246 million tons for direct human consumption. The relevant question
that arises is whether India would be able to increase the foodgrain production in the
coming years with the net-cropped area remaining same? Much of the additional food
demand in the future will have to be met through productivity enhancement. What factors
have contributed most to the productivity growth in the past? Reaching towards the goal
of sustainable agriculture with high yield requires a crucial role of irrigation and other
factors. In the paper, we explore the marginal contribution of factors like irrigation and
fertilizer on yield of foodgrain using a regression model. We also test the hypothesis that
marginal effect of fertilizer on yield depends much on the irrigated conditions.
Over the past 15 years, increase in irrigated area has mainly taken place from
groundwater source. Yields in areas irrigated by groundwater are often substantially
higher than the yield from surface water sources. Research indicates that yields in
groundwater irrigated areas are higher by one third to one half than in areas irrigated
from surface sources, and as much as 70-80% of India’s agricultural output may be
groundwater dependent (Marcus 1996). Higher yields from groundwater-irrigated areas
are in large part due to increase in the reliability of water supply. In the paper, we explore
how irrigated area driven by groundwater irrigation expansion will contribute in
increasing the irrigation intensity.
Much of the contribution in yield change in the last two decades is caused by high
fertilizer usage (Daniel 2000; Ahluwalia 1996). High use of fertilizer in agricultural
production is also contributed by expansion of irrigation as the latter reduces the risk of
investment in fertilizer. Two decades back, farmers applied only 30 kg of mineral
fertilizers (nitrogenous, phosphatic and potassic fertilizers) to their land. Today, they
apply 29kg per hectare which is three times as much. In the same period, foodgrain yields
has increased every year, from about 1.023 tonnes/ha to 1.67 tonnes/ha. One of the
concerns regarding the factors constraining the yield growth is imbalanced use of
fertilizer. The pattern of fertilizer use is distorted to great extent. Data suggests extreme
overuse of nitrogenous fertilizer, and to large extent it is due to under market price of
nitrogenous fertilizer. The excessive use of nitrogenous fertilizer usage is sticking mainly
25
in the irrigated area of the north zone. With declining ground water table over use of
nitrogenous fertilizer may slow down the yield growth in future (Fresco 2003).
We hypothesize both time series and cross section variation in yield and the
factors influencing the latter across the states in India. Using a panel data, we investigate
the yield of foodgrains, and assess the future impacts of increasing irrigated area and
fertilizer usage. We have used annual time series and cross section data of 15 major
states in India, which constitutes more than 95 % of the agrarian economy of India, for
the period 1990-2001. Based on the regression results, we analyze the contribution of the
different factors in the relative changes in yield growth. To get into further insights we
also assess the contribution of the factors in relative change in yield in different zones of
India, for instance North, South, East and West Zones.1
It is essential to project India’s future food production, as the current concern is to
meet the food demand of the increasing population. The proportion irrigated area,
fertilizer usage and gross cropped area are determined using a quadratic time trend of the
last decade; and then based on the regression results and time trend values of the factors,
we project the yield of foodgrains in 2010, 2025 and 2050.
The structure of the paper is as follows. In the first section, we discuss about the
past agricultural scenarios .In the next section, we explore the yield of foodgrains and the
relative contribution of the factors in changing it’s growth. In the fourth section, we make
future projections of yield and food production. Finally, the last section summarizes the
findings and results of the paper.
4.2.1 Agriculture scenario:
In the past, India has made great progress in providing food security for its
people. The growth of food production has surpassed the growth of population, with per
capita food availability increased from 167kg per year during 1980-1990 to 174 kg per
year during 1990-2000. Indian policy makers have shifted their focus from self-
sufficiency to generating additional income in rural area (Ahluwalia 2004). But will India
continue to be self-sufficient in foodgrain in the years ahead with declining net cropped
area for the same? Till 1990, foodgrain production was driving the agricultural sector
growth- a natural consequence of high priority food policy regime pursued since
1
See appendix for the states in each geographical zones.
26
independence. Since 1990, the non -foodgrain sector appeared to have taken over. Table
2.1 shows the production of major foodgrains over the last 50 years. The major growth
has taken place in rice and wheat production while coarse cereals and particularly pulses
are lagging behind. The table also illustrates a decelerating growth of food grains
production during 1990-2000.In the paper, we explore the factors influencing the gross
area and yield of foodgrains, which determine the production of the same.
Total food Growth

Rice Wheat Coarse Cereals Pulses grains Rate
1950-51 20.58 6.46 15.38 8.41 50.82 -
1960-61 34.58 11 23.74 12.7 82.02 4.90
1970-71 42.22 23.83 30.55 11.82 108.43 2.83
1980-81 53.63 36.31 29.02 10.63 129.59 1.80
1990-91 74.29 55.14 32.7 14.26 176.39 3.13
2000-01 84.98 69.68 31.08 11.07 196.81 1.10
Table 2.1: Production of foodgrains; Source: Ministry of Agriculture, Government of

India
4.2.2 Gross cropped area of foodgrains:

In the post independence period until 1967-68, much of the increase in food
production had taken place from expansion of farm areas. The area expansion slowed
down by 1970; and since then, the total net area sown for crops has not increased much.
Most of the increase in gross sown area, however, has been achieved from increasing
cropping intensity, mainly driven by the development of irrigation.
Figure 2.1 illustrates the gross and net sown area, with the difference signifying the
cropping intensity. From the beginning of the last decade we observe high difference in
net and gross sown area, highlighting the growing cropping intensity. Table 2.2 shows
the cropping intensity, irrigation intensity and the rainfed intensity. In 2000 we observe a
decline in cropping intensity in both irrigated and rainfed area, and if we exclude that
27
year we find considerable growth in the rainfed intensity. This is largely due to
governmental policies directed towards improving the position of small farmers in the
non-irrigated areas through extending the productivity revolution and production of high
valued crops.
However, cropping intensity growth in the irrigated area is still higher than that of the
rain fed area.
Irrigation Cropping Rainfed

