The Economic Survey 2024-25 has called for shifting away from overproduction of cereals to pulses, edible oil and high-value crops to boost agricultural productivity and farmers’ incomes. The survey also recognised that despite being a major global producer of cereals, India’s crop yields remain considerably lower than those of other leading producers.
The report highlighted the need for appropriate policies, expressing concerns about the slow growth rate of 1.9 per cent in oilseeds, particularly given India’s heavy reliance on imports to meet its domestic edible oil requirements.
“The right set of policies across all levels of government can reduce the overproduction of cereals and address the underproduction of pulses and edible oil,” said the survey tabled by Union Finance Minister Nirmala Sitharaman on January 31, 2025.
These policies could include allowing farmers to receive market price signals without interference, as well as separate mechanisms to address the cost-of-living impact on deserving households for specified periods of time.
“Two, they need to have market mechanisms to hedge their price risks. Three, they need the right policies that nudge them away from impairing their soil fertility with an unbalanced application of fertilisers and from producing already overproduced crops, which deplete India’s water resources and use up electricity excessively. These policy shifts will help lift agricultural productivity in the economy by boosting land and labour productivity in the sector,” it said.
Inter-state variations in growth to 2020-21 from 2011-12 also reflected diversity. States such as Andhra Pradesh, Madhya Pradesh and Tamil Nadu, which were among the top performers in agricultural growth, have shifted towards cultivating crops with higher yields.
For example, Andhra Pradesh diversified towards jowar, Madhya Pradesh towards moong or green gram and Tamil Nadu towards maize.
Overall, livestock and fisheries, not crops, have been pushing the growth in the agriculture sector, which grew at 3.5 per cent in the second quarter of 2024-25. While the crop sector experienced a compound annual growth rate (CAGR) of 2.1 per cent, from 2012-13 to 2021-22, livestock and fisheries grew at a CAGR of 5.8 and 8.7 per cent, respectively.
Even in the crop sector, the increase was largely driven by the production of fruits, vegetables and pulses.
“As we look to the future, it’s important to consider how changing dietary preferences, driven by rising incomes, will influence the agricultural sector’s growth trajectory. The increasing consumption of non-food grains, particularly horticultural products, livestock and fisheries, will be significant,” said the survey.
However, the overall agriculture sector growth represented a recovery compared to the previous four quarters, when growth rates varied from a modest 0.4 per cent to 2 per cent.
Meanwhile, agricultural income has increased at 5.23 per cent annually over the past decade, compared to 6.24 per cent for non-agricultural income and 5.8 per cent for the overall economy.