Indian agriculture had reached the stage of development and maturity much before the now advanced countries of the world embarked upon the path of progress. There was a proper balance between agriculture and industry and both flourished hand in hand. This situation continued till the middle of the 18th century. The interference from the alien British govt. destroyed the balance and the economy of the country was badly shattered. Therefore Indian agriculture in the pre-independence period can be correctly described as a “subsistence” occupation.
It was only after the advent of planning (more precisely the advent of the green revolution in 1966) that the farmers started adopting agriculture on a commercial basis. THE ROLE OF AGRICULTURE IN INDIAN ECONOMY 1. Share in national income: at the time of the First World War, agriculture contributed two-thirds of the national income. After the initiation of planning in India, the share of agriculture has persistently declined due to the development of the secondary and the tertiary sectors. At 1999-2000 prices, the share of agriculture in GDP at factor cost was 27.
3% in 1999-2000 and 21. 7% in 2005-2006. 2. Largest employment providing sector: in 1951, 69. 5% of the working population was engaged in agriculture. This percentage fell to 66. 9% in 1991 and to 56. 7% in 2001. 3. Provision of food surplus to the expanding population: the ninth Five Year Plan set a target of increasing the food grains production from a level of 199. 4 million tonnes in 1996-97 to 300 million tonnes by 2007-08 to meet the consumption requirement of India’s estimated population of more than a billion.
4. Contribution to capital formation: since agriculture happens to be the largest industry in India, it can play an important role in pushing up the rate of capital formation. The policies advocated are: a) Transfer of labor and capital from farm to non-farm activities. b) Taxation of agriculture in such a way that the burden on agriculture is greater than the governmental services provided to agriculture. c) Turning the terms of trade against agriculture b imposing price controls on agricultural products, taxation or the use of multiple exchange rates that discriminate against agriculture.
5. Providing raw materials to industries: agriculture provides raw materials to various industries of national importance, like, sugar industry, jute industry, cotton textile industry, etc. 6. Market for industrial products: since more than two-thirds of the population of India lives in rural areas, increased rural purchasing power is a valuable stimulus to industrial development. 7. Importance in international trade: for a number of years, cotton textiles, jute and tea accounted for more than 50% of export earnings of the country.
With economic progress and consequent diversification of production base, the share of agricultural goods in total exports has consistently fallen. It fell from 44. 2% in 1960-61to 10. 2% in 2005-06. A growing surplus of agricultural produce is needed in the country to: i) Increase supply of food and agricultural raw materials at non-inflationary prices. ii) Widen the domestic market for industrial goods through increased purchasing power within the rural sector. iii) Facilitate inter-sectoral transfers of capital needed for industrial development (including infrastructure) iv) Increase foreign exchange earnings through agricultural exports.
THE NATURE OF INDIA’S AGRICULTURE At the time of independence, India’s agriculture was in a state of backwardness. Productivity per hectare and per worker was extremely low. The techniques employed were age-old and traditional. Because of low productivity, agriculture merely provided ‘subsistence’ to the farmers and had not become ‘commercialized’. Approximately 45% of the total consumption of the farmers came from their own production in 1951-52. This highlights the low importance of money in the village economy. These reveal that Indian agriculture was backward and qualitatively traditional in nature on the eve of the First Five Year Plan.
Some of the causes responsible for the above state of affairs are listed below: 1. Feudal relations of production: at the time of independence, three types of land tenure systems existed in the country-zamindari, mahalwari and ryotwari. Approximately 57% area of the country was under the zamindar system, ryotwari came second with 38% and mahalwari was restricted to only 5%. 2. Usurious capital and rural indebtedness. 3. Labor market dualism: because of the excessive pressure of population on land, wages in the agricultural sector tend to be considerably lower as compared to the modern (industrial) sector.