intensity intensity intensity
1990 1.31 1.30 1.29
1991 1.32 1.29 1.27
1992 1.33 1.30 1.29
1993 1.33 1.31 1.30
1994 1.33 1.32 1.31
1995 1.34 1.32 1.31
1996 1.33 1.33 1.33
1997 1.33 1.34 1.35
1998 1.32 1.35 1.37
1999 1.37 1.35 1.33
2000 1.35 1.32 1.30
Table 2.2: Cropping , irrigation and rainfed intensity of India during 1990-2000; Source:
Ministry of Agriculture, Government of India
The growth in irrigation intensity is mainly contributed by groundwater

expansion and increasing level of mechanization, while rainfall and the need to
sustain livelihood determine the growth of intensity in the rainfed area, where
majority of the rural poor people live. Most of the diversified and mixed farming
28
are taking place in the rainfed part of the cropped area, and it contributes in
increasing the cropping intensity.
We analyze the state wise variation in cropping intensity across states in the last
decade. Many climatic factors like rainfall, drought affects cropping intensity. So, we
have taken a four-year average for the period 1990-1993 and 1997-2000.Table 2.1 shows
the average cropping intensity and the corresponding growth rate. We observe high
growth of cropping intensity in the northern and eastern states, and mainly in Uttar
Pradesh and West Bengal. In the latter two states, intensity is driven by higher irrigation
expansion. In Tamil Nadu, however, there is decrease in cropping intensity. In Tamil
Nadu, depletion of groundwater resource increases the opportunity cost of increasing the
intensive margin, and resulting a decrease in cropping intensity.
250
GSA and NSA
200
million hectares
150
100
Net sown area
Gross sown area
50
0
1 9 -5 1
1 9 -5 4
19 -5 7
19 - 6 0
19 - 6 3
19 - 6 6
19 - 6 9
19 -72
1 9 -7 5
1 9 -7 8
1 9 -8 1
1 9 -8 4
1 9 -8 7
19 -9 0
19 - 9 3
19 -96
9
-9
50
53
56
62
65
68
71
74
77
80
83
86
89
95
98
59
92
19
year
Figure 2.1 Gross and net sown area of India during 1950-2000; Source: Ministry of
Agriculture, Government of India
States Growth Rates (Per

1990- 1997- Cent 1997-2000 over
1993 2000 1990-1993)
Haryana 1.58 1.72 8.81

Punjab 1.79 1.90 5.84
Himachal Pradesh 1.71 1.74 1.78
Uttar Pradesh 1.33 1.51 13.81
29
North Zone 1.45 1.61 11.12

West Bengal 1.37 1.71 24.52
Bihar- 1.29 1.35 4.61
Orissa 1.33 1.39 4.29
Assam 1.31 1.47 12.77
East Zone 1.35 1.47 8.67
Karnataka 1.14 1.17 2.51
Kerala 1.29 1.33 2.92
Tamil Nadu 1.26 1.18 -5.83
Andhra Pradesh 1.22 1.23 1.12
South Zone 1.20 1.21 0.46
Gujarat 1.12 1.12 0.46
Maharashtra 1.17 1.24 6.08
MP 1.20 1.28 6.99
Rajasthan 1.24 1.27 3.16
West Zone 1.19 1.25 4.79
INDIA 1.30 1.34 3.16
All major states 1.26 1.34 6.07
Table 2.3: Cropping intensity in India during 1990-1993 and 1997-2000. Source:
4.2.3 Changing Grain Orientation:

With technologies developments in agriculture and rising demand of non-
foodgrain, traditional farming is changing into modern commercial farming. From a very
generalized perspective, Indian agriculture is increasingly getting influenced more and
more by economic factors (Hazra 2000). This is not surprising because development of
irrigation driven by groundwater expansion, infrastructure development, development
and spread of short duration and drought resistant crop technologies have all contributed
to minimizing the role of non-economic factors in crop choice of even small farmers
(Hazra 2000). In the last decade, we have observed a decrease in grain orientation and
diversification in crops. Crop diversification is intended to give a wider choice in the
production of a variety of crops in a given area so as to expand production related
activities on various crops and also to lessen risk. Between 1990-91 and 2000-01, around
4 percent of the gross cultivated area (GCA) - representing approximately about 6.7
million hectares (m/ha) - has shifted from foodgrain crops to non-foodgrain crops.
30
Among the food grain crops, the area under superior cereals, i.e., rice and wheat, is
increasing; while that of coarse cereals (millets) is on decline.
While cereals and pulses have lost area, the major gainers of this area shift are the
non-foodgrain crops especially oilseeds. If we look at the grain orientation of agriculture
defined as a ratio of gross cropped area for foodgrain to total cropped area, we observe a
declining trend. Grain orientation of agriculture during the last decade has decreased
from 71% to 67%. Most of the change in grain orientation, however, is taking place
under rainfed conditions to reduce the risk factor of crop failures due to drought or less
rains. This is also evident from figure 2.2. Although comparative advantage, yield
difference and crop rotation considerations often favour diversification in irrigated areas.
Grain area - % of Total crop area

85%
80%
75%
70%
65%
60%
55%
50%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Total grain area - % of Gross Sown

Area
Irri. Grain Area - % of Gros Irri.
Area
RF grai area - % of Gross RF
Area
Figure 2.2: Grain orientation in irrigated and rainfed area from 1960 onwards. Source:
31
100%
Pulses
80%
Wheat
% of GSA foodgrain
Maize
60%
Others
40%
20% Rice
0%
19 -51
19 -55
19 -59
19 -63
19 -67
19 -71
19 -75
19 -79
19 -83
19 -87
19 -91
19 -95
9
-9
50
58
62
66
70
74
78
82
90
98
54
86
94
19
Figure 2.3: Composition of foodgrains in India from 1950-2000. Source: Ministry of

