SOWING PROSPERITY

Boosting agricultural productivity FAST FACTS In 2011-2012, agriculture employed 70% of the countrys work forcei but only contributed to 13% of the GDP. The average size of agricultural land holdings has decreased from 2.3 hectares in 1971 to 1.2 hectares in 2011.ii 80% of all farmers in the country are small or marginal farmers operating on a little over 40% of all cultivable land in the country. The agricultural productivity of China in corn, rice and paddy is twice that of Indias. iii 40% of all fruits and vegetables produced in India perish due to shortage of storage facilities.iv

OVERVIEW During the Eleventh Five Year Plan (2007 2012), agriculture grew at 3.6% p.a. vis--vis. the overall growth rate of the economy which stood at 8.16% p.a.v.The neglect of agriculture and the rapid growth of non-agricultural sectors has led to a serious agrarian crisis and increased the disparity between urban and rural incomes. Although the share of agriculture in GDP has declined over the past two decades, the dependence of the workforce on agriculture remains high in rural areas. Nearly 63% of all male and 79% of all female workers are employed in the agricultural sector.vi Also, as Indias urban population continues to expand and demand s more food, the domestic agricultural industry must be made competitive so that it can feed its citizens at a reasonable cost. A major concern for Indias agricultural sector has been its unbalanced growth in different states and amongst various crops. Agricultural growth rates have been below the national average of 3.6% in agrarian states such as Uttar Pradesh and Assam, but have been as high as 10% in industrialized states such as Gujarat. Also, while India has managed to become the worlds largest producer of food grains, it has not improved agricultural productivity levels across the board. Cotton is a notable exception, where there has been a doubling of

productivity levels in the last decade. This has been attributed to the introduction of Bt cotton.vii In the past decade the government has increased public investments, minimum support prices and the flow of credit to the agricultural sector. However, high inflation, delivery delays and the exclusion of small farmers from most schemes have eroded the impact of such policy interventions. SOME CHALLENGES Small land holdings reduce the rate of return for productive investments, which disincentivizes farmers from undertaking capital expenditure.viii Interestingly though, China has managed to increase its farm productivity levels despite the fact that Chinese farmers have smaller land holdings than their Indian counterparts.ix Overdependence on rainfall renders precarious the returns on agriculture. Unscientific methods of cultivation have led to the erosion of soil fertility, depletion of water table levels and pre harvest losses. Nearly 80% of small and marginal farmers suffer from financial exclusion and have no formal access to creditx Excessive regulations by specific states prevent farmers from accessing a nationwide market to sell their produce.xi

THE NEXT STEPS Given that India is blessed with diverse agro climatic zones and a large agricultural work force, appropriate polices could convert India into an agricultural powerhouse and lift millions from poverty. Any intervention or program must consider the tough operating conditions of farmers. Manthan calls for innovative solutions from young enthusiasts.

Sharma, V.P. (2012). Accelerating Agriculture Growth for Inclusive Development. Vikalpa, 37(1). Retrieved from http://www.iimahd.ernet.in/assets/upload/faculty/161638648Vikalapa%20Paper%202011.pdf

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Gulati, A. & Jain, S. (2012, December 20). Credit inclusion, farm lease and forming clusters can help small farmers overcome poverty much faster. The Economic Times. Retrieved from http://articles.economictimes.indiatimes.com/2012-12-20/news/35933641_1_small-farms-farm-output-farmlease iii Gulati, A. & Jain, S. (2012, December 20). Credit inclusion, farm lease and forming clusters can help small farmers overcome poverty much faster. The Economic Times. Retrieved from http://articles.economictimes.indiatimes.com/2012-12-20/news/35933641_1_small-farms-farm-output-farmlease iv Khajuria, J. (2013). Think before you throw. Retrieved from http://www.sustainuance.com/think-before-youthrow/ v Planning Commission, Government of India. (2008). Eleventh Five Year Plan (2007-2012). Retrieved from http://planningcommission.nic.in/plans/planrel/fiveyr/11th/11_v1/11th_vol1.pdf vi Ahluwalia, M.S. (2011). Prospects and Policy Challenges in the Twelfth Plan. Economic and Political Weekly, 46(21). vii World Bank. (2012). India: Issues and Priorities for Agriculture. Retrieved from http://www.worldbank.org/en/news/feature/2012/05/17/india-agriculture-issues-priorities viii Agricultural Census, Government of India. (2012). All India Report on Agricultural Census 2005-06. Retrieved from http://agcensus.nic.in/document/ac0506/reports/Chapter-4_2005-06.pdf ix Gulati, A. & Jain, S. (2012, December 20). Credit inclusion, farm lease and forming clusters can help small farmers overcome poverty much faster. The Economic Times. Retrieved from http://articles.economictimes.indiatimes.com/2012-12-20/news/35933641_1_small-farms-farm-output-farmlease x Rural lending. Retrieved from http://articles.economictimes.indiatimes.com/2012-0307/news/31132278_1_priority-sector-regional-rural-banks-lending xi Gross Capital Formation in Agriculture 2011 , Bharti & Vijay, NABARD. Retrieved from http://www.sadhan.net/Adls/Microfinance/Dhaka%20Starting%20Microfinance%20in%20India.pdf