The average year-on-year increase in agriculture GVA (the total value of output generated by the sector minus that of inputs consumed) was 3.5% during the UPA period. The last ten years ended 2023-24 witnessed further acceleration to 3.7% (chart), belying the general perception of a sector steeped in crisis.
So, has Indian agriculture actually fared well in recent times, as the above numbers suggest? The answer: It may not be that straightforward.
To start with, there are questions on the output estimates itself, especially for the most recent period.
Government estimates show production of cereals, for instance, rising from 185.2 million tonnes (mt) to 303.6 mt, between 2004-05 and 2022-23. But household cereal consumption, estimated from the National Sample Survey Office’s (NSSO) data, has been virtually flat at 153-156 mt over this period. The gap between officially reported cereal production and household consumption has widened from a mere 29.5 mt in 2004-05 to 84 mt in 2011-12 and 151 mt in 2022-23.
Similar doubts have been raised on a two-and-a-half times jump in the country’s estimated milk production (from 92.5 mt in 2004-05 to 230.6 mt in 2022-23), with no commensurate increase in consumption as per the NSSO’s household surveys.
But these incongruities notwithstanding, the NITI paper, published in the Economic & Political Weekly (September 28), has some key findings with implications for policymaking and helping identify pockets of excellence as well as pain points in Indian agriculture.
Disaggregated divergence
The first is the large variation in performance of the different subsectors within agriculture.
The crops subsector – which one normally associates with farming – recorded only 2.3% average annual growth in output value (at 2011-12 prices to adjust for inflation) from 2014-15 to 2022-23. That was, in fact, lower than the 3.4% during the 10 years of UPA rule.
On the other hand, the livestock and fisheries subsectors posted average year-on-year production growth of 5.8% and 9.2% respectively from 2014-15 to 2022-23, higher than their corresponding rates of 4.5% and 4.3% for the 10 years ended 2013-14.
imply put, the farm sector’s overall better growth performance during the Modi-led NDA compared to that under UPA has been primarily courtesy of animal and aqua as opposed to conventional crop agriculture.
Table 1 gives a further break-up of subsector production growth (i.e. in the value of output at constant prices) during the NDA period. The highest average annual growth rates have come from poultry meat (9.2%), fishing & aquaculture (9.1%), eggs (6.6%) and milk (5.8%). Even within crops, horticulture output has grown at a relatively impressive 3.9% per annum.
It is non-horticulture, i.e. regular field crops, that has experienced meagre growth of just over 1.6%. The real laggards have been cotton, jute, tobacco, tea and coffee, with the growth rates being moderate in cereals and oilseeds to decent in pulses and sugarcane.
Table 2 shows 13 states whose annual agriculture growth during 2014-15 to 2022-23 has averaged 4% or more. Three notable absentees here are Punjab, Haryana and West Bengal. The average year-on-year rise in their GVA from agriculture for this period was only 2%, 3.4% and 2.8%, with these from crops being even lower at 0.5%, 0.7% and 1.9% respectively.
The growth in the 13 states, in turn, been largely powered by livestock and fisheries. The crop subsector’s growth has topped 5% only for two states: Madhya Pradesh and Telangana.
Policy takeaways
It links up with the second major finding.
The accelerated agricultural growth during the last two decades, a result of diversification towards horticulture crops, livestock and fisheries, has also been market-led – driven by the growing demand for vegetables, fruits, milk, meat, eggs and fish.
Thus, diversification in farms has been accompanied by diet diversification in plates, with a shift in the composition of household consumption expenditures from foods basically delivering calories to those rich in proteins and micronutrients. This has been additionally enabled by new technologies, be it hybrids in vegetables and maize (a vital livestock and poultry feed ingredient), drip irrigation and high-density tissue culture planting in bananas, or high-yielding broiler and layer breeds in poultry.
But as Chand and Singh note, not all Indian farmers engage in livestock, fisheries and horticulture activities. According to the NSSO’s 2018-19 Situation Assessment Survey for Agricultural Households, only 53% of them derived income from livestock rearing and just 6.5% cultivated horticulture crops.
The main earning source for 44.2% of agricultural households was from farming of cereals, pulses, oilseeds, sugarcane, cotton and other non-horticulture crops. Some of these have seen decent production growth, on the back of rising demand (oilseeds and pulses) or non-food use (sugarcane for ethanol production).
However, the benefits of diversification and new production technologies have not percolated to field crops the way they have for horticulture or livestock. Oilseeds and pulses yields remain low, leading to a substantial share of demand being met by imports. In cotton, there has no breakthrough after genetically modified Bt hybrids: India’s average domestic production of 325 lakh bales in the last three years is below the 370-400 lakh bales reached during 2012-13 to 2014-15!
The crops subsector showing low growth despite this segment – particularly rice and wheat – being covered under the minimum support price regime only highlights the importance of demand-side factors. These, along with improvements in production technology, are more effective in promoting agricultural growth than government output price or input subsidy interventions, the NITI Aayog paper has concluded.
Source: The Indian Express