Area of Foodgrains
135
130
125
120
115
110
105
1966-67
1968-69
1970-71
1972-73
1974-75
1976-77
1978-79
1980-81
1982-83
1984-85
1986-87
1988-89
1990-91
1992-93
1994-95
1996-97
1998-99
2000-01
Figure 2.4: Trend in gross sown area of foodgrains in India from 1966-2000. Source:
32
Table 2.3 shows the grain orientation of 16 major states and the growth from the
period 1990-1993 to 1997-2000. The table suggests changes in grain orientation are
taking place in most of the major states and with greater prominence in the rain fed area.
Area wise change in grain orientation is more among the southern states. In the rice
wheat producing states of Punjab, Haryana and Uttar Pradesh, diversification is taking
place slowly in irrigated area. Much of diversification in Punjab is taking place in the
rain-fed area. The minimum support price provided to farmers in the northern agricultural
states act as risk reducing insurance against fluctuation in price. Farmers have little
incentive to change to other high valued crops. Considering the rice dominant states, we
observe a decline in grain orientation in West Bengal. Among the southern states, crop
diversification is taking place only under irrigated conditions during the period 1997-
2000 in Andhra Pradesh and Tamil Nadu. One of the reasons of change in grain
orientation in Tamil Nadu especially is rapidly decline in groundwater level, caused by
higher withdrawal rate than the recharge rate. It induces farmers to shift to water saving
commercial crops in irrigated area.
Growth Rates (Per Cent 1997-

States 1990-1993 1997-2000 2000 over 1990-1993)
Grain Grain Grain Grain
Grain orientation- orientat orientation- orientation-
orientation Irrigated ion Irrigated Grain orientation Irrigated
(GOA) (GOA-IR) (GOA) (GOA-IR) (GOA) (GOA-IR)
Haryana 0.77 0.70 0.70 0.70 -9.22 -0.88
Punjab 0.93 0.78 0.76 0.78 -17.77 -0.98
Himachal Pradesh 0.87 0.63 0.86 0.85 -0.48 34.99
Uttar Pradesh 0.88 0.81 0.84 0.77 -4.75 -4.96
North Zone 0.88 0.79 0.81 0.76 -7.85 -3.07
West Bengal 0.86 0.95 0.70 0.77 -18.36 -19.18
Bihar- 0.92 0.89 0.95 0.92 3.46 2.60
Orissa 0.81 0.70 0.64 0.80 -20.26 13.90
Assam 0.76 0.94 0.69 0.66 -8.97 -29.79
East Zone 0.85 0.86 0.76 0.83 -10.50 -2.62
Karnataka 0.58 0.52 0.62 0.55 7.25 6.07
Kerala 0.22 0.55 0.13 0.46 -41.10 -15.83
Tamil Nadu 0.55 0.66 0.56 0.62 1.74 -5.97
33
Andhra Pradesh 0.54 0.74 0.55 0.71 0.93 -3.64

South Zone 0.53 0.66 0.54 0.64 1.10 -3.31
Gujarat 0.40 0.42 0.34 0.34 -14.68 -19.73
Maharashtra 0.83 0.60 0.73 0.55 -11.92 -8.04
MP 0.59 0.93 0.53 0.84 -11.32 -9.51
Rajasthan 0.60 0.53 0.60 0.51 0.77 -3.65
West Zone 0.63 0.64 0.58 0.59 -8.71 -7.88
Total 0.70 0.74 0.65 0.71 -6.33 -4.76
INDIA 0.68 0.71 0.65 0.71 -3.98 0.31
Table 2.4: Grain orientation in India during 1990-1993 and 1997-2000
Note GOA=GSA-fg/GSA
GOA-IR=GIA-fg/GIA
Source: Ministry of Agriculture, Government of India
4.2.4 Yield of Foodgrains
Increase in cropped area is not sufficient enough to meet the demand for foodgrain. In
the last few decades, yield of foodgrain has increased by more than two fold. From figure
2.5, it is evident that from late 70’s, which also marked the beginning of the period of
green
revolution, the yield of food grain has increased which results in higher gap between
the growth of production and gross grain cropped area.
250
Yield (Kg./Hectare)
200
Production (Million
150 Tonne)
Area (Million
100
Hectare)
50
0
1 9 -5 1
1 9 -5 7
1 9 -6 3
1 9 -6 9
1 9 -7 5
1 9 -8 1
19 -8 7
19 - 9 3
9
-9
50
56
62
68
74
80
86
92
98
19
year
34
Figure 2.5: Food production and gross sown area for foodgrain from 1950-2000. Source:
Reaching towards the goal of sustainable agriculture with high yield requires a crucial
role of irrigation. Irrigation has played a contributory role in the production of foodgrain
in the past and it is also evident from the figure shown below.
The yield and irrigation grew at the same rate for longer time period. The question,
however, remains whether irrigation would continue to play similar role in future. From
figure 2.6 we observe that 1990 onwards irrigation has played a less significant role in
yield change compare to pre 1990 period, and is highlighted by the increasing differences
between yield and irrigation ratio. Much of the yield change in the last two decades is
caused by high fertilizer usage. High use of fertilizer in agricultural production is also
contributed by expansion of irrigation as the latter reduces the risk of investment in
fertilizers.
400
Indices(%)-Base year 1980
350
300 Irrigation Coverage
250
yield tonne per
200
hectare
150 Fertilizer use per
100 hectare
50
0
1950-51
1955-56
1960-61
1965-66
1970-71
1975-76
1980-81
1985-86
1990-91
1995-96
Figure 2.6: Irrigation coverage, fertilizer usage and yield of foodgrain from 1950-2000.
Source: Ministry of Agriculture and Fertilizer Association of India, Government of India
States 1990-1993 1997- Growth Rates

