Tuesday, 17 June 2025
Although agriculture contributes just 17 per cent to the GDP of India, its significance to the national economy remains undiminished. Apart from feeding the country, the sector has about half of the 1.3 billion population depending on it for their daily livelihood. Unfortunately, agricultural growth has been slowing all over the country. Between FY 2014-19 agricultural GDP grew at just 2.9 per cent per annum compared to a 3.7 per cent per annum growth between FY 2005-14. There are many reasons for this, not the least being widespread crop damage caused by unseasonal weather due to global warming and climate change.
If India is to become a trillion dollar economy over the coming five years, focused attention will need to be paid to the agricultural sector and proactive steps will need to be taken for its revival. Most Indian farmers are aging and the younger generation is largely disinterested in following in their parents’ footsteps. Many educated rural youth who are able to migrate to urban areas to better their livelihood prospects are doing so, as in the majority of cases, farming does not offer suitable financial incentives to those who practice it and depend on it for their daily sustenance. Indian agriculture also accounts for a large share of disguised unemployment in the country, which considerably reduces workforce productivity in the sector. All this does not bode well for long-term national economic growth to occur in an inclusive and sustainable manner.
Agriculture and Climate Change
Unseasonal rains this year have damaged around 30 per cent of agricultural crops in Maharashtra, Gujarat, Rajasthan, UP and West Bengal. Among the crops affected are sugarcane, oilseeds, pulses, paddy, Jowar and Bajra. The number of unusually hot days as well as the number of dry days have increased, consistent with models of climate change which predict rising variability in weather. Vulnerability to climate change is also directly proportional to poverty, as the poorer farmers have fewer resources, both financial and technical, to cope with the vagaries of Mother Nature.
Unless our farmers are adequately prepared to deal with climate change, the sheer magnitude and spatial distribution of such changes may affect our ability to enhance our agricultural productivity in line with our expanding population. That could have severe consequences. In this context, the following could be attempted:
Research on the development of new crop varieties incorporating various traits such as heat and drought tolerance, salt and pest resistance etc. should be given priority.
The proportion of cultivated land under irrigation in India is less than 50% today. Thus, much more needs to be done to spread irrigation throughout the country, especially against the backdrop of steadily diminishing groundwater reserves.
Power and fertilizer subsidies encouraging the indiscriminate use of water need to be rationalized and reduced. Instead, support to farmers could be extended through non-distortionary mechanisms such as direct transfers.
The government needs to act proactively to promote rainwater harvesting and efficient groundwater replenishment during the monsoon season, so that those scarce resources could be gainfully employed in leaner times.
Agriculture and International Trade Deals
It is India’s agricultural sector which has the most to gain (or loss) from our involvement with international trade deals. With the current state of Indian agriculture being what it is, the government has done well in opting out of the Regional Comprehensive Economic Partnership (RCEP). The need of the hour is to enhance the competitiveness of domestic agro-businesses so that they will be able to stand up to tariff liberalization, which is a sine qua non of most global trade deals today.
We cannot afford to sit out of trade deals indefinitely. Sooner or later, Indian agriculture will need to compete in international markets. There needs to be a clear timeline set by the government to make domestic producers more cost-effective. In this regard, the continuous MSP hikes are hurting India’s agricultural exports and diminishing our farmers’ global competitiveness.
It is the lack of competitiveness of Indian agriculture that has prevented our farmers from taking advantage of the market access opportunities provided by the three free trade agreements with ASEAN, Korea and Japan. Fixing the internal challenges of Indian agro-businesses (essentially through quality infrastructure development and a smooth flow of credit to the sector) will ensure steady growth and ensure India’s mutually beneficial participation in international trade deals.
Technology and Indian Agriculture
Even as we advance steadily on the policy front, we need to bridge the massive knowledge gap in Indian agriculture between farmers on one hand and crop scientists on the other. Farmers should be encouraged to learn more about technology and to apply global best practices to enhance their productivity and earning capacity. Technology usage will boost their entrepreneurial spirit and help them inculcate an innovative mind set. For example, remote sensing can help farmers estimate their yield, schedule irrigation patterns, and analyse relevant data and other crucial weather related information. Timely and precise information will enable farmers to take better decisions. Technology can also help to build more efficient supply chains that will minimize wastage of produce and enable our farmers to compete effectively in global markets.
Social media also has a pivotal role to play in the growth prospects of India’s agro-businesses. WhatsApp is widely used in the country, and that platform can be used to educate farmers, transform them into micro-entrepreneurs and link them with national and international markets. Already, greater access to technology has led to the emergence of social enterprise start-ups in rural areas that are coming up with suitable apps to educate farmers and keep them posted about the latest developments in their vocation. The use of digital platforms can transform delivery mechanisms for farmers, reducing costs and turning their profession into a potentially remunerative one. Suitably designed start-ups can leverage technology to arrive at innovative solutions to issues faced by agro-businesses and the food processing industry. This will also form a part of the larger poverty eradication and development strategies in rural India.
New solutions to old problems required
Indian agriculture is currently undergoing massive transition. However, the fact remains that we continue to remain uncompetitive primarily due to a lack of domestic reforms, whether they pertain to land, labour, capital, water management or R&D. On the flip side, our problems are not insurmountable. The best agricultural practices from all over the world could be suitably modified and implemented in India, keeping in mind our unique socioeconomic realities. A transparent and predictable set of policies for promoting the agricultural sector will ensure that the benefits of economic growth percolate uniformly across both urban and rural India.
We cannot wish away climate change and its adverse impact on our agricultural sector, as well as continue to isolate ourselves from international and regional trading blocs. In this context, our laws and regulations for reviving agriculture and agro-businesses need a revisit. India’s growth story will remain incomplete and unstable if our agricultural sector and its allied activities prove to be a drag on the rest of the economy. The bottom-line is that much of today’s Indian agriculture simply needs new solutions to old problems.
