Agricultural Growth in India.

Agricultural Growth in India.(Reference:India’s Agricultural Development under the New Economic Regime: Policy Perspective and Strategy for the 12th Five Year Plan

Vijay Paul Sharma, W.P. No. 2011-11-01, IIM(A), November 2011.)

We inherit the current status of agriculture in India from the previous decades, it is interesting to study, what was the status of agricultural growth in the last two decades in Indian agriculture?

Decelerating Agricultural Growth-

To study the decelerating agricultural growth in India we consider in the main four major criteria:

1)      Growth rate of real agriculture and non-agriculture GDP.

2)      Trends in area and production of major crops/crop groups.

3)      Growth Rate and level of physical productivity of agriculture, and

4)      High-level agriculture growth patterns in pre and post-reform period.

1) Growth rate of real agriculture and non-agriculture GDP.

Whereas agricultural GDP had started growing in India since the onset of wider technological dissemination period ie-since 1981-82, agricultural GDP grew at 4.8% during the eighth plan period from 1992-97, at around 2 ½ % in the ninth and tenth plan period, between 1997-2007, (2.5%-1997-2002, 2.4%-2002-2007) and 3.3 percent during the eleventh plan period, clearly agricultural growth has decelerated  during the last fifteen years, though it picked up somewhat during the eleventh plan period.

The growth rate of non-agricultural GDP increased from 5.4% to 9.3% in the period from the eighth five-year plan to the tenth five-year plan.

The gap between agricultural and non-agricultural GDP increased significantly in the post-reforms period. The ratio of growth-rate of real agricultural GDP to that of total real non-agriculture GDP was lowest (.27) in 10^th five-year plan period compared to that in the 8^th five-year plan period (1.07), indicating deceleration in agricultural growth compared with non-agricultural GDP. However, as we saw earlier agricultural growth has once again picked up a bit in the 11^th five-year plan period.

2) Changing shares of acreage and production of major crops/crop groups.

During the last three decades net area sown declined from 142 million hectares in triennium ending (TE) 1983-84 to 140.8 million hectares in TE 2008-9, whereas total cropped area increased from 176.4 million hectares to 194 million hectares during the same period.

The area under foodgrains declined by about 6 million hectares, area under pulses has almost remained stagnant, area under wheat has increased by about 4.6 million hectares and rice by 3.7 million hectares, coarse cereals has declined by about 13.6 million hectares from TE 1983-84 to TE 2007-8.

During the last two decades foodgrain production increased by about 28%, cotton by over 200%, fruits and vegetables by 97%, condiments and spices by 66% and wheat by 39%. Pulses did not increase by much, though during 2010-11 there was a record pulses production.

Cropping Pattern shifted towards oilseeds, sugarcane and fruits and vegetables during the 1980’s, whereas in the 1990’s and 2000s, the shift was more fruits and vegetables, sugarcane and cotton and other non food crops, as we saw earlier this increase in area in non food crops since 1983-84 has been at the expense of food crops.

The compound annual growth rate of area under major crops reveal that, during the 1980’s fruits and vegetables witnessed the highest growth rate (3.4%), followed by oilseeds (3.02%) and sugarcane (1.35%). The main reason for significant growth in area under oilseeds during the 1980’s was technology mission on oilseeds and complete protection to domestic industry from imports. During the 1990’s, area under fruits and vegetables agin witnessed the highest growth rate (2.5%), followed by cotton (2.18%) and sugarcane (1.91%). Area under fruits and vegetables grew at an annual compound growth-rate of 5.28% during the 2000s, followed by cotton (3.12%), oilseeds (2.57%) and wheat and sugarcane (about 1.3%). The National Horticulture Mission has helped the growth in fruits and vegetables.

Performance of Indian Agriculture decelerated significantly in the 1990’s.The compound annual growth rates of all crops were significantly lower in the 90’s compared to the 80’s. Rice production recorded a growth of 4.2% in the 80’s and 1.87% in 90’s. Oilseeds growth fell from 5.8% to less than 1%.Foodgrain from 2.24% to 1.9%. The highest increase in growth rate was witnessed in case of cotton (14.28%), followed by fruits and vegetables (6.76%), oilseeds (5.12%), pulses (3.04%) and coarse cereals (2.94%). The increase in growth rate of fruits and vegeatables was primarily due to area expansion.

3.) Growth Rate and level of physical productivity of agriculture,

Average productivity of all crops improved between 1980’s and 2000’s, but the increase was greatest in the case of cotton (89.9%), followed by coarse cereals (59.1%) and oilseeds (41.6%). However growth rate of productivity declined during the 90’s compared to the 80’s.Average productivity can be increased significantly for all crops in India, specifically for Rice, Maize and Milk it is significantly lower than the world average.

4.) High Value Agriculture Growth Patterns-Some Concerns.

Foodgrains particularly cereals are shifting to livestock, fisheries and fruits and vegetables. 2% growth in foodgrain output is aimed for twelfth plan but 4.5% to 6% for animal husbandry, horticulture and high value agriculture segment.