Farm sector fell short of targeted growth of 4 per cent: Economic Survey 2013

'Investments are the only way to motivate the farming community to produce more'

By Jyotika Sood
Published: Wednesday 27 February 2013

Economic Survey 2012-13, tabled by Finance Minister P Chidambaram on Wednesday, painted a grim picture of Indian agriculture as the trend of declining growth continued in the current fiscal. The sector failed to achieve the targeted growth of 4 per cent during the 11th Five Year Plan (period 2007-2012), and its growth rate was limited to 3.6 per cent. 

Presenting the reasons for failure, the survey states that there are number of constraints and challenges that need to be addressed and that the country needs to invest heavily in farm research. Moreover, rural infrastructure, better access to high value markets, better credit facilities and inputs are other key hurdles noticed during the 11th Plan that hindered the sector from achieving the target set for it. Investments are the only way to motivate the farming community to produce more and achieve the target of 4 per cent growth set for the agriculture and allied sectors in the 12th Five Year Plan, says the Economic Survey.

R&D spending too low

Public sector agricultural R&D spending remained in the range of 0.50 to 0.59 per cent of GDP in the last decade and needs to be enhanced considerably, says the survey. It adds that the Indian Council of Agricultural Research in partnership with state agricultural universities has developed a number of technologies like 9,838 tonnes of breeder seeds, 13,228 tonnes of foundation seeds, 20,541 tonnes of certified seeds, 14,860 tonnes of truthful labelled seeds and about 40,000 tissue culture plantlets of field crops and three new improved varieties of sugarcane during 2011-12.

The survey states that India is one of the leading producers in the world of crops like paddy, wheat, pulses, sugarcane, spices and plantation crops, but that the yield levels are not creditable with the farm sector achieving a much lower rank in yields in many of these crops when compared to other countries. The report states that studies indicate that there are wide gap in crop yields across the country. Agriculture production can be substantially increased if we address this yield gap by adopting technological and policy interventions. Improvement in yields hold the key for India to remain self-sufficient in food grains and also make a place for itself in many agricultural crops and products in the international market.

Crop output set to decline

During 2011-12, total food grains production reached an all-time high of 259.32 million tonnes. However, the production of 2012-13 kharif crops is likely to be adversely affected by deficiency in the south-west monsoon and the resultant acreage losses. The overall area coverage at 66.5 million hectares under foodgrains during kharif 2012-13 shows a decline of 5.58 million hectares compared to 77.02 million hectare during kharif 2011-12. The Economic Suvey says that crop output is expected to decline in all major crops.

The survey also points out that agricultural incomes are a big concern and maximising them while adopting a more sustainable agricultural strategy is another challenge. The government claims that it has done its best as the minimum support price (MSP) announced by it takes into account the relevant factors for encouraging farmers so that farming becomes remunerative. The government says that it has also implemented market intervention scheme for perishable horticultural and agricultural commodities which is another big effort.

Managing supply chain and marketing

The survey says that another critical issue is supply chain management in agricultural marketing in India. Farmers' access to markets is hampered by poor roads, rudimentary market infrastructure and  excessive regulations. Many agricultural crops are perishable in nature and post-harvest handling issues and marketing problems affect the farm incomes. It is necessary that mechanisms are evolved for linking wholesale processing, logistics and retailing with farm production activities so as to attain enhanced efficiency and better farm prices. The report also says that the private sector should be allowed to operate in developing these market linkages for which suitable reforms will help. The government says that its recent decision of FDI in retail which has been supported by many farmer organizations as well can pave the way for investment in new technology and marketing of agricultural produce in India.

Low expectations, grim outlook

The concern of degrading land and water due to soil erosion and other problems like soil salinity, water logging and excessive application of nutrients also need to be focus areas. The survey states that measures must be taken to promote use of quality seeds, cultivation of drought resistant varieties of crops, judicious use of available water, balanced use of fertilizers, farm mechanization and wider use of irrigation facilities.

While the government is hopeful that focus on the challenges and constraints will help, it seems that they don’t have much hope from the agri-sector. Even for the 12th Plan, it has decided to keep the growth target at 4 per cent which seems to be an indication of what to expect.


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