Agriculture Sector

AGRICULTURE SECTOR

Facts and Figures……. • As being stated by the economic data of financial year 2008-09, agriculture had acquired 17 percent (approx) of India's GDP. • The agricultural sector of India has occupied almost 43 percent of India's geographical area. • Agriculture also plays a significant role in the growth of socio-economic sector in India. • India was largely dependent upon food imports but the successive stories of the agricultural sector of Indian economy has made it self-sufficing in grain production.

GDP of India and Growth rate of different sectors: •

The third quarter GDP growth for the current financial year slowed to 5.3 per cent year-on-year as compared to 7.6 per cent year-on-year in the previous quarter, belying all market expectations.

• The major hit was taken by agriculture, which worries the markets. The agricultural sector contracted to 2.2 per cent year-on-year versus 2.7 per cent year-on-year growth in the previous quarter. •

•

Industrial growth slowed to 0.8 per cent year-on-year from 4.7 per cent year-on-year in the previous quarter as foretold by the slowdown in the index of industrial production (IIP). Services sector growth remained flat at 9.5 per cent versus 9.6 per cent in the previous quarter as falling growth in construction, trade and hotels, which was evened out by rapid increase in community and social services.

Growth rate of different sectors in India (2008-09)…….

Agriculture and Allied sectors…. • Agriculture accounts for 13% of the countries exports. • The growth rate for the sector was 5.6 % for the year 2007-08 with almost two third of its workforce is engaged in this sector • 43 % of India's geographical area is used for agricultural activity. • The size of the food grain industry is estimated to be USD 70 billion. • The food processing industry is over USD 1 billion and is expected to grow at the rate of 20% over the next few years.

Need for Second Green Revolution: • Indian agriculture is heavily dependent on monsoons. •

The monsoons play a critical role in determining whether the harvest will be rich, average, or poor.

• The structural weaknesses of the agriculture sector are reflected in the low level of public investment, exhaustion of the yield potential of new high yielding varieties of wheat and rice, unbalanced fertilizer use, low seeds replacement rate, an inadequate incentive system and post harvest value addition. • The lack of necessary infrastructure in terms of food processing, food grain storage, cold storage, refrigerated transport etc has lead the industry to be lose 20% of its produce. • The government also needs to take initiative to provide subsidies to the small farmers so that this sector can grow much faster. • The subsidies in India are too low as compared to Canada, Japan, and USA etc. • Need to take annual growth to a higher trajectory of 4 per cent.

Steps to achieve this objective: • Doubling the rate of growth of irrigated area; • Reclaiming degraded land and focusing on soil quality; • Improving water management, rain water harvesting and watershed development; • Bridging the knowledge gap through effective extension services; • Diversifying into high value outputs, fruits, vegetables, flowers, herbs and spices, medicinal plants, bamboo, bio-diesel, but with adequate measures to ensure food security; • Providing easy access to credit at affordable rates.

Steps taken by Government: • The government needs to take steps to ensure a significant growth in this sector by providing neccesary infra. for storage capacity. • Foreign equity participation of upto 51% has been allowed in Cold Chain Projects. • Agricultural sectors like horticulture, floriculture, development of seeds, animal husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom under cultivated conditions and services & allied sectors related to agro are open to 100 % foreign direct investment (FDI). • Government of India is utilizing the advantages of biotechnology for accelerating the growth of agricultural sector. According to a report by Rabobank, the Indian agri-biotech sector has been growing at 30 % growth rate in the last five years and is likely to maintain this growth well into the future

Improvement of Agri exports… •

• •

•

With a view to promoting agricultural exports from the country and remunerative returns to the farming community in a sustained manner, the concept of the agri export zones (AEZ) was floated. These zones have been set up for end to end development for export of specific products from a geographically contiguous area. AEZ are to be identified by the State Government, who would evolve a comprehensive package of services provided by all State Government agencies, State agriculture universities and all institutions and agencies of the Union Government for intensive delivery in these zones. Corporate sector with proven credentials would be encouraged to sponsor new agri export zone or take over already notified agri export zone or part of such zones for boosting agri exports from the zones.

China way ahead of India in agriculture sector!!! • Poor agricultural yield of India compared with China is one of the major points of concern for the country. • India had a poor average yield of major cereals, pulses and oilseeds. • The pace of yield increase over the past decade and a half does also not compare favourably with China. • India’s usage per acre of fertilizers was pointed out to be half of China’s. • In terms of aggregate fertiliser consumption, India is one of the largest users of artificial fertilisers.