Introduction
Agriculture is the dominant sector of the Indian economy, which determines the growth and sustainability of the country too. India is the second-largest producer of food in the world and holds the potential of being the biggest on global food and agriculture canvas, according to a Corporate Catalyst India (CCI) survey. About 65 per cent of the population still relies on agriculture for employment and livelihood. The sector contributes approximately 16 per cent of total gross domestic product (GDP) and 10 per cent of export earnings.
During 2012-13, the agriculture sector is expected to witness a growth of 2.4 per cent, according to the National Council of Applied Economic Research (NCAER). The Gross Capital Formation (GCF) in agriculture and allied sectors was Rs 142254 crore (US$ 25.68 billion) in 2010-11 as compared to Rs 76,096 crore (US$ 13.71 billion) in 2004-05, as per the Annual Report 2011-12 of the Department of Agriculture and Cooperation.
The green revolution transformed India from a food deficient stage to a surplus food market. In a span of three decades, India has become a net exporter of food grains. The transformations in the sector are due to factors such as new and improved technologies, easy credit facilities, interest of the organised sector, rapid growth of contract farming, and investor friendly Government policies.
Market Dynamics
Exports of agricultural products are expected to cross US$ 22 billion mark by 2014 and account for 5 per cent of the world's agriculture exports, according to the Agricultural and Processed Food Products Export Development Authority (APEDA).
Sugar output in India grew 13 per cent during October 2011-March 2012, to touch 23.2 million tonnes (MT) as compared to 20.45 MT in the same period last year, according to the Indian Sugar Mills Association (ISMA).
Further, cotton yarn exports have increased by 15 per cent during 2011-12, due to rising demand in the foreign markets. During the last financial year, 872.68 million kg of cotton yarn were exported, as compared to 720 million kg in 2010-11, according to the data compiled by the Directorate General of Foreign Trade (DGFT).
Meanwhile, oil meal exports from the country has registered 8 per cent growth in volume and touched a figure of 5.5 MT in the financial year 2011-12 as compared to 5.1 MT in 2010-11.
The Asian Development Bank (ADB) will provide a loan of US$ 67 million to Bihar for expanding agriculture value chain and to facilitate linkages for small farmers with food processors, agribusiness entrepreneurs and service providers in Mazaffarpur, Patna and Nalanda districts.
Major Developments and Investments
The total planned expenditure for the Department of Agriculture and Cooperation is increased by 18 per cent from Rs 17,123 crore (US$ 3.08 billion) in 2011-12 to Rs 20,208 crore (US$ 3.64 billion) in 2012-13. The outlay for Rashtriya Krishi Vikas Yojana (RKVY) is being increased from Rs 7,860 crore (US$ 1.42 billion) in 2011-12 to Rs 9,217 crore (US$ 1.66 billion) in 2012-13. Further, the amount of Rs 10 billion (US$ 180.10 million) has been allocated for "Bringing Green Revolution to Eastern India" initiative, compared to Rs 4.0 billion (US$ 72.04 million) in 2011-12.
The sector attracted foreign direct investments (FDI) worth Rs 93.18 crore (US$ 16.78 million) in the month of May 2012 as compared to Rs 29.58 crore (US$ 5.33 million) during the corresponding month in 2011.
The National Bank for Agriculture and Rural Development (NABARD) has increased financial assistance in Gujarat by 50 per cent in 2011-12, to Rs 4,340 crore (US$ 781.63 million) as compared to Rs 2,894 crore (US$ 521.21 million) in the previous fiscal. The assistance is provided mainly for supporting agriculture, rural development and rural infrastructure development in Gujarat.
Government Initiatives
The Government of India has allowed 100 per cent FDI in the agriculture services under automatic route covering horticulture, floriculture, development of seeds, animal husbandry, pisciculture, aquaculture, cultivation of vegetables, mushroom and services related to agro and allied sectors.
Some of the initiatives taken by the Government of India are:
- The Government has taken various policy measures to increase availability of institutional credit to farmers. The annual agriculture target for the financial year 2012-13 is fixed at Rs 5,75,000 crore (US$ 103.56 billion) against the target of Rs 4,75,000 crore (US$ 85.55 billion) in 2011-12
- The Union Cabinet has approved the proposal of the Ministry of Agriculture, Department of Agricultural Research and Education for the establishing the Indian Institute of Agricultural Biotechnology at Ranchi (Jharkhand) at a cost of Rs. 287.50 crore (US$ 51.78 million) during the 12th five year plan
- The Indian Council of Agricultural Research (ICAR) has established 44 Agricultural Technology Information Centres (ATICs) in 28 Agricultural Universities and 16 ICAR Institutes in the country. ICAR has also created a network of 630 Krishi Vigyan Kendra (KVK) in the country to facilitate farmers' access to agricultural technology generated by the National Agricultural Research System (NARS)
- The Government has launched an initiative to spend US$ 65.1 million to promote 60,000 'pulses villages' in rain-fed areas for increasing crop productivity and strengthening market linkages
- Spice Board of India plans to promote exports of spices by establishing 25-30 spice parks in different parts of the country. This will help in achieving export of spices worth Rs 30,000 crore (US$ 5.40 billion) by 2020, as per Dr G K Vidyashankar, Deputy Director (Marketing), Spice Board
Road Ahead
The country provides various opportunities for agri input segments such as seeds and plant growth nutrients. There is a huge demand for quality branded seeds in India. Further, the demand for cold storage, warehouses, supply chains, etc. will also grow rapidly in the coming years.
In the 12th five year plan, the Government will focus on "mechanization of agriculture" to match the growing need for higher production of food grain and to tackle labour shortages in the farm sector. The Government is committed to at least double the spending on research and development (R&D) in the farm sector by the end of the 12th five year plan from the existing level of about one per cent of gross domestic product (GDP).
The Government has taken many policy initiatives and missions to strengthen the farm credit delivery system for providing credit at affordable rates of interest to support the resource requirements of the agricultural sector.