This leads to a labor market dualism. Low wages in the agricultural sector lead to low per-capita income and this, in turn, results in low labor productivity. 4. Outmoded farming techniques. 5. Fluctuations and instability in crop output: even now, approximately 60% of gross cropped area continues to depend on rainfall. Therefore nature continues to play a major role in determining the role of agricultural production. 6. Diversities in the agricultural sector and the problem of generalization: different regions exhibit entirely different characteristics so that no one plan can be conceived for all agricultural regions of the country.
CROPPING PATTERN IN INDIA By crop pattern, we mean the proportion of area of different crops at a point of time, changes in this distribution over a period of time and factors determining this change in distribution. Cropping pattern in India is determined mainly natural factors like rainfall, climate and soil conditions. However, technological conditions have also played an important part. Some significant facts about the cropping pattern in India are summarized below: 1. Food crops including cereals, millets, pulses, vegetables and fruits cover nearly three-fourths of total cropped area.
Of the total area under food grains, a large proportion is occupied by cereals. Of the total area of 121. 9 million hectares under food grains in2005-2006, the share of cereals was 99. 5 million hectares (i. e. , 81. 6%) 2. Rice is the most important food grain crop in India. 2005-0 6 it was grown on 43. 5 million hectares, which amounted to 34. 7% of total area under food grains. This shows that rice is grown on more than one-third of the total area under food grains. 3. The second important crop in India is wheat. In 2005-06 wheat was grown on 26. 6million hectares, which comes to 21.
8% of the area under food grains. 4. The combined area under jowar, bajra and maize declined in percentage from 28. 6% in 1950-51 to 21. 4% in 2005-06. 5. Area under oilseeds was 10. 7 million hectares in 1950-51 and 19millio hectares in 1985-86. To achieve self-sufficiency in edible oils, the govt. launched a no. of programs in 1980s. As a result of these programs, area under oilseeds increased rapidly to 26. 2 million hectares in 1998-99. In 2005-06, area under oilseeds rose to 27. 7 million hectares. 6. In commercial crops, the area under sugarcane increased from 1. 8 million hectares in 1950-51 to 4.
2 million hectares in 2005-06. The area under jute increased from 0. 6 million hectares in 1950-51 to 0. 8 million hectares in 2005-06. Area under cotton rose from5. 9 million hectares in 1950-51 to 8. 9 in 2005-06. TRENDS IN AGRICULTURAL PRODUCTION AND PRODUCTIVITY Agricultural production has two components- food grains and non food grains. In the index no. of agricultural production, the weights assigned to food grains and non food grains are62. 9 and 37. 1 respectively. The most important component in the food grains category is rice (weight 29. 7), followed by wheat (weight 14. 5).
In non food grains category, oilseeds constitute the most important group (weight 12. 6). Sugarcane carries a weight of 8. 1 while cotton carries a weight of 4. 4. As far as food grains output is concerned, the total production increased from 50. 8 million tonnes in 1950-51 to 187. 0 million tonnes in the eighth plan, and further to 202. 9 million tonnes in the ninth plan. However, because of draught conditions in the first year of the tenth plan, 2002-03, the food grains output declined to 174. 8 million tones but again rose to 213. 2 million tonnes in 2003-04. However in 2004-05, it fell to 198.
4 million tonnes and stood at 208. 3 million tonnes in 2005-06. In the non food grains group, jute and cotton show slow and halting progress in both the periods. However, the production of oilseeds rose considerably in the latter half of the 1980s and certain years of the 1990s. It increased from 12. 7 million tonnes in 1987-88 to 27. 7 million tonnes in 2005-06. Production of cotton rose from 8. 4 million bales in the seventh plan to 19. 6 million bales in 2005-06. Sugarcane registered a more or less steady growth during the entire period 1950-51 to 2002-03, but its production fell sharply in 2003-04 and 2004-05.
