Strategic approach to agriculture & rural development in Bharat

Bharat has set an ambitious target of doubling the farmers’ income and also simultaneously have a target of US$ 60 Billion agri-export by the year 2022. The value of processed food exports during 2018-19 was of the order of US$ 35.30 Billion accounting for about 10.69 percent of Bharat’s total exports.

The exports of the food products have shown a rising trend since 2014-15.  The organic food segment in Bharat is expected to grow at a CAGR of 10 per cent during 2015-25 and is estimated to reach Rs 75,000 crore (US$ 10.73 billion) by 2025 from Rs 2,700 crore (US$ 386.32 million) in 2015.

Bharat’s Position in World Production of Agricultural & Food Products are:

20 items – 1st position.

19 items- 2nd position

6 items- 3rd position

(*Data is for 2014; #Ranks are based on the quantity;- Source: FAOSTAT website accessed on 29/04/2019 as mentioned in https://mofpi.nic.in/ sites/default/ files/ eng_mofpi annual report _2018-19.pdf)

Various policy initiatives taken by the Government of Bharat

  • The Electronic National Agriculture Market (e-NAM) was launched in April 2016 to create a unified national market for agricultural commodities by networking existing APMCs. It had 16.6 million farmers and 131,000 traders registered on its platform until May 2020. Over 1,000 mandis in Bharat are already linked to e-NAM and 22,000 additional mandis are expected to be linked by 2021-22.
  • In May 2019, NABARD announced an investment of Rs 700 crore (US$ 100 million) venture capital fund for equity investment in agriculture and rural-focused start-ups.
  • Under Union Budget 2019-20, Pradhan Mantri Samman Nidhi Yojana was introduced where a minimum fixed pension of Rs 3000 (US$ 42.92) was to be provided to the eligible small and marginal farmers, subject to certain exclusion clauses, on attaining the age of 60 years.
  • In September 2019, the Government of India launched National Animal Disease Control Programme (NADCP), expected to eradicate foot and mouth disease (FMD) and brucellosis in livestock. In May 2020, Rs 13,343 crore (US$ 1.89 billion) was allocated to the scheme.
  • In May 2020, Government announced the launch of animal husbandry infrastructure development fund of Rs 15,000 crore (US$ 2.13 billion).
  • The Government of India came out with Transport and Marketing Assistance (TMA) scheme to provide financial assistance for transport and marketing of agriculture products in order to boost agriculture exports.
  • The Government of India is going to provide Rs 2,000 crore (US$ 306.29 million) for computerization of Primary Agricultural Credit Society (PACS) to ensure cooperatives are benefitted through digital technology.
  • The Government of India launched the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) with an investment of Rs 50,000 crore (US$ 7.7 billion) aimed at development of irrigation sources for providing a permanent solution from drought.
  • Government plans to triple the capacity of food processing sector in Bharat from the current 10 per cent of agriculture produce and has also committed Rs 6,000 crore (US$ 936.38 billion) as investments for mega food parks in the country, as a part of the Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters (SAMPADA).
  • The Government of India has allowed 100 per cent FDI in marketing of food products and in food product E-commerce under the automatic route.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), the Indian food processing industry has cumulatively attracted Foreign Direct Investment (FDI) equity inflow of about US$ 9.98 billion between April 2000 and March 2020.

Pradhan Mantri Kisan Sampada Yojana  primarily covers –

(i) Mega Food Parks,

(ii) Integrated Cold Chain and Value Addition Infrastructure,

(iii) Creation/ Expansion of Food Processing & Preservation Capacities (Unit Scheme),

(iv) Infrastructure for Agro-Processing Clusters,

(v) Creation of Backward and Forward Linkages,

(vi) Food Safety and Quality Assurance Infrastructure, and

(vii) Human Resources and Institutions.

The Ministry of Food Processing and Industries has notified 253 designated food parks in different states for the purpose of availing affordable credit from special fund with NABARD. NABARD has sanctioned a term loan of Rs. 489.49 Cr to 11 Mega Food Park projects, and Rs. 41.86 Cr to 3 Individual Processing Units in Designated Food Park and disbursed an amount of Rs.276.05 Cr to 11 Mega Food Park projects and Rs.36.80 Cr to 3 individual Processing Units as on 31.03.2019.

Government of India recently launched Agri Infrastructure Fund for Rs. 1 lakh crores (1st year Rs.10,000 Crores and next three years Rs. 30,000 Crores each) and the scheme is operational for 10 years. All assets created under this scheme will be geo-tagged for effective real-time monitoring according to the press reports. This scheme is expected to strengthen the rural infrastructure and improve the market linkages in order to reduce the storage and distribution losses and enhance the overall yields.

Bharat’s strengths

Bharat is among the 15 leading exporters of agricultural products in the world. Agricultural export from Bharat reached US$ 38.54 billion in FY19 and US$ 28.93 billion in FY20 (till January 2020).

