Agriculture and allied sector has a critical role in ensuring food security, reducing poverty and sustaining growth in India. The dynamics of agricultural growth reflect a reduction in the share of crop sector and an increase in the share of agricultural sub-sectors. To improve productivity in agriculture, the focus has been on critical inputs and insurance. Future agricultural policies must note the increasing role of women and crop diversification, suggests the Economic Survey.


What is the role of agriculture in the economy?

In a developing country like India, agriculture sector and rural economy have a significant role in providing livelihoods, ensuring food security and providing impetus to the growth of industries and service sectors.

  • The process of development results in declining share of agriculture in Gross Value Added (GVA), which is being witnessed in India tooHowever, the declining share does not undermine the significance of the sector for employment, livelihood and food security.
  • With structural changes in agriculture, there is greater scope to broaden the range of activities related to agriculture to improve productivity and make way for sustainable growth.

The growth rates of agriculture & allied sectors have been fluctuating at 1.5 per cent in 2012-13, 5.6 per cent in 2013-14, (-) 0.2 per cent in 2014-15, 0.7 per cent in 2015-16 and 4.9 per cent in 2016-17.

  • The uncertainties in growth in agriculture are explained by the fact that more than 50 percent of agriculture in India is rainfall dependent which aggravate the production risks.
  • The Gross Capital Formation (GCF) in Agriculture and Allied Sectors relative to GVA in this sector has been showing a fluctuating trend from 18.2 per cent in 2011-12 to 16.4 per cent in 2015-16.
  • The Gross Capital Formation in agriculture and allied sectors as a proportion to the total GCF showed a decline from 8.3 per cent in 2014-2015 to 7.8 per cent in 2015-16. This decline can be attributed to reduction in private investment.


The sector has been witnessing a gradual structural change in recent years.

  • The share of livestock in GVA in agriculture has been rising graduallythe share of the crop sector in GVA has been on the decline from 65 per cent in 2011-12 to 60 per cent in 2015-16.
  • The structural changes that are being witnessed by the agriculture sector in India necessitates re-orientation in policies towards this sector in terms of strengthening the agricultural value chain by focusing on allied activities like dairying and livestock development along with gender-specific interventions.
  • The structural transformation is also manifested in the farm incomes of the households. The decrease in share of crop sector in the total gross value added of the agriculture and allied sector has impacted the sources of incomes of the farm households. In 2002-03, the share of livestock in total farm incomes was just 4 per cent which increased to 13 per cent by 2012-13.


Why do we need crop diversification?

India ranks first, with 179.8 Mha (9.6 percent of the global net cropland area), in net cropland area according to United States Geological Survey 2017. The pattern of cropping is determined by various factors like agro-climatic conditions, farm size, prices, profitability and government policies.

  • A diversified cropping pattern will help in mitigating the risks faced by farmers in terms of price shocks and production/harvest losses. With 9.6 per cent of the global net cropland area, India has tremendous potential for crop diversification and to make farming a sustainable and profitable economic activity.
  • The Index of Crop Diversification has been computed for major States and All India to examine whether there has been major changes in the cropping patterns across States. The index value ranges between 0 and 1 and higher the value, greater the diversification.
  • Two of the states, Himachal Pradesh and Jharkhand, have shown increasing values in crop diversification. The crop diversification scenario for India as a whole appears to be almost stable throughout the periods. There is a declining inter-temporal (across time) behaviour in crop diversification for the States like Chhattisgarh, Haryana, Madhya Pradesh, Odisha, Punjab and Uttar Pradesh.
  • Among these States, the decline in the index has been sharp for Odisha. In Odisha, by 2014-15, 80 per cent of the cropped area was under rice, around 10 per cent under other pulses and around 4 percent under other food crops. In Punjab too, wheat and paddy cover 83 per cent of the cultivable area of the State.
  • The issues related to mono-culture as witnessed in Odisha and Punjab are declining productivity, lower fertilizer response ratio, degradation of soil health and declining profitability of cultivation.
  • Crop diversification needs to be encouraged to improve soil health, productivity and thereby profitability of cultivation. The inverse relationship between change in crop diversification index and variability of output can be seen in the plot of States (excluding outliers Odisha and Jharkhand) in the Chart above.