However, in 2005-06, it bounced back to touch 278. 4 million tonnes. Over the period 1950-51 to 2005-06, yield per hectare of all food grains has increased by more than three times from 552 kgs per hectare in 1950-51 to 1,708 kgs per hectare in 2005-06. Most significant increase has been recorded by wheat with its yield increasing from 655 kgs per hectare in 1950-51 to 2,607 kgs per hectare in 2005-06. While the productivity of maize has increased significantly during recent years, the productivity of jowar and bajra has increased relatively slowly.
Productivity of pulses was only 585 kgs per hectare in 2005-06 which was only slightly higher than the productivity in 1960-61. A comparison of productivity levels of Indian agriculture with the levels in other countries shows how low the productivity in Indian agriculture is. India happens to be one of the largest growers and producers of most of the agricultural crops, but ranks very low in terms of yield. For instance, it has the largest area under rice and wheat in the world and the second largest producer of these crops. However, in terms of productivity, its rank is only 52nd in the world in rice and 38th in wheat.
Not only is productivity in Indian agriculture lower than that in other countries, it is much lower than the potential. The causes of low productivity in Indian agriculture can be divided in the following three categories: I. General causes. 1. Social environment: it is said that the Indian farmer is illiterate, superstitious, conservative and unresponsive to new and modern agricultural techniques. The social environment of the villages is often stated to be an obstacle in agricultural development. 2. Pressure of population on land: this is partly responsible for the sub-division and the fragmentation of the land holdings.
Productivity on small and uneconomic holdings is low. 3. Land degradation: almost 43% of land suffers from high degradation resulting in 33-67% yield loss while 5% is so damaged that it is rendered unusable. II. Institutional causes. 1. Land tenure system: in this land tenure system, it is difficult to increase productivity through technological progress. Land reforms should precede technical changes. 2. Lack of credit and marketing facilities: Indian farmers continue to produce the same output even at more attractive prices.
On account of lack o marketing facilities or non-availability of loans on fair interest rates, the cultivators are not able to invest the requisite resources in agriculture. This keeps the level of productivity low. 3. Uneconomic holdings: most of the holdings are not extremely small; they’re also fragmented into a no. of tiny plots so that cultivation can be carried on them only by labor intensive ways. This results in low productivity. III. Technical causes. 1. Outmoded agricultural techniques: most of the Indian farmers still use outmoded techniques.
Wooden ploughs and bullocks are still used by majority farmers. Use of fertilizers and HYV seeds are very limited. Indian agriculture is traditional. 2. Inadequate irrigational facilities: almost 60% of the gross cropped area depends on rains. Rainfall is often insufficient, uncertain & irregular. Thus productivity is low in areas depending wholly on rainfall. Even in areas having irrigational facilities, potential is not fully utilized because of defective management. Also with the ever rising cost of irrigation, small farmers can’t make use of the irrigational facilities.
Following are some of the measures to increase productivity: 1. Implementation of land reforms: even though the land reforms have been introduced in India in the post-independence period, the results from it are pretty unsatisfactory. Therefore special efforts have to be made by the State to implement those reforms forcefully. Unless this is done, the tiller won’t have any incentive to invest in land and adopt new agricultural techniques. Thus, land reforms are the foremost necessity. 2. Integrated management of land & water resources: almost half of country’s soil is degraded.
There’s a huge loss due to water-logging, salinization and human induced water erosion. This proves the urgency of the integrated & efficient management of our land and water resources. 3. Improved seeds: this play an important role in increasing productivity. E. g. :- HYV of wheat in Punjab, Haryana & U. P. therefore the farmers should be educated in the methods of sowing, manuring and irrigating the new HYV seeds. 4. Fertilizers: improved variety of seeds requires heavy doses of fertilizers. Indian farmers use only a tenth of the required amount. Use of fertilizers in ample quantities can push up the productivity.
5. Irrigation: use of improved seeds & fertilizers require proper irrigational facilities. It can also make multiple cropping possible in many areas & thus increase the productivity. 6. Plant protection: most of the countryside farmers are unaware of the medicines and insecticides to face the challenge posed by diseases & insects. The govt. should maintain its own technical staff to carry out the spraying of pesticides & insecticides at nominal rates. 7. Farm mechanization: it is generally maintained through farm mechanization, agricultural production can be increased.