2000 (Per Cent
1997-2000
over 1990-
35
1993)
Haryana 2.40 2.77 15.62

Punjab 3.38 3.70 9.40
Himachal Pradesh 1.57 1.70 8.53
Uttar Pradesh 1.75 1.90 8.44
North Zone 2.13 2.33 9.37
West Bengal 1.85 2.20 18.74
Bihar- 1.18 1.48 26.15
Orissa 1.07 1.06 -1.25
Assam 1.24 1.31 6.22
East Zone 1.33 1.56 17.32
Karnataka 1.02 1.24 21.27
Kerala 1.93 2.04 5.92
Tamil Nadu 1.79 2.28 27.18
Andhra Pradesh 1.62 1.85 14.23
South Zone 1.44 1.69 17.65
Gujarat 1.00 1.42 42.04
Maharashtra 0.66 0.78 16.69
MP 1.21 1.46 20.74
Rajasthan 0.80 1.02 27.38
West Zone 0.89 1.09 23.35
INDIA 1.42 1.63 14.92
All major states 1.38 1.62 17.89
Table 2.5: Yield of foodgrains in India during 1990-1993 and 1997-2000 Source:
Table 2.5 shows the yield of foodgrains during the period 1990-1993 and 1997-2000.
The yield of foodgrains in India has increased by around 15% from 1990-93 to 1997-00.
In the past, the gains in productivity remain confined to select areas. Part of this disparity
can be explained by the fact that during the period of Green Revolution Punjab and
Haryana were way ahead of other states in terms of irrigated area, intensity of irrigation,
and intensity of cropping. Availability of irrigation is one of the crucial factors governing
regional variations. However, from 1990 there are signs of diminishing returns as a result
of decreasing fertiliser productivities and long-term extraction of ground water and soil
36
minerals., and thus raising the question of sustainability of growth and possible
exhaustion of the green revolution potential.
During the periods 1990-93 and 1997-00, major increase in yield growth has taken place
in the west zone where the average yield was low compare to other regions.
Growth is striking in Gujarat, where water harvesting is the primary source of water for
agriculture.
Table 2.6 and 2.7 show the yield of rice and wheat and percentage coverage under
irrigation of all the major states for these crops. The national growth rates of yield mask
variability in the performance of different states. In few states, like Punjab, Haryana,
Orissa and Gujarat rice yield has decreased in the period 1997-2000. The decrease in
yield is due to the presence of salinity in the groundwater level caused by over
exploitation. Zone-wise analysis of growth suggests an equally disquieting trend with the
most productive north zone showing slow growth in productivity The only redeeming
factor is the impressive growth rate of the eastern and southern zone The gap between
state yield and national yield is high among the western states. Ecology and agro climatic
conditions accounts for such gap in this region.
1990-1993 1997-2000
% coverage under
yield % coverage under irrigation yield irrigation
Haryana 2.73 0.99 2.46 0.99
Punjab 3.43 0.99 3.39 0.97
Himachal
Pradesh 1.31 0.61 1.54 0.62
Uttar Pradesh 1.84 0.51 2.05 0.67
North Zone 2.32 0.67 2.44 0.78
West Bengal 2.06 0.23 2.32 0.34
Bihar- 1.13 0.37 1.44 0.41
Orissa 1.36 0.36 1.24 0.38
Assam 1.33 0.21 1.46 0.15
East Zone 1.53 0.30 1.68 0.34
Karnataka 2.36 0.64 2.49 0.70
Kerala 1.98 0.42 2.16 0.57
Tamil Nadu 3.15 0.92 3.47 0.93
37
Andhra
Pradesh 2.56 0.95 2.83 0.96
South Zone 2.65 0.85 2.91 0.89
Gujarat 1.46 0.59 1.37 0.66
Maharashtra 1.56 0.25 1.59 0.29
MP 1.12 0.23 0.91 0.24
Rajasthan 1.11 0.32 1.17 0.55
West Zone 1.24 0.26 1.09 0.29
INDIA 1.84 0.48 1.97 0.53
Major States 1.85 0.50 1.96 0.55
Table 2.6: Yield of Rice in India during 1990-1993 and 1997-2000; Source: Ministry of
Regarding wheat, India has made much progress in the productivity growth. The major
wheat producing states, Uttar Pradesh, Punjab, Haryana, Rajasthan, Madhya Pradesh and
Bihar contribute more than 90 % of the wheat production. In these states, there has been
considerable growth of yield. Among the major factors that affect yield, expansion in
irrigated and high yielding variety (HYV) area seem to play a important role in raising
yield.
1990-1993 1997-2000
Yield% Coverage under irrigationYield % Coverage under irrigation
Haryana 3.61 0.98 3.96 0.99 0.35
Punjab 3.86 0.97 4.36 0.97 0.50
Himachal Pradesh 1.43 0.18 1.42 0.18 -0.02
Uttar Pradesh 2.29 0.90 2.63 0.93 0.33
North Zone 2.80 0.91 3.17 0.93 0.37
West Bangal 2.16 0.86 2.29 0.76 0.13
Bihar- 1.89 0.87 2.19 0.89 0.30
Orissa - - 1.28 2.95 1.28
Assam - - 1.20 0.00 1.20
East Zone 1.92 0.88 2.17 0.85 0.25
Karnataka 0.74 0.35 0.76 0.41 0.02
Kerala - - - - -
Tamil Nadu - - - - -
Andhra Pradesh - 0.58 0.75 0.58
38
South Zone
Gujarat 2.11 0.91 2.30 0.86 0.18
Maharashtra 1.19 0.72 1.20 0.74 0.01
MP 1.50 0.61 1.67 0.71 0.17
Rajasthan 2.17 0.93 2.48 0.97 0.31
West Zone 1.71 0.73 1.92 0.80 0.21
INDIA 2.37 0.85 2.64 0.87 0.27
Major States 2.38 0.87 2.65 0.89 0.27
Table 2.7: Yield of wheat in India during 1990-1993 and 1997-2000; Source: Ministry of
Fertilizer Usage:
With ground water tables declining, there are growing pressure to increase the
yield. The key factor behind high yield growth could be the development of new
technology that will produce higher yields per hectare, and fertilizer remains a key player
in this most important task as it has been in the past. However, fertilizer application
should be optimum in quantity to meet the crop’s nutrient requirement fully so as to
achieve the set yield target. Table 2.8 shows the usage of fertilizer per hectare of gross
cropped area in year 1990-91.The table illustrates significant difference in the
consumption of fertilizer in the irrigated and rain fed area. Mainly, the nitrogenous
fertilizer usage is almost double in the irrigated area than in the rainfed area. The pattern
of fertilizer use is distorted to great extent. On the basis of agronomic efficiency the ratio
of N: P: K should be 4:2:1, whereas usage is 8:3:1 in irritated area and 8:4:1 in the rain
fed area. The distortion in the pattern of fertilizer usage is caused by under price of
nitrogenous fertilizer (Ahluwalia 1996). There is substantial subsidy on both domestic
production and imports of nitrogenous fertilizer, while the prices of phosphatic and
potassic fertilizers are largely market determined. The excessive use of nitrogenous
fertilizer usage is sticking mainly in the irrigated area of the north zone. With declining
ground water table over use of nitrogenous fertilizer may slow down the yield growth.
Consumption of fertilizer per hectare

of gross cropped area (kg)
39
Irrigated Irrigated rain fed Total

N 85.5 43.9 66.6
P 33.1 22 28
K 10.1 5.7 8.1
Total 128.8 71.5 102.8
Table 2.8: Usage of fertilizer per hectare of cropped area during 2001; Source: Fertilizer
Association of India Government of India
Note: N-nitrogenous fertilizer, P- phosphatic fertilizer and K- potassic fertilizer
Consumption (' 000