There is a need to diversify into high value crops and horticulture crops for which Government has taken several measures. Crops Diversification Program is being implemented by the Government

  • In original green revolution states viz. Punjab, Haryana and in Western UP to diversify paddy area towards less water requiring crops like oilseeds, pulses, coarse cereal, agro-forestry.
  • In tobacco growing States viz. Andhra Pradesh, Bihar, Gujarat, Karnataka, Maharashtra, Odisha, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal for shifting of tobacco farmers to alternative crops/cropping system.

When did India break previous records of agricultural production?

As per the Fourth Advance Estimates for 2016-17 released by Department of Agriculture, Cooperation and Farmer’s Welfare, the country achieved a record production of food grains estimated at 275.7 million tons, which is higher by 10.6 million tons than the previous record production of food grains in 2013-14.

  • The production of rice is estimated at 110.2 million tons during 2016-17 which is also a new record. Similarly, the production of wheat, estimated at 98.4 million tons is higher by 2.6 per cent than the previous record production achieved during 2013-14.
  • Another significant achievement is in the production of pulses which is estimated at 23.0 million tons during 2016-17 and higher by 3.7 million tons than the previous record production achieved during 2013-14. The production of oilseeds and cotton registered a growth of 27 per cent and 10.3 per cent respectively in 2016-17.
  • This increase in production of food grains and other crops is mainly on account of very good rainfall during monsoon 2016-17 and various policy initiatives taken up by the Government.

Kharif Production 2017-18

As per the First Advance Estimates released on 22nd September, 2017, kharif food grains production during 2017-18 is estimated at 134.7 million tons which is expected to be lower by 3.9 million tons from the production of 138.5 million tons during 2016-17.

  • The total production of rice during 2017-18 is estimated at 94.5 million tons vis-à-vis 96.4 million tons in 2016-17.
  • The production of pulses during 2017-18 is estimated at 8.7 million tons, sugarcane at 337.7 million tons, oilseeds at 20.7 million tons and cotton at 32.3 million bales of 170 kgs each.

Sowing Of Rabi Crops 2017-18

  • The sowing of rabi crops was under progress at the time of writing of the Survey. As per the latest available information on sowing of crops from States, 617.8 lakh hectares of area has been covered under Rabi crops for 2017-18 as on 19th January 2018. The area coverage under rabi crops is above 98 per cent of the normal area.

Where do we require input management?

Agricultural productivity is determined by the appropriate use of critical inputs like irrigation, seeds, fertilisers, credit, machines, technology and extension services.

  • For instance, the Green Revolution in India which brought about self-sufficiency in food production was driven by the use of high yielding varieties (HYVs) of seeds, intensive use of fertilisers and irrigation.
  • Managing the inputs in appropriate combinations for specific crops can improve the productivity in agriculture without losing soil fertility and causing environmental damages.
  • In this context, the significance of extension services and capacity of farmers to adopt new innovations, technologies and inputs for improving productivity become pertinent.

Operational Holdings by Educational status

Educational level of farmers has a significant impact on the capacity of farmers to adopt and inculcate new methods of cultivation and input management.

  • As per Input Survey 2011-12 (with an estimated 138.11 million operational holders), about 69.3 percent were literate with 22.5 percent studied up to class V, 22.7 percent up to middle class, 15.4 percent up to secondary, 5.2 percent up to senior secondary, 1.3 percent technical diploma holders below degree level and the remaining 2.1 percent has graduation and above.
  • However, 30 per cent among marginal and small farmers were illiterate. With predominance of small and marginal farm holdings, it is necessary to improve the educational status of farmers to increase their capacity to absorb technologies, and adopt risk mitigating measures.

Use of Inputs by Agricultural Holdings

The use of inputs like fertilisers, hybrid seeds and organic manure are critical in increasing productivity in agriculture.

  • As reported in the Input Survey, out of the total operational holdings only 9.4 percent used certified seeds while 27 percent used seeds of notified variety and only 9.8 percent used hybrid seeds.
  • Small and marginal farmers use these inputs, with more than 80 per cent of agricultural holdings in the marginal size category using organic manure which increases soil fertility.
  • The percentage of small holdings which use hybrid seeds and fertilisers are also lower in comparison to marginal holdings.

Recognising the significance of quality of seeds in improving the crop yields, the Government has taken several measures.