Bharat has the largest livestock population of around 535.78 million, which translates to around 31 per cent of the world population. Milk production in the country is expected to increase to 208 MT in FY21 from 198 MT in FY20, registering a growth of 10 per cent y-o-y. Agriculture is the primary source of livelihood for about 58 per cent of Bharat’s population.

Gross Value Added (GVA) by agriculture, forestry and fishing was estimated at Rs 19.48 lakh crore (US$ 276.37 billion) in FY20 (PE). Growth in GVA in agriculture and allied sectors stood at 4 per cent in FY20.

Bharat’s food and grocery market is the world’s sixth largest, with retail contributing 70 per cent of the sales. Bharat’s food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in Bharat and is ranked fifth in terms of production, consumption, export and expected growth.

Major Issues in Indian Agriculture

Static annual growth

The average annual growth rate in real terms in agriculture as well as its allied sectors has remained static in the last six years, in turn impacting farmers’ income, according to the Economic Survey 2019-20, which also says the annual growth rate in real terms in agriculture and its allied sectors was 2.88 per cent from 2014-15 to 2018-19. However, in 2019-20 the growth rate increased to 3.7%.

Income inequality in Agriculture

Government is targeting to double the farmers’ incomes by 2022-23 (2015-16 as the base year). Whereas the ground reality is not showing encouraging signs.  A 2012-13 study by the National Sample Survey Organization (NSSO), estimated the average monthly income of farm household at Rs 6,426, whereas

The NABARD All India Rural Financial Inclusion Survey (NAFIS) shows that average agriculture household income was Rs 8,931 per month in 2016-17. Agricultural households in Bihar, Jharkhand, West Bengal, Uttarakhand, Odisha, and Uttar Pradesh have a very low monthly average incomes. Agriculture has a share of 16.5% in GDP and close to 50% of the country’s population is dependent on it.

NABARD survey also indicates the income inequality of the farmers across the states in the country as under.

State Average monthly household agri incomes

In INR. 

Punjab 16,020
Kerala 15,130
Tamil Nadu   9,716
Karnataka   8,383
Telangana   7,811
West Bengal   6,860
Andhra Pradesh   5,842

Harvest and post-harvest losses

According to a report by Central Institute of Post-Harvest Engineering & Technology (CIPHET), Ludhiana submitted in March 2015 the annual value of harvest and post-harvest losses of major agricultural produces estimated at national level was at Rs. 92,651 crore calculated using production data of 2012-13 at 2014 wholesale prices.

Reverse migration of workers from Cities to Villages

Post Covid lockdown, several lakhs of migrant workers have come back to the villages and most of them are either under employed or unemployed.

Need for a Strategic Approach

As the agriculture sector is showing signs of growth with prediction of favourable monsoons, there is a need for a strategic approach to give more thrust to this sector.

A special task force from various ministries like- Ministry of Agriculture & Farmers’ Welfare, Ministry of Food Processing Industries, Textile Ministry, Ministry of Environment, Forest and Climate Change, Ministry of Rural Development, Ministry of Micro, Small and Medium Enterprises and the six commodity boards (Coffee Board, Tea Board, Cardamon Board, Rubber Board, Coir Board, Central Silk Board) to be formed in order to put on fast track the various government initiatives in agriculture , allied activities and agro-based industries.

Niti Aayog may be entrusted with the task of coordinating with the states in this mission. While the farmers can be productively engaged in agriculture and allied activities, the migrant workers who have come back to the villages post Covid lockdown can be productively absorbed in rural infrastructure development works and agro-based industries.

This would not only improve the production and exports in agriculture but more importantly reduce the rural poverty, income inequalities significantly and discourage migration of people from villages to cities.

Though the share of agriculture in GDP is not expected to increase substantially even a marginal increase of its share in GDP by 1% will lead to increasing the rural household incomes significantly resulting in boosting the consumer demand in the economy provided the above initiatives of the government are targeted in ensuring direct market access to the farmers by eliminating the middlemen.

Let us hope the government will take the required steps in this direction.

(Featured image for representational purpose only. Source)


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About the Author

Dr. B.N.V. Parthasarathi
Ex- Senior Banker, Financial and Management Consultant and Visiting faculty at premier B Schools and Universities. Areas of Specialization & Teaching interests - Banking, Finance, Entrepreneurship, Economics, Global Business & Behavioural Sciences. Qualification- M.Com., M.B.A., A.I.I.B.F., PhD. Experience- 25 years of banking and 14 years of teaching, research and consulting. 100 plus national and international publications on various topics like- banking, global trade, economy, public finance, public policy and spirituality. One book in English “In Search of Eternal Truth”, two books in Telugu and 20 short stories and 27 articles published in Telugu. Email id: [email protected]