Zones tonnes)
2002-03
Nutrient Kharif Rabi Total
N 743.5 810.8 1554.4
P 262.5 347.6 610.12
K 153.1 230.2 383.26
East Total 1159 1389 2547.7
N 1861 2481 4341.5
P 380.5 919.2 1299.7
K 58.04 141.9 199.92
North Total 2299 3542 5841.1
N 1030 1133 2163
P 452.6 484.5 937.1
K 315.9 338.3 654.22
South Total 1799 1955 3754.3

N 1268 1148 2415.3
P 620.1 551.8 1171.9
K 187.6 176.2 363.76
West Total 2075 1875 3950.9
Table 2.9: Total consumption of fertilizer in different geographic zones during 2002-03
Note: N-nitrogenous fertilizer, P- phosphatic fertilizer and K- potassic fertilizer
Source: Fertilizer Association of India Government of India
40
4.3 COMPONENT OF INDIAN AGRICULTURE
Climate:
India has Monsoon climate in which a year has been divided into two distinct seasons of
summer and winter. Rainfall occurs mainly in summer.
Weather Forecasting System:

India has a strong weather forecasting system developed and maintained by Indian
Meteorological Department (IMD). Apart from weather forecasting and severe weather
warning, it also gives agro meteorological services to farmers in India.
Agro Climatic Zones:

India has diverse agro-climatic zones from north to south and from east to west. It has
been divided into fifteen different agro-climatic zones, which signifies its diversified
agricultural production from tropical to temperate crops.
Major Crops:
Rice, Wheat, Sugarcane, Oilseeds, Pulses, Cotton, Jowar, Bajra, Ragi, Tea, Coffee,
Coconut, Cashew, Rubber, Spices, Cauliflower, Onion, Cabbage, Mango, Banana,
Sapota, Acid lime.
Farm Size:
Indian Agriculture is characterized by small and marginal operational holdings. About
85% of total cultivated land has been fragmented into less than 10-hectare land. About
60% of farmland is less than 4 hectare in size.
Extent of Mechanization:
Mechanization in Indian agriculture is still at rudimentary stage showing regional
variation. But it is increasing over the years. Power availability for carrying out various
agricultural operations, which is one of the indicators of mechanization, has been
increased.
Plantation:
Tea, Coffee, and Natural rubber are the main plantation crops in India that contribute in
Indian export to a considerable extent. India is the largest producer and consumer of tea
in the world. It contributes 4% to global coffee production and enjoys a niche market by
producing both Arabica and robusta coffee. In rubber also, it ranks third in production
and fourth in consumption of natural rubber in the world.
Horticulture:
41
India has a great potential in the production of horticultural crops, which includes fruits,
vegetables, spices, floriculture, and plantations. Acreage under horticulture is around 20
million hectares. India is the second largest producer of both fruits and vegetables in the
world. It occupies first position in the production of cauliflower, second in onion, and
third in cabbage.
Dairy:
India ranks first in the world in milk production, which was around 100 million tones in
2006-07.Strong networks of Milk Cooperatives, have been instrumental in this
phenomenal performance of dairy sector in India. Presently, 1.13 lakh village level
cooperative societies spread over 265 districts in the country form part of the national
Milk Grid. This Grid links milk producers throughout India and consumers in 700 towns
and cities. De-licensing of dairy sector in 1991 has directed considerable amount of
private funds both from inside and outside country in this sector especially in
manufacturing facilities while investment in cooperative sector are concentrated largely
in procurement and processing of milk. Livestock: Livestock sector contributes about
27% of the G.D.P. from agriculture and allied activities. This sector has excellent
forward and backward linkages, which p-promote many industries and increase the
incomes of vulnerable groups of the society such as agricultural labourers and small and
marginal farmers. India possesses the second largest livestock population in the world.
Fishery:
Fishing, aquaculture and a host of allied activities are a source of livelihood to over 14
million people and a major source of foreign exchange earner. In 2005-06, this sector
contributed about 1% of G.D.P. and 5.3% of G.D.P from agricultural sector.8, 118 k.m.
of coastline gives geographical basis for the development of marine fishery sector and
cultural factor boosts the inland fishery sector in India.
Agricultural Finance:
Credit: Availability of adequate credit is vital for every sector and agriculture is not an
exception. In India, Commercial Banks, Cooperative Banks, and Regional Rural Banks
(RRBs) are responsible for smooth flow of credit to agricultural sector. But a huge
unorganized market exists for credit to agricultural sector in India, which provide timely
fund to this sector but at the exorbitant rate of interest. Among organized credit
disbursement to agriculture commercial banks play a vital role with a share of about 70%
where as cooperative sector and RRBs contribute 20% and 10 % respectively.Kisan
Credit Card (KCC) scheme was introduced to provide adequate and timely support from
the banking system to the farmers for their cultivation needs. This scheme has made rapid
progress and more than645 lakh cards issued up to October 2006. The 'Farm Credit
Package' announced by the Government of India in June 2004 stipulated doubling the
flow of institutional credit for agriculture in ensuing three years.
42
Insurance:
Insurance is a prime necessity to mitigate uncertainty that persists in Agriculture. In
India, agriculture is still affected by such factors, which are beyond control of human
being. So, there is a great need for agricultural insurance in India. Keeping this in mind,
Government of India in coordination with the General Insurance Corporation of India
(GIC) had introduced National Agricultural Insurance Scheme (NAIS) from Rabi 1999-
2000 seasons. The main objective of this scheme is to protect the farmers against losses
suffered by them due to crop failure on account of natural calamities. Agricultural
Insurance Company of India (AICIL) which was incorporated in December 2002 took
over the implementation of NAIS. AICIL introduced Rainfall Insurance Scheme called
'Varsha Bima' during 2004 southwest monsoon period. Varsha Bima provided for five
different options suiting varied requirements of farming community:
1. Seasonal rainfall insurance based on aggregate rainfall from June to September.

