The Role of public sector

Agriculture & Rural Policies

Profile of India

by
Dr. Sarala Gopalan,
National Institute of Agriculture, India

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Some Important Facts on Agriculture

 Agriculture – Main Employer of Population in Poor

Countries

 65% of Indian Population dependent on Agriculture as

against 30% in middle income countries and 4% in
high income countries.

Significant Contribution of Agriculture to GDP of

Developing countries -

India – 26%, Low Income countries 34%

Upper Middle Income countries – 8%, High Income
countries – 1.5%.
contd
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 Agriculture - An important Source of Foreign Exchange
and Revenue

 Share of Agriculture Exports to total merchandise

exports – more than 50% for 55 developing countries.
 Indian Agricultural Exports account for 15% - 16%
of total Indian Exports.
 Expenditure on Foodaccounts for over 1/3rd of the household
expenditure in developing countries.
 In Developed countries - accounts for a small and
decreasing portion of household income.

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India’s Position in World Agriculture during 1999
Item India World India’s Position
% Share Rank
Area (Million Hectares)

Arable Land 162 1381 11.7 Second

Irrigated Area 59 271 21.8 First .

Population (Million)

Total 99 5978 16.7 Second

Agriculture 553 2575 21.5 Second

Economically Active Population (Million)

Total 437 2911 15.0

Second
Agriculture 263 1317 20.0 4
Second
India’s Position in World Agriculture during 1999
Item India World India’s Position
% Share Rank
Crop Production (Million Tonnes)

Total Cereals 230 2064 11.1 Third

Oilseeds - Groundnut 7 33 21.2 Second

Rapeseed 6 43 14.0 Third

Fruits & vegetables (Million Tonnes)

Vegetables & Melons 59 629 9.4 Second

Fruits excluding Melons 39 445 8.8 Second

Potatoes 23 294 7.8 Third

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Profile of Indian Agriculture
Only 28% of cropped area is irrigated
Rest is rainfed. Failure of monsoon could throw India into
drought-poverty syndrome

Green Revolution occurred in the Indus basin, which has

helped attain self sufficiency of food production

The Indo-Gangetic and Brahmaputra valley have not

benefitted from the Green Revolution, for lack of adequate
investment in irrigation infrastructure and flood control
measures. Hence low productivity in this region except
Western U.P.(Dr.Swaminathan)

 Ground water Potential not fully utilized, though there are

areas of excessive exploitation, with its own problems.
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contd
History of World Trade in Agriculture

Investment required for creating processing & marketing

infrastructure

Inputs of technology required in large measure

Intensive Research & Extension work for modernizing

Agriculture needs to be done

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International Trade

India is a big commodity producer.

It also remains largely a commodity exporter;

Tea:exported as plain black tea in 40 Kg deal-wood cases
Coffee: Largely exported as beans
Marine products: Shrimps and prawns – exported in 2 Kg
institutional packs in frozen condition

Value added production is urgently needed to benefit

producers and create more employment –
Government Support required for value added production
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Agri Imports & Exports situation in India
Imports- Of the order of Rs.120,000 million (US$ 25 billion)
Half of this is edible oil imports. Agri imports only 5% of
total National imports
EXPORTS
Rs.2900 billion (US $ 58 billion)(Billion =100 million)
This accounts for 14% of total national exports
Principal Exports in quantity terms (in ‘000 Mts.)
Marine products 500
Basmati rice 850
Oil meals (cattle feed) 2,430
Tea 200
Coffee 190
Spices 245
Cashew 80

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In overall world Trade India is a negligible Player
In world trade in agriculture India’s role is much lesser

Trade Liberalization, pitted against heavily subsidized products

of imports, would throw millions of survival farmers into serious
economic distress

Products in which India has comparative advantage are also

those in which other developing countries have comparative
advantage. So, trade liberalization would result in trade-war
between developing countries.

Trade liberalization in the present status of India’s agriculture

development would also inhibit building of export capability in
the long term.

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contd
 What should Government do?

Invest in infrastructure (Irrigation, processing, storage

and marketing) where farmers cannot by themselves invest
because of the vast size of investment required.

Facilitate access to technology by investments in

research and extension

Desist from Policies based on mere ideologies, which

may throttle economic viability of farming
Encourage cooperative efforts among farmers,
minimizing Government interference and role of middle
men (Anand example)
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Promote productivity by supporting private investments through
incentives (cash subsidy/tax concession etc.) in capital intensive
farming activities, like replantation of tea, coffee etc plantations

Promote value addition as mentioned earlier

In Rural Development huge public expenditure is incurred

under a plethora of schemes. Part of the expenditure also goes
for rural infrastructure like link roads, minor irrigation facilities etc.
Synergy should be built up in creation of this infrastructure with
areas of farming activities. As former Finance Minister,
Mr.Chidambaram observed, our rural development schemes are
largely expenditure oriented; Expenditure is not necessarily
investment; All Rural Development expenditures should be
investment oriented.
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 India has been seen by some as a wrecker of
Trade liberalization talks in Cancun. This is not an
accurate assessment. When Mr.Arun Jetley
enquired in Cancun whether the Development
Agenda was meant to be an agenda for the
development of Developed countries, he was not
indulging in negotiation rhetoric. On the other hand
he was only reflecting the hard realities and ground
truths of the status of agriculture in India, which I
have attempted to present before you, and on which
650 million people are dependant.

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International trade negotiations should be
informed by the reality that it is a positive
sum game in which everybody can win
and that the South and North are not
adversaries, but inter dependent entities.

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Thank you

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A new approach needed now – modern technology, biological
inputs, precision farming and conservation of land and water
resources

High yielding and disease-resistant varieties but not genet-engnd.

More investment in infrastructure, research and extension

New preservation processing and distribution techniques
Also, agriculture should provide more sources of income to farmers

Diversification and value addition required.

contd
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Thank you

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THANK YOU

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