Although agriculture accounts for about 16.5% of overall GDP in the country (2019–20), it remains central to the Indian economy as it still engages about 44% of the work force (in 2018–19; it was 47% in 2015–16) as per Labour Bureau, GOI. India is also going to be the most populous country in the world by 2027, according to population projections by the UN, and ensuring food security for this large mass of humanity is a daunting task, more so when it also has the largest number of poor and malnourished in the world (as per World Bank’s Development indicators). An average Indian household spends about 45% of its expenditure on food (this ratio stands at 60% for the poor in bottom expenditure group) (NSSO 2011). No wonder agriculture remains critical for India as it has implications not only for farmers in terms of their income, but also for consumers, especially with respect to ensuring food security to the poor and the malnourished.
Although agriculture accounts for about 17.8 percent of country’s Gross Value Added (GVA) (2019–20 current prices), it remains central to the Indian economy as it still engages about 44% of the work force (it was 47% in 2015–16 as per Labour Bureau, GOI). India is also going to be the most populous country in the world by 2027, according to population projections by the UN, and ensuring food security for this large mass of humanity is a daunting task, more so when it also has the largest number of poor and malnourished in the world (as per World Bank’s Development indicators). An average Indian household spends about 45% of its expenditure on food (this ratio stands at 60% for the poor in bottom expenditure group) (NSSO 2011). No wonder agriculture remains critical for India as it has implications not only for farmers in terms of their income, but also for consumers, especially with respect to ensuring food security of the poor and the malnourished.
Between 2000–01 and 2018–19, overall GDP in the country increased by 7.2% per annum and agricultural GDP grew only by 3.2% per annum, way below the target rate of 4% per annum. This underlines the urgent need to accelerate growth in the agricultural sector. Most experts agree on this proposition, but the question really is “how” to do it. More comprehensively, the question is how the agricultural growth process can be speeded up and made more inclusive, and financially viable. Are there any best practices that can be studied and replicated to bring about faster growth in agriculture? The prior hypothesis is that rapid agricultural growth can alleviate poverty faster, reduce malnutrition and augment farmers’ incomes.
To find answers to some of these questions, normally the approach that many studies take is to turn outward and look for global best practices and evaluate them to assess the possibility of replicating these domestically. This book uniquely looks inward in the sense that it looks at best practices and experiences within Indian states.
India has been a federation of 29 states and 7 union territories1 (until 30 October 2019, and as treated in this study) and not all of them are equally agrarian. They vary in terms of their natural resource endowments, share of agriculture in overall state employment, contribution of agriculture to overall state gross domestic product (GDP) and, inter alia, in terms of the historical growth rate witnessed in their agriculture sector. This brings us to the starting point of the research based on which this book is written: how can some Indian states grow faster than others? How have some states continued to lag behind while others have grown sharply? Are there lessons that Indian states can learn from each other? By looking within the country to find best practices and solutions to agrarian problems in fellow states, this book offers a unique perspective.
1.2 Rationale of the study
Agriculture in the current Indian context has multiple roles. The four most important roles, inter alia, are:
Feeding the large and growing Indian population, particularly with the uncertain impact of climate change looming large on the sustainability of the agricultural sector
Alleviating the stubborn problems of malnutrition and poverty amongst people most of whom live in rural areas and are dependent on agriculture for their livelihoods
Supplying agricultural products that act as inputs for other industries
Initiating a multiplier effect in the economy, where a financially empowered farming community will trigger demand-led growth, particularly for manufactured products and services.
Given the centrality of the sector and the importance of the sector’s growth in terms of food security and poverty alleviation, this book proposes an evidence-based roadmap for revitalising Indian agriculture while ensuring that the growth process is efficient, inclusive and sustainable, and results in sustained growth of farmers’ incomes.
The book does this by undertaking analysis under the following four broad heads.
Linkage between agricultural performance, poverty and malnutrition: Intuitively, there is expectation of a high and negative correlation between agricultural performance and the twin problems of poverty and malnutrition. What this means is that when the agricultural sector grows, it helps to alleviate poverty and malnutrition. This hypothesis is tested in this book for all major Indian states.
Analysing the historical growth performance of agricultural sector in selected Indian states: Upon establishing the need for higher agricultural growth to alleviate poverty and malnutrition, this section explores agricultural performance in six selected states. Three of these states, Punjab, Gujarat and Madhya Pradesh, have performed much better than others—Punjab during the green revolution period and the other two states over the last 10–15 years. The other three states, Uttar Pradesh, Bihar and Odisha, have been somewhat mediocre (average/below average) performers in agriculture. In this study, we analyse the sources of agricultural growth and its drivers to find out the best practices that led to a higher growth rate in the studied states.
Will higher agricultural GDP necessarily result in higher incomes for farmers: Historical experience states that (i) not all states that witnessed high agricultural GDP growth rates delivered higher farmer income growth rates and (ii) there were states that delivered high farmer income growth rates despite experiencing lower agricultural GDP growth rates. Both cases mandated further research as is done under this head. This analysis has been done across all major Indian states.