It results in increase in productivity of land & labor, reduction in costs, saving of time & increase in economic surplus. 8. Provision of credit & market facilities: use of improved seeds, fertilizers, irrigational facilities, pesticides, machinery, etc. requires substantial money resources which small farmers don’t possess. Thus it is necessary to strengthen the credit-cooperative sector. The commercial banks should be encouraged to lend more to small farmers. Cooperative marketing societies should be promoted to ensure better prices to small farmers. THE GREEN REVOLUTION
A team of experts sponsored by the Ford Foundation was invited by the Government of India in the latter half of the second Five Year Plan to suggest ways and means to increase agricultural production and productivity. This necessity arose out of the need to increase agricultural production in the ace of continuing stagnation of production on one hand, and rapidly increasing demand on the other. On the basis of the recommendations of this team, the govt. introduced an intensive development program in seven districts selected from seven states in 1960 and this program was named Intensive Area Development Program (IADP).
A district selected under IADP was required to possess qualities such as assured water supply, minimum hazards (like floods, drainage problems, acute soil conservation problem, etc), well developed village institutions and maximum potentialities for increasing agricultural production within a short span of time. The seven districts selected were West Godavari in Andhra Pradesh, Shahabad in Bihar, Raipur in Madhya Pradesh, Thanjavur in Tamil Nadu, Ludhiana in Punjab, Aligarh in Uttar Pradesh and Pali in Rajasthan—the first four were selected for rice, the next two for wheat and the last one for millets.
This program was later extended to remaining states also by selecting one district from each state for intensive development. In October 1965, the net was widened and 114 districts were selected for intensive development and the program labeled as Intensive Agricultural Areas Program (IAAP). The period of mid-1960s was very significant from the point of view of agriculture. New high-yielding varieties of wheat were developed in Mexico by Prof. Norman Borlaug and his associates and adopted by a number of countries.
These high yielding variety of seeds required proper irrigation facilities and extensive use of fertilizers, pesticides and insecticides. This new “agricultural strategy” was put into practice for the first time in India in the kharif season of 1966 and was termed High-Yielding Varieties Program (HYVP). This program was introduced in the form of a packaged program since it depended crucially on regular and adequate irrigation, fertilizers, high-yielding varieties of seeds, pesticides and insecticides. Initially it was implemented in a total area of 1. 89 million hectares. In 1998-99, total area under HYVP was 78.
4 million hectares. This was 62. 6% of the total area under food grains (data for later years are not available). IMPACT OF GREEN REVOLUTION Throughout the period of the green revolution, population was increasing at a rate of over 2% p. a, constantly pressing on the margin of cultivation of traditional agriculture. I. Impacts on agricultural production: As a result of new agricultural strategy, food grains output increased substantially from 81. 0 million tonnes in the third Plan to 208. 3 million tonnes in 2005-06. HYVP was restricted to only five crops-wheat, rice, jowar, bajra and maize.
Therefore, non-food grains were excluded from the ambit of the new strategy. The production of wheat increased from 11. 1 million tonnes in the third plan to 69. 5 million tonnes in 2005-06. The overall contribution of wheat increased from 13% in 1950-51 to 33. 4% in 2005-06. Thus, wheat has remained the mainstay of the green revolution over the years. The average annual production of rice rose from 35. 1million tonnes in the third plan to 91. 0 million tonnes in 2005-06. The production of course cereals-jowar, bajra and maize-continues to remain static or has moved very slowly upwards.
As far as pulses are concerned, their production was 11. 7 million tonnes in second plan, which rose to 13. 1 million tonnes in 2005-06. But even this is less than the requirement of pulses in India estimated at 17 million tonnes. The bulk of vegetable oil production in India is derived from nine cultivated oilseeds, namely, groundnut, mustard, sesame, safflower, nigerseed, soyabean, sunflower-forming the edible group-and linseed and castorseed forming the inedible group. The total production of oilseeds averaged 8. 3 million tonnes in the fourth plan and 11.