2. Sowing failure insurance based on rainfall between June 15 and August 15.
3. Rainfall distribution insurance with the weight assigned to different weeks June
and September.
4. Agronomic index constructed on the basis of water requirements of crops.
43
5. A catastrophe option covering extremely adverse deviation of 50% and above in

rainfall during the season.
4.3.1 agriculture marketing
Form of Markets exists in India:

Agricultural markets in India are dominated by the existence of unorganized and
unregulated agricultural mandies with the presence of a large number of middlemen and
widespread prevalence of malpractices. Absence of proper warehousing facilities in the
villages, lack of proper transportation facilities and infrastructure such as rails and good
quality all weather roads and ignorance about the market prices of their products are
some of the important factors for exploitation of farmers from middle men. They are
forced to sell their products to these middlemen at the farm gate at throwaway prices.
Agricultural Market Reforms in India:

Ministry of Agriculture had formulated a model law on agricultural marketing in
consultation with State/Union territory Governments to bring about marketing reforms in
line with emerging trends. This model act enables establishment of private markets/yards,
direct purchase centers, consumers/farmers markets for direct sale, and promotion of
publicprivate Partnership (PPP) in the management and development of agricultural
markets in the country. It also provides for exclusive markets for onion,
fruits, vegetables, and flowers. Regulation and promotion of contract farming
arrangement has also been made a part of this legislation. A provision has also been
made for constitution of State Agricultural Produce Standard Bureau for promotion of
grading, standardization, and quality certification of agricultural produce. So far, 15
States and 5 Union Territories have amended their Agricultural Produce Marketing
Committee (APMC) Act to derive the benefits of market reforms.
E-Chaupal:
E-Chaupal is a business platform consisting of a set of organizational Subsystems and

interfaces connecting farmers to global markets. It has been initiated by International
Tobacco Company (ITC) who are quite active in agricultural sector in India. This e-
44
chaupal business platform consists of three layers each of different level of geographic
aggregation. Each of the three layers is characterized by three key elements:
1. The infrastructure (physical or organizational) through which transaction takes

place.
2. The entity (person or organization) orchestrating the transactions, and
3. The geographical coverage of the layer.
The first layer consists of the village level kiosks with internet access (echaupals),
managed by an ITC trained local farmer and within walking distance (I-5 kilometers) of
each target farmer. Each cluster of five villages gets an e-chaupal, which is justified by
sparse population in rural India. The second layer consists of a brick and mortar
infrastructure called hubs managed by the traditional intermediary who has local
knowledge/skills called a Samayojak and within tractorable distance (25- 30 kilometer)
of then target farmer.
Agricultural Commodities Exchanges:

To introduce future trading in agricultural commodities in India, two commodity
exchanges have been introduced in 2003 for future trading. They are, National
Commodity & Derivatives Exchange Limited (NCDEX) and Multi Commodity
Exchange of India Limited (MCX). These exchanges are majorly dealing in agricultural
commodities. They are involved in forward trading to mitigate price risks of the farmers.
4.3.2 International Trade & Indian Agriculture:

Agricultural Export: India's total exports of agricultural and allied products at $10.5
billion in 2005-06 constitute 10.2% of its export share. Developed country markets
account for nearly 35% of India's agri-exports. In agricultural exports there are varied
performances across commodities. Contribution of various agricultural commodities in
world exports has been listed below.
*Source: NCTI based on UN-ITC Trade Map Data.

Export of Marine products, which after a decline in 2003-04 had picked up in subsequent
years, grew by 6.3% in April- October-2006.In terms of export earnings, among marine
products, frozen shrimp contributed to be the largest export item, followed by frozen fish,
Product Percentage share in World Export :Lac, gums, resins, vegetable products 10
Vegetable planting materials, vegetable products 4.9 Coffee, tea, mate & spices 3.7
Marine products 2.3 Residues, waste of food industry, animal fodder 2.1 Cereals 1.3
Fruits & nuts 1.1 cuttlefish, squid, and dried items. European Union accounted for the
largest share of India's export of marine products, followed by US and Japan. This sector,
however, faced a number of hurdles in the major export destinations. Indian shrimp
45
imports to USA have been subject to anti dumping duty of 10.17% from August 2004. In
European markets, India's marine products have been facing problem due to multiplicity
of standards-in addition to the EU's own standards, the standards of each of the own
member states.
46
Agricultural Imports and Exports:

Agricultural import contributes about 3% in total merchandise import to India. Major
imports during April-October 2005 included vegetable oils (US$ 1237.3 million), raw
cashew nut (US$ 287.8 million), pulses (US$ 281.8 million) and sugar (US$ 138.7
million).Vegetable oils and pulses are largely imported to augment domestic supplies and
raw cashew is imported for processing and re-exports, as domestic production is not
adequate to meet the demand of processing capacity installed in the country. L Agri
Export Zones: In the Export Import (EXIM) Policy 2001-02, the Government of India
announced the proposal to set up Agri-Export Zones for the purpose of developing and
sourcing raw materials and their processing/packaging leading to final exports. The
concept essentially embodies a cluster approach of identifying the potential products and
the geographical region in which such products are grown and adoption of an end to end
approach of integration of the entire process, right from the stage of production to
consumption.
1. Removal of distorting subsidies and protection by developed countries to level the
Playing field, and
2. Appropriate provisions designed to safeguard food and/or livelihood security, and
to meet the rural development needs in developing countries.
47
Indian Council of Agricultural research (ICAR) is an apex body in India at the

