Agri Sector Report Card, Growth Performance, Policy Takeaways

Agri Sector Report Card, Growth Performance and Policy Takeaways

The NITI Aayog paper by Ramesh Chand and Jaspal Singh highlighted that India's farm sector has registered improved growth over the past two decades, especially during the last ten years.

Table of Contents

What was the Agri Sector Growth Performance?

From 1984-85 to 1993-94 and 1994-95 to 2003-04, agriculture’s annual growth rate, based on Gross Value Added (GVA) at constant prices, averaged 9%.
Growth accelerated during 2004-05 to 2013-14 to 5% annually and further increased to 3.7% during 2014-15 to 2023-24.

What is the Current Status of the Indian Agriculture Sector?

Contribution to Economy: Contributes 18.2 per cent in the country’s GDP at current prices (Economic Survey 23-24).
Employment: Employs 42.3%of the population.
Production(23-24): 328.8 million tonnes (slightly lower than that of 2022-23 which stood at 329.7 million tonnes- all time high).
Export (23-24): US$ 38.65 billion (lower than 22-23 which stood at US$ 52.50 billion).

Discrepancies in Output Estimates

While official production estimates show significant growth, discrepancies have been noted between cereal production and household consumption data:
- Cereal production rose from 2 million tonnes (mt) in 2004-05 to 303.6 mt in 2022-23.
- However, household cereal consumption has remained almost flat at 153-156 mt over the same period.
- The gap between production and consumption increased from 5 mt in 2004-05 to 151 mt in 2022-23.
Similar discrepancies exist in milk production, which more than doubled from 92.5 mt in 2004-05 to 230.6 mt in 2022-23, without a matching increase in consumption.

Subsector Performance: Disaggregated Data

Crops subsector (regular farming) recorded only 2.3% annual growth during 2014-15 to 2022-23, which is lower than the 3.4% growth during the UPA period.
Livestock and fisheries sub-sectors performed significantly better with:
- Livestock growing at 8% annually.
- Fisheries growing at 2% annually from 2014-15 to 2022-23.
Within livestock and fisheries, specific areas showed even higher growth:
- Poultry meat: 2%
- Fishing & aquaculture: 1%
- Eggs: 6%
- Milk: 8%
Even within crops, horticulture performed well, growing at 9% annually.
However, non-horticulture field crops like cereals, oilseeds, and cash crops (cotton, jute, tobacco) showed sluggish growth:
- Regular field crops grew by just 1.6%

Schemes and Initiatives

e-NAM Scheme (Electronic National Agriculture Market)

Launch Date: April 14, 2016.
Objective: To create a unified national market for agricultural commodities by integrating existing Agricultural Produce Market Committees (APMCs).
Current Statistics: As of March 14, 2024, over 1.77 Crore farmers and 2.56 Lakh traders are registered on the e-NAM portal.
Benefits:
- Facilitates better price discovery and reduces transaction costs.
- Provides transparency in trading with online payment systems.
- Offers real-time information on commodity prices via a mobile app.

Farmer Producer Organizations (FPOs) Scheme

Launch Year: 2020.
Budget Outlay: ₹6,860 crore allocated until 2027-28 to promote 10,000 FPOs.
Current Statistics: As of February 29, 2024, 8,195 FPOs have been registered under this scheme.
Financial Support:
- Equity grants of ₹157.4 crore released to 3,325 FPOs.
- Credit guarantee cover worth ₹278.2 crore issued to 1,185 FPOs.

Minimum Support Price (MSP)

Purpose: Ensures remunerative returns to farmers and stabilises the supply of staples at reasonable prices.
Implementation: The government has been increasing MSP for Kharif, Rabi, and other commercial crops by at least 50% over the all-India weighted average cost of production since the agricultural year 2018-19.

Pradhan Mantri Kisan Maandhan Yojna (PMKMY)

Objective: Provide social security to vulnerable farmer families by offering a monthly pension.
Pension Amount: ₹3,000 per month upon reaching the age of 60 years.
Premium Contribution: Nominal premium between ₹55 to ₹200 per month for eligible farmers aged between 18 to 40 years.
Current Enrollment: As of July 7, 2024, 23.41 lakh farmers have enrolled.

PM Programme for Restoration, Awareness Generation, Nourishment, and Amelioration of Mother Earth (PM-PRANAM)

Objective: Reduce chemical fertilizer use and promote sustainable agricultural practices.
Focus Areas:
- Incentivizes states to adopt alternative fertilizers like Nano Urea and organic fertilizers.

Pradhan Mantri Fasal Bima Yojana (PMFBY)

Purpose: Provides a safety net against crop losses due to natural calamities, pests, or diseases.
Significance: Largest crop insurance scheme globally in terms of farmer enrollment; third largest in terms of insurance premiums.
Coverage Statistics:
- The insured area reached 610 lakh hectares in the year 2023-24 compared to 500.2 lakh hectares in the previous year.
- Since its inception in 2016-17, a total of 5549.40 lakh farmer applications have been insured, with claims amounting to ₹150,589.10 crore paid out.

Policy Takeaways and Market-Led Diversification

Diversification in agriculture has been market-driven, driven by increased demand for vegetables, fruits, milk, meat, eggs, and fish, resulting in accelerated agricultural growth.
- Diets have diversified from calorie-heavy to protein-rich foods.
- New technologies like hybrid seeds, drip irrigation, and improved livestock breeds have facilitated this shift.
However, not all farmers have benefited equally:
- Only 53% of farmers engage in livestock
- Only 5% cultivate horticulture crops.
- A significant portion (2%) of farmers still rely on conventional crop farming (cereals, pulses, oilseeds, etc.).
There has been no significant technological breakthrough in crops like cotton since the introduction of Bt hybrids, and India’s domestic production of cotton has stagnated.

Concluding Observations

The modest growth in field crops like rice and wheat, despite being covered under the Minimum Support Price (MSP) regime, underscores the importance of demand-side factors and production technology improvements over price or subsidy interventions.