4 million tonnes in the sixth plan. To achieve self-sufficiency in edible oils, the govt. launched a series of measures towards the end of the sixth plan and the seventh plan. As a result of these, the average annual production of oilseeds rose from 11. 4 million tonnes in the sixth plan to 24. 7 million tonnes in 1998-99. This is also termed as the “yellow revolution”. II. Economic impacts of the green revolution i. Crop areas under HYV seeds needed more water, fertilizers, pesticides and certain other chemicals. This spurred the growth of the local manufacturing sector.
Such industrial growth created new jobs and contributed to the country’s GDP. ii. The increase in irrigation created a need for new dams to harness monsoon water. The water stored was used to create hydro-electric power. This in turn boosted industrial growth and improved the quality of life of the villagers. iii. India paid back all the loans it had taken from the World Bank and all its affiliates for the purpose of green revolution. This improved India’s credit worthiness in the eyes of the lending agencies. III. Impact on labor absorption The adoption of new technology has reduced labor absorption in agriculture.
In a large number of states, especially in those regions where there was abundant availability of labor, the growth of output was too slow to generate adequate employment opportunities. In high growth rate regions, labor was not plentiful and wage rate was high. The sudden rise in demand for labor in these areas induced mechanization and labor saving practices in general. Also, the HYVP is basically a land saving technology. By increasing the yield per acre, the new technology makes it possible to increase food production out of a given amount of land. This tends to increase the demand for labor.
On the other hand, mechanized processes tend to reduce the demand for labor. In addition, the very dynamic possibility of increasing yields may itself encourage mechanization and in turn decreases the employment of labor. In recent years, a significant development in the pattern of rural labor absorption has been a shift away from crop production and into rural non-farm activities like agro-processing industries and other rural industries. IV. Political impacts of the green revolution India transformed itself from a starving nation to an exporter of food.
This earned admiration for India in the committee of nations, especially in the third world. The green revolution was one factor that made Mrs. Indira Gandhi (1917-1984) and her party, the Indian National Congress, very powerful political force in India. [BOX: HIMACHAL PRADESH TOPS AGAIN IN IMPLEMENTATION OF 20 POINT PROGRAMMNE 17th July 2009 :Himachal Pradesh has done it once again. Yes, it has maintained the first position in the implementation of Twenty-Point Programme amongst all the States in the Country by attaining 92 percent achievement up to February during the financial year 2008-09, the last but one month of the financial year.
This achievement is two percent more than the Gujarat, four percent Uttrakhand and five percent Andhra Pradesh the four top States that had been ranked in the implementation of this programme. The main thrust of the Twenty Point Programme is poverty alleviation, employment generation housing, education, family welfare & health, protection of environment and other schemes having a bearing on the quality of life, especially in rural areas. Under Employment Generation Programme, 8, 17,364 job cards have been issued in the State during the period thereby generating employment of 1. 54 crore man days by giving wages worth Rs. 171 crore .
Under Individual Swaranjayanti Gram Swarojgar Yojna percent achievement of the State had been 517 as 8619 individual swarojgars have been assisted against a target of 1886 fixed for the year. Karnataka follows Himachal Pradesh in it whose percent achievements are 470. This speaks about tremendous performance of the State. Under Swaranjayanti Gram Swarojgar Yojna the achievement of the State is 318 percent. As many as 3486 individual ST Swarojgaries and 5612 individual women swarojgaries have been assisted from April, 2008 to February 2009 under this scheme.