  • During 2016-17, total breeder seed production in field crops has been 121989 quintals, comprising cereal crops 70093, Pulses 20578 and Oilseeds 30288, fibre crops 131 and forage crops 898 quintals.
  • In order to promote Seed Replacement Rate (SRR) and Varietal Replacement Rate (VRR), Seed Project entitled, “Seed Production in Agricultural Crops” is being implemented.
  • During the year 2016-17, total production of quality seed including all classes was 620743 quintals against the target of 462404 quintals. In addition, 239 lakh planting material and 1.9 lakh tissue culture plantlets were also produced.
  • However, the use of fertilizers and hybrid seeds can bring about better yields if there is adequate coverage of irrigation since agriculture in India is largely rainfed.


The all India percentage of net irrigated area to total cropped area was 34.5 per cent, which makes a large segment of cultivation dependent on rainfall.

  • The State-wise percentage distribution of net irrigated area to total cropped area shows that only two States, Punjab and Uttar Pradesh have more than 50 per cent net irrigated area to total cropped area and only seven states have above 34 percent in 2014-15.
  • There is tremendous potential to increase the coverage of irrigated area for which the Government launched the Prime Minister’s Krishi Sinchayee Yojana (PMKSY) in 2015. PMKSY has been approved for implementation across the country with an outlay of Rs.50,000 crore in five years.
  • An amount of Rs. 3400 crore has been allocated for Per Drop More Crop scheme under PMKSY for the year 2017-18, and till September, Rs.1601.4 crore has been released. The target is to bring 12 lakh hectare area under micro-irrigation during 2017-18.
  • PMKSY Scheme is being implemented in the mission mode with the help of Command Area Development to complete 99 major and medium irrigation projects covering 76.0 lakh hectares in a phased manner by December 2019.

Agricultural Mechanization

Farm mechanization and crop productivity has a direct correlation as farm mechanization saves time and labour, reduces drudgery, cut down production cost in the long run, reduces post-harvest losses and boosts crop output and farm income.

  • Use of improved implements has the potential to increase productivity up to 30 per cent and reduce the cost of cultivation up to 20 per cent. At present, Indian farmers are adapting farm mechanization at a faster rate in comparison to recent past.
  • Although the sale of tractors in India cannot be taken as the only measure of farm mechanization but to a great extent it reflects the level of mechanization. Indian tractor industries have emerged as the largest in the world and account for about one-third of total global tractor production.

According to the World Bank estimates, half of the Indian population would be urban by the year 2050. It is estimated that percentage of agricultural workers of total work force would drop to 25.7 per cent by 2050 from 58.2 per cent in 2001.

  • Thus, there is a need to enhance the level of farm mechanization in the country. Due to intensive involvement of labour in different farm operations, the cost of production of many crops is quite high.
  • Human power availability in agriculture also increased from about 0.043 KW/ha in 1960-61 to about 0.077 KW/ha in 2014-15. However, as compared to tractor growth, increase in human power in agriculture is quite slow.
  • Over the years, the shift has been towards the use of mechanical and electrical sources of power. In 1960-61, about 93 per cent farm power was coming from animate sources, which has reduced to about 10 per cent in 2014-15. On the other hand, mechanical and electrical sources of power have increased from 7 per cent to about 90 per cent during the same period.

There is predominance of small operational holdings in Indian agriculture. It is, thereforeneeded to consolidate the land holdings to reap the benefits of agricultural mechanization.

  • There is a need to innovate custom service or a rental model by institutionalization for high cost farm machinery such as combine harvester, sugarcane harvester, potato combine, paddy transplanter, laser guided land leveler and rotavator to reduce the cost of operation and it can be adopted by private players or State or Central Organizations in major production hubs.


Who is playing an increasingly important role in agriculture?

Women play a significant and crucial role in agricultural development and allied fields including in the main crop production, livestock production, horticulture, post-harvest operations, agro/social forestry and fisheries is a fact long taken for granted.

  • For sustainable development of the agriculture and rural economy, the contribution of women to agriculture and food production cannot be ignored. As per Census 2011, out of all female main workers, 55 per cent were agricultural labourers and 24 per cent were cultivators.
  • However, only 12.8 per cent of the operational holdings were owned by women, which reflect the gender disparity in ownership of landholdings in agriculture. Moreover, there is concentration of operational holdings (25.7 per cent) by women in the marginal and small holdings categories.
  • With growing rural to urban migration by men, there is ‘feminisation’ of agriculture sector, with increasing number of women in multiple roles as cultivators, entrepreneurs, and labourers.
  • Globally, there is empirical evidence that women have a decisive role in ensuring food security and preserving local agro-biodiversity. Rural women are responsible for the integrated management and use of diverse natural resources to meet the daily household needs.
  • This requires that women farmers should have enhanced access to resources like land, water, credit, technology and training which warrants critical analysis in the context of India. In addition, the entitlements of women farmers will be the key to improve agriculture productivity. The differential access of women to resources like land, credit, water, seeds and markets needs to be addressed.