national level, which promotes science and technology programmes in the area of
agricultural research, education, and extension education. Agriculture and Employment:
bout 65% of Indian population is dependent on agriculture for their livelihood. This
sector has strong forward and backward linkages and its performance affects each and
every sector of the country.
Sustainable Agriculture: Organic Farming:
In the recent decades, there is an increasing demand of organic foods in the developed
world. Organic farming is an important pillar of sustainable agriculture, which is
beneficial for producers and consumers both. India has a great potential for organic
farming using traditional wisdoms prevailing in the villages of India. In fact, a large
section of Indian agriculture uses more or less organic method of farming using
minimum level of chemical inputs. Promotion of organic farming in India could prove
beneficial to increase share of Indian agricultural export in the world export.
48
4.3.3 SWOT ANALYSIS OF INDIAN AGRICULTURE
Strength
• NER presents high potentiality for Horti production due to topography ,agro-
climatic factors & farmers’ familiarity
• Horticulture is a viable option for diversification in agriculture due to the

higher returns it offers
Weaknesses
• Inadequate infrastructure
– Road / Rail connectivity
– Logistics for processing, cold storage, transport and packaging
– Irrigation
• Disadvantage in Economies of Scale
• Lack of quality plant material
• Weak Market linkages
Opportunities
• Proximity to Bangladesh, Mayanmar, Bhutan and Nepal.
• Existing demand in these countries
Threats
• If necessary measures are not been taken in time, Thailand and Mayanmar
will take over the marke
49
4.3.4 Presetl Scenario of Indian agriculture
Total Geographical Area - 328 million hectares

Net Area sown - 142 million hectares
Gross Cropped Area – 190.8 million hectares
Major Crop Production (1999-2000)
Rice 89.5 million tonnes
Wheat 75.6 million tonnes
Pulses 13.4 million tonnes
Oilseeds 20.9 million tonnes
Sugarcane 29.9 million tones
1 Contributes to 24%24%of GDP
2 Provides food to Provides food to 110 Billion110 Billionpeople people 
3 Sustains 65% of the population : helps alleviate poverty
5 Produces 51 major CropsProduces 51 major Crops
6 Provides Raw Material to IndustriesProvides Raw Material to Industries
7 Contributes to 1/6Contributes to 1/6ththof the export earningsof the export
earnings
8 One of the 12 BioOne of the 12 Bio-diversity centers in the world with over
diversity centers in the world with over 46,000 species of plants and
86,000 species of animals recorded
50
CHAPTER: 5
CONCLUSION
51
5.1 Conclusion
The Government of India trusts that the National Seeds Policy will receive the fullest
support of State Governments/Union Territory Administrations, State Agricultural
Universities, plant breeders, seed producers, the seed industry and all other stakeholders,
so that it may serve as a catalyst to meet the objectives of sustainable development of
agriculture, food and nutritional security for the population, and improved standards of
living for farming communities.
The National Seeds Policy will be a vital instrument in attaining the objectives of
doubling food production and making India hunger free. It is expected to provide the
impetus for a new revolution in Indian agriculture, based on an efficient system for
supply of seeds of the best quality to the cultivator.
The National Seeds Policy will lay the foundation for comprehensive reforms in the seed
sector. Significant changes in the existing legislative framework will be effected
accompanied by programmatic interventions. The Policy will also provide the parameters
for the development of the seed sector in the Tenth and subsequent Plans. The progress
of implementation of the Policy will be monitored by a High Level Review Committee.
52
5.2 CONCLUSION FOR GROWTH
Although India missed the opportunity to open up two decades ago, its attempts to do so
now must be regarded as better late than never. Others such as Desai (1999) observe that,
“the logic of the global economy as well as India’s interests dictate that India become
proactive in its liberalization policies. India must liberalize not because it has no choice
but because it is the best choice”. His lament that India has adopted a ‘victim mentality’
when it really needs to adopt a ‘winner mentality’ has become less of a concern as over
time, India has shown commitment to stay on the bandwagon of globalization. Having
realized that globalization is a necessary but not a sufficient condition for high growth
production, India has undertaken economic reforms, both internal and external. However,
it must be ensured that these reforms are synchronized so that the pace of both reforms is
set right in order to work hand in hand to promote agricultural productivity growth. Asia-
Pacific Development Journal Vol. 10, No. 2, December 2003
71 Thus, training the farmers and educating them appropriately to change their mindset
and reorienting them to take up new activities or adopt foreign technology is of utmost
importance. In this context, it is necessary to involve non-governmental organizations in
training and mobilizing the rural poor to face the challenge of liberalization. Also, with
domestic economic reforms, more care needs to be exercised to draw up state-specific
liberalization measures to maximize their benefits. Lastly, in the implementation of these
reforms for successful globalization, one crucial element, not entirely within control is
the need for good governance and stability in the political and economic environment.
Political leaders who are the ultimate decision makers in these matters need to examine
their own role dispassionately. It is quite apparent that at this relatively early stage, there
is little observable evidence of gains to India’s agricultural performance after opening up.
However, there could easily be benefits that have not yet surfaced, or are yet to be
identified and perhaps too difficult or intangible to measure. Whatever the case, it is
53
highly likely that it is too soon to assess the full impact of globalization and economic
reforms. Furthermore, the process of liberalization has been gradual and remains
incomplete. For example, the complete removal of quantitative restrictions after March
2001 will have provided an opportunity for Indian farmers to tap world markets and, if
they are successful, results should start to become evident soon. Export promotion via the
development of export and trading houses as well as effective liberalizing export
promotion zone schemes for agriculture are fairly recent measures and only time will tell
as to how effective these measures are. Other possibilities such as agro-industry parks for
promoting exports are also in the pipeline. In conclusion, India has successfully set sail
on the waters of globalization and economic reforms and even in the wake of economic
and political instability, she has to carefully steer her course in order to reap the benefits
of increased productivity growth in the agricultural sector.
54
CHAPTER: 6
BIBLIOGRAPHY
AND
REFERENCES
55
6.1 BIBLIOGRAPHY
Books:
1. M.S.Ahluwalia
M.S. - New economic policy and agriculture
Journals:
1. Indian Economy
2. Asia-Pacific Development Journal
Internet:
1. scribd.com
2. Google.com
3. Altavista.com
4. MSN.com
56
6. REFERENCES
Chadha, R., 1999. Trade and Balance of Payments, National Council of Applied
Economic Research(Mimeographer).
Desai, M., 1999. “What should be India’s economic priorities in a globalized world?”,
Indian Council for Research on International Economic Relations, New Delhi.
Gulati, A., and A.N. Sharma, 1995. “Subsidy syndrome in Indian agriculture”, Economic
and Political Weekly, 30 September 1995.
Kalirajan, K.P., G. Mythili and U. Sankar, eds. 2001. Accelerating Growth Through
Globalization of Indian Agriculture, Macmilan, India.
Shand, R., 1997. ‘The agriculture-manufacturing nexus and sequencing in India’s reform
process’,
Discussion Paper No. 4, Australia-South Asia Research Centre, Australian National