] AGRICULTURAL FINANCE AND MARKETING Agriculture is an unorganized profession. Its success and failure depends, o a large extent, on climatic factors. Further, it’s not always possible to distinguish between productive and unproductive loans of the farmers. Because of these factors, banks did not show much interest in advancing loans to agriculture and allied activities for a long time and farmers were forced to depend on money-lenders and mahajans. NEED FOR AGRICULTURAL FINANCE Credit needs of the farmers can be examined from two different angles: i) On the basis of time :
Agricultural credit needs of the farmers can be further classified into three categories:- a. Short term loans are required for the purchase of seeds, fertilizers, pesticides, feeds and fodder of livestock, etc. the period of such loans is less than 15 months. Main agencies of granting of short term loans are the moneylenders and co-operative societies. b. Medium term loans are generally obtained for the purchase of cattle, small agricultural implements; repair and construction of wells, etc. the period of such loans extend from 15 months to 5 years.
These loans are generally provided by moneylenders, relative of farmers, co-operative societies and commercial banks. c. Long term loans are required for effecting permanent improvements on land; repayment of old wells, etc. The period of such loans extends beyond 5 years. Such loans are normally taken from Primary Co-operative Agricultural and Rural Development Banks (PCARDBs). ii) On the basis of purpose : Agricultural needs of the farmers can be further classified into the following categories: a. Under productive needs we can include all credit requirements which directly affect agricultural productivity.
b. Farmers often require loans for consumption as well. Most of the farmers do not have sufficient income to sustain themselves. Therefore they have to take loans for meeting their consumption needs. Institutional credit agencies do not provide loans for consumption purposes. Accordingly, farmers are forced to fall back upon moneylenders. c. In addition to consumption, farmers also require loans for a multiplicity of other unproductive purposes. Since institutional agencies do not grant credit for such unproductive purposes, farmers have to seek assistance from moneylenders and mahajans.
SOURCES OF AGRICULTURAL FINANCE AND THEIR RELATIVE IMPORTANCE Sources of agricultural finance can be divided into two categories: 1. Non-institutional sources 2. Institutional sources The non-institutional sources are the following- * Moneylenders * Relatives * Traders * Commission agents * Landlords The institutional sources comprise the Co-operatives, Scheduled Commercial Banks and Regional Rural Banks (RRBs). As far as co-operatives are concerned, the Primary Agricultural Credit Societies (PACSs) provide mainly short and medium term goals and PCARDBs long term loans to agriculture.
The Commercial Banks, including RRBs provide both short and medium term loans for agriculture and allied activities. The National Bank for Agriculture and Rural Development (NABARD) is the apex institution at the national level for agricultural credit and provides refinance assistance tot eh agencies mentioned above. The Reserve Bank of India, as the central bank of the country, plays a crucial role in this sphere by giving overall direction to rural credit and financial support to NABARD for its operations.
The first institution established and promoted was the institution of co-operative credit societies. By the end of 1976, there emerged three separate institutions for providing rural credit, which is often described, as the multi-agency approach. In 1982, NABARD was set up. India now has a wide network of rural finance institutions (RFIs).
There are more than 30,000 commercial bank branches, 14,000 regional rural banks and about 1,00,000 rural credit co-operatives. As a result of the efforts undertaken by the govt., the share of non-institutional sources in rural credit, which was as high as 92. 7% in 1951, fell to 38. 9% in 2002. The share of moneylenders fell from 71. 6% in 1951 to 26. 8% in 2002. The share of institutional sources in rural credit rose correspondingly from 7. 3% in 1951 to 61. 1% in 2002. NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD) The most important development in the field of rural credit has been the setting up of the National Bank for Agriculture and Rural Development (NABARD) in July 1982.
It took over from Reserve Bank of India all the functions that the layer performed in the field of rural credit. NABARD is now the apex bank for rural credit. And therefore, it doesn’t deal directly with farmers and other rural people. It grants assistance to them through the co-operative banks, commercial banks, RRBs, etc. NABARD’s credit to State Co-operative banks, State Governments and RRBs outstanding in 2004-05 was Rs. 8,577 crore which rose to Rs. 12,763 crore in 2005-06.