Analysing the current agricultural policy environment to (i) evaluate its efficiency and efficacy and (ii) consolidate all analysis to create a roadmap: Unless the current policy environment is aligned to the requirements of the sector and is able to deliver on set objectives, the agricultural sector can never realise its full potential. In this section, major government programmes and policies have been evaluated, based on various performance parameters.
All analysis is then processed, collated and presented as a roadmap for revitalising Indian agriculture. The roadmap builds on (a) the results of research and analysis presented in this book and (b) on broader macro-issues that, even though not discussed in much depth in the book, are necessary for agricultural growth.
1.3 Identification of Six Indian States
Using historical data on the relative agricultural growth rates in different states, two sets of states were selected—those that had performed exceptionally well and those that had a relatively lacklustre performance. The aim was to identify and distil learnings and best practices in the better performing states and see if they can be replicated in states whose performance was relatively poor.
Based on average historical growth rates (Fig. 1.1), the two set of states were identified as follows:
High performing states: Madhya Pradesh, Gujarat and Punjab
Low or average performing states: Uttar Pradesh, Bihar and Odisha.
Both Gujarat and Madhya Pradesh have experienced very high rates of agricultural growth, particularly during the last 10–15 years. Despite low current growth rates in Punjab, the state was selected for its exceptional historical performance during the post-Green Revolution period since the mid-1960s. Today, the state has a low growth rate but that can be explained by the high base that it has developed over the years.
The study also focuses on—Uttar Pradesh, Bihar and Odisha—because of the importance of agriculture in these states and prevalence of high levels of poverty and malnutrition.
The six selected states are presented on the Indian graph in Fig. 1.2. These six states together account for 41.9% of India’s population (Census 2011), 38.6% of India’s gross value added in agriculture (TE 2016–17, Source NAS, MOSPI), 43.05% of India’s agricultural workforce (Census 2011) and 53.9% of India’s poverty (Planning Commission 2011).
Interestingly, lessons for best practices emerged both ways. In line with our earlier expectations, analysis of the high performing states of Punjab, MP and Gujarat helped us in identifying agricultural best practices. But in addition, the analysis of the three laggard states—UP, Bihar and Odisha—also revealed certain exceptional policies followed by them which had potential for replication in other Indian states.
1.4 Organisation of the Book
The book is organised into 12 chapters, each provides a building block for the concluding chapter that presents a roadmap for revitalising Indian agriculture while ensuring growth in farmers’ incomes.
After this introductory chapter, Chap. 2 presents a synthesis of the book.
Chapter 3 explores the linkages between agriculture, poverty and malnutrition at the state level. To test this linkage, a major econometric analysis was done by pooling cross section and time series data across major Indian states.
Next up, the qualitative and quantitative analysis of the agriculture and allied activities sector in each of the six identified states is presented as distinct state chapters in Chaps. 4–9. These chapters relate to the Performance of Agriculture inPunjab (Chap.4);Gujarat (Chap.5); Madhya Pradesh (Chap.6); Uttar Pradesh (Chap.7); Bihar (Chap.8) and Odisha (Chap.9).
The analysis at the state level involved (a) identifying the sources of growth within agriculture by sub-groups of commodities such as grains, oilseeds, cotton and sugarcane, fruits and vegetables, livestock, fisheries and by sub-regions; (b) finding the determinants of agricultural growth in each of the states, especially the role of policy, infrastructure, land and water resources, agricultural R&D, institutional changes in agricultural marketing, etc; and (c) to the extent possible, looking at the budgets of selected states with a view to estimate the investment(s) needed, especially in the three states of Uttar Pradesh, Bihar and Odisha, in case they chose to implement some of the best practices as delineated in their respective cases.
A state-wise analysis of farmers’ incomes has been undertaken in Chap. 10. It was observed during the research that states that had higher agricultural GDP growth rates did not necessarily deliver faster growth rates in farmers’ incomes. In Gujarat and MP (to some extent), despite higher AGDP growth, farmers’ incomes failed to rise as fast. Contrarily, farmers’ incomes have risen sharply in Odisha, Punjab, UP and Bihar despite a not-so-impressive AGDP performance.
A comparative state-wise analysis of the sources of farmers’ incomes and their trends over time was done to identify major challenges that limited growth.
In Chap. 11, the focus is on policies, programmes and schemes as implemented recently by the central government to support Indian agriculture. Major schemes are outlined, analysed for their efficiency and efficacy, and gaps in design and implementation are identified.
The book ends with Chap. 12, which presents a way forward not only to spur Indian agriculture but also to help augment farmers’ incomes. The recommendations in this chapter emanate primarily from the analysis presented in preceding chapters but the chapter also contains other recommendations on macro-issues that are likely to help improve the overall eco-system in which agriculture and Indian farmers operate.
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