University.
Kruger, A.O., M. Schiff and A. Valdes, eds. 1991. The Political Economy of Agricultural
Pricing Policy, vols. 1 and 2 (Baltimore, John Hopkins University Press).
Mahadevan, R. and Kalirajan K.P., 1999. “On measuring total factor productivity growth
in Singapore’smanufacturing industries”, Applied Economics Letters, vol. 6, pp. 295-298.
OECD, 1998. Agricultural Policies in OECD Countries (Paris).
Satyasai, K.J.S. and K.U. Viswanathan, 1999. “Dynamics of agriculture-industry

linkages”, Indian Journal of Agricultural Economics, vol. 54, No. 3, pp. 394- 401.
Schumacher, Jr., A., 2000. “International agricultural trade at a crossroads”, Economic

Perspectives, An Electronic Journal of the US Department of State, March 2000.
Singh, M., 1995. Inaugural address delivered at the 54th Annual Conference, Indian
Journal of Agricultural Economics, vol. 50, No. 1: 1-6.
Sivakumar, S.D., R. Balasubramaniam and N. Srinivasan, 1999. “Growth linkage effects

of
agro-industrialization”, Indian Journal of Agricultural Economics, vol. 54, No. 3,
pp. 412- 419.
UNCTAD, 1999. Trade and Development Report, Geneva.
57
1 Appendices
Exhibit 1.1 :Present Indian Scenario
1.1.1
9 Contributes to 24%24%of GDP
10 Provides food to Provides food to 110 Billion110 Billionpeople people
13 Produces 51 major CropsProduces 51 major Crops
14 Provides Raw Material to IndustriesProvides Raw Material to Industries
15 Contributes to 1/6Contributes to 1/6ththof the export earningsof the export
earnings
16 One of the 12 BioOne of the 12 Bio-diversity centers in the world with over
diversity centers in the world with over 46,000 species of plants and
86,000 species of animals recorded
58

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Role of agriculture in indian GDP.

Agriculture is the backbone of Indian Economy. About 65% of Indian population

1.1 RECENT SCENARIO IN INDIAN AGRICULTURE

1.2 The next phase in Indian agriculture

3.1 SCOPE OF THE STUDY

3.2 OBJECTIVES OF THE STUDY

3.2.1 SUB OBJECTIVE

 To find out factors affecting growth of agriculture sector.

3.3 RESEARCH DESIGN

3.4 DATA COLLECTION METHODS

Secondary Sources – The secondary sources used are already in existence

4.1 Agriculture in India – Past, present and future

4.1.1 Structure of the Indian Agriculture

4.1.2 AGRICULTURAL DEVELOPMENT STRATEGY ADOPTED BY JAMAICA

Agribusiness Management practices adopted by Thailand Orchid cooperative:

Thailand is regarded as an agricultural country. The agricultural sector has played an

Current situation of Agricultural co-operatives in Thailand:

Source: From Website of Thailand Orchid Co-op limited

4.1.3 BIOTECH CROP AS AGRICULTURAL INTERVENTION:

Global Status of Biotech Crops in 2004:

reflects the substantial improvements in productivity, the environment, economics, health

4.1.4 INDIAN AGRICULRURE: ITS ISSUES AND CHALLENGES

4.1.5NEW AGRICULTURAL POLICY AND CHALLENGES IN INDIAN

The challenges facing Indian agriculture can be grouped in four categories

Weak Framework for Sustainable Water Management and Irrigation:

Inadequate Access to Land and Finance:

Weak Natural Resources Management: One quarter of India’s population depends on

A  purely conservation approach to forests is ineffective: Experience in India shows

Weak delivery of basic services in rural areas:

4.2 FUTURE GROWTH POTENTIAL OF

Total food Growth

Table 2.1: Production of foodgrains; Source: Ministry of Agriculture, Government of

4.2.2 Gross cropped area of foodgrains:

Irrigation Cropping Rainfed

The growth in irrigation intensity is mainly contributed by groundwater

States Growth Rates (Per

Haryana 1.58 1.72 8.81

North Zone 1.45 1.61 11.12

4.2.3 Changing Grain Orientation:

Grain area - % of Total crop area

Total grain area - % of Gross Sown

Figure 2.3: Composition of foodgrains in India from 1950-2000. Source: Ministry of

Growth Rates (Per Cent 1997-

Andhra Pradesh 0.54 0.74 0.55 0.71 0.93 -3.64

States 1990-1993 1997- Growth Rates

Haryana 2.40 2.77 15.62

Consumption of fertilizer per hectare

Irrigated Irrigated rain fed Total

Consumption (' 000

South Total 1799 1955 3754.3

4.3 COMPONENT OF INDIAN AGRICULTURE

Weather Forecasting System:

Agro Climatic Zones:

1. Seasonal rainfall insurance based on aggregate rainfall from June to September.

5. A catastrophe option covering extremely adverse deviation of 50% and above in

4.3.1 agriculture marketing

Form of Markets exists in India:

Agricultural Market Reforms in India:

E-Chaupal is a business platform consisting of a set of organizational Subsystems and

1. The infrastructure (physical or organizational) through which transaction takes

Agricultural Commodities Exchanges:

4.3.2 International Trade & Indian Agriculture:

*Source: NCTI based on UN-ITC Trade Map Data.