Towards this, the following measures have been taken by the government to ensure mainstreaming of women in agriculture

  • Earmarking at least 30 per cent of the budget allocation for women beneficiaries in all ongoing schemes/programs and development activities.
  • Initiating women centric activities to ensure benefits of various beneficiary-oriented programs/schemes reach them.
  • Focusing on women self-help group (SHG) to connect them to micro-credit through capacity building activities and to provide information and ensuring their representation in different decision-making bodies.
  • Recognising the critical role of women in agriculture, the Ministry of Agriculture and Farmers Welfare has declared 15th October of every year as Women Farmer’s Day.

With women predominant at all levels- production, pre-harvest, post-harvest processing, packaging, marketing- of the agricultural value chain, to increase productivity in agriculture, it is imperative to adopt gender specific interventions. An ‘inclusive transformative agricultural policy’ should aim at gender-specific interventions to raise productivity of small farm holdings, integrate women as active agents in rural transformation, and engage men and women in extension services with gender expertise.

How has Pradhan Mantri Fasal Bima Yojana helped?

The NSSO Report (July 2012 – June 2013) had indicated that a very small share of agricultural households engaged in crop production activities was insuring their crops.

  • In respect of wheat and paddy, the two most harvested cereals in the country, less than 5 percent of the cultivating agricultural households insured their crops.
  • The share of households opted for crop insurance in the case of cotton, groundnut and soybean was slightly higher compared to the other selected crops harvested during the two halves of the agricultural year July 2012- June, 2013.

The reasons for not insuring for selected crops as highlighted in Table above reflect that ‘Not aware about the crop insurance’ was the most prominent reason reported by the cultivating agricultural households for not insuring their crops during the two halves of the agricultural year July 2012-June 2013.

  • The lack of awareness about the availability of the facility for the harvested cop was the second highest reported reason for not insuring the crops.
  • Barring this 20 percent of households which were either not interested in insuring their crops or not felt the need for insuring their crops, majority of the agricultural households did not insure their crop due to reasons that can be attributed to lack of awareness, improper coverage and reach and complicated procedures and lack of resources etc.
  • To enhance the coverage and rate of crop insurance among agricultural households, proper awareness needs to be generated along with enhanced geographical coverage and simplification of procedures.

In this context, it is noteworthy that the Pradhan Mantri Fasal Bima Yojana (PMFBY), which is a yield index based crop insurance scheme launched in 2016, has made substantial progress with more ground coverage compared to erstwhile schemes. During Kharif 2016 season 23 States implemented PMFBY and during Rabi 2016-17, 25 States/Union Territories implemented PMFBY.

  • During 2016-17, the target of 30 percent of the Gross Cropped Area (GCA) in the country for PMFBY has been achieved. In 2016-17, for a gross premium of Rs. 22,004 crore, overall coverage was 571 lakh farmer applications and 554 lakh ha. area insured for a sum of Rs. 20,2145 crore.
  • As on December 2017, under PMFBY, total claims of Rs. 13,292 crores have been approved for 116 lakh farmers (applications) and Rs. 12,020 crores have been paid. Loanee and non-loanee coverage stood at 435 lakh and 136 lakh respectively.
  • As compared to 2015-16, there is about 18.3 per cent increase in farmer applications, 10.8 per cent increase in area insured and about 76 per cent increase in sum insured under the scheme. The coverage of non-loanee farmers has also been increased by 123.5 per cent during 2016-17 over previous year i.e. 2015-16.
  • The target for 2017-18 has been kept at 40 per cent of GCA. During Kharif 2017, the scheme is being implemented by 25 States/UTs.

PMFBY provides comprehensive coverage of risks from pre-sowing to post harvest against natural non-preventable risks.

  • The insurance premium is to be paid to companies on actuarial basiswith however very low share to be paid by farmers on a uniform basis across the country (2 per cent & 1.5 per cent for food & oilseed crops for Kharif & Rabi seasons respectively and 5 per cent for annual commercial/horticultural crops) and balance premium to be paid upfront and shared equally by Central and State Governments.
  • It provides better protection for the farmers in terms of sum insured which has been made equal to the scale of finance.