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India's Economic Development Since 1947 With an Emphasis on Agriculture and Food Management

By siddharth212 Sep 09, 2013 12736 Words


B.A. (H) Economics II nd Year Avinash Pandey| 0187|
Surbhi Singh| 0191|
Ashima Sahni| 0202|
Pankhuri Dave| 0203|
Ritika Narula| 0204|
Siddharth Goel| 0205|
Pritish Bhattacharya| 0209|
Monika| 0210|
Shubhangini Aggarwal| 0212|
Deepak| 0213|


We have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals. We would like to extend our sincere thanks to all of them. We are highly indebted to Mr. Deb Kusum Das for his guidance and constant supervision as well as for providing necessary information regarding the project & also for his support in completing the project.

Besides, this project made us realize the value of working together as a team and as a new experience in working environment, which challenges us every minute.
Last but not least we wish to avail ourselves of this opportunity, and express a sense of gratitude and love to our beloved parents for their manual support, strength, and help and for everything.

* Overview
* Agriculture
* Indian agricultural policy
* Significance of agriculture
* Production ,productivity and growth
* Green revolution
* Globalization and Indian agricultural
* Recent trends
* Rural distress
* The way ahead
* Food management
* Introduction
* Agricultural price policy
* Recent scenario
* The way forward
* Challenges and outlook
* Summary
* Bibliography

It does not take a genius to decipher the fact that agriculture is the backbone of the Indian economy, providing means of livelihood of almost two thirds of the work force in the country. It has always been INDIA'S most important economic sector. The 1970s saw a huge increase in India's wheat production that heralded the Green Revolution in the country. The increase in post -independence agricultural production has been brought about by bringing additional area under cultivation, extension of irrigation facilities, use of better seeds, better techniques, water management, and plant protection .Today, India ranks second worldwide in farm output; agriculture is demographically the broadest economic sector and plays a significant role in the overall socio-economic fabric of India. The Government of India is currently celebrating the fact that per-capita agricultural income is growing faster than overall per-capita income. With its next five-year plan for 2012-2017, the government is targeting a 4% agricultural growth rate. This may seem like good news, especially given recent years’ food inflation. However, the fact that India’s agriculture sector is earning more income has a hidden story: the price of food is increasing with each year, but there are also more mouths to feed each year. It is imperative to understand how much food India will need to grow every year to satisfactorily feed its population. India’s food challenges stem from mismanagement more than output. This attaches paramount significance to food management system in India. It has to be understood that the life of a farmer goes beyond tilling and yielding crops. Their standard of living has to be uplifted by small scale industries set up which will increase their income. Other facilities like shelter, drainage system, education and alternative employment will secure their future. The change is accepted well by farmers as India still believes in the phrase, ‘Jai Jawan Jai Kisan’. The project that we have developed is an all encompassing one as we have tried to incorporate several topics regarding the agriculture sector in India such as the various trends in production, the ongoing process of innovation, issues and challenges and future prospects. The second half of the project deals with food management in India, particularly the PDS system and the issue of food security and different challenges that need to be addressed.

By the time India became independent, its agriculture was in precarious state, ravaged by the world war -II and the government of India had thus to formulate and implement a suitable policy for reconstruction and rapid development of agriculture. The main aspects of agricultural policy, which was design to remove institutional organisational obstacle to its development are as follows:

1. Land reforms and Tenancy reforms
A major policy measure for the development of agriculture was adopted in the form of `land reforms`.Land reforms are aimed at removing all obstacles in the way of agricultural development that have arisen from land ownership pattern land tenure system ,pattern of agricultural land holdings and agricultural tenancy. Under the land reform policies initiated after the independence intermediary tenures commonly known as the zamindari system that prevailed over half of the country in areas such as Bengal,UP,B ihar,Orissa,etc was abolished the actual tillers of the land were conferred ownership rights and brought in direct contact with the state celing were also imposed prescribing maximum limit to which a person can hold the surplus land has been collected and distributed among land less workers and very small farmers tenancy reforms have also been undertaken and laws were passed to prescribe maximum rents that land owners could charge from the cultivators and the conditions under which the tenants could be evicted thus providing security of tenure .

2. Strengthening Infrastructure
A major thrust of the governments agricultural policy has been in the direction a building up and strengthening infrastructural services for agricultural development to begin with, the focus of government policy was on building up of irrigation network comprising of dams ,canals ,well, tanks, etc. and huge multipurpose projects that only provides irrigation other development services such as reorganisation of institution for providing financial assistance to the farmers marketing and warehousing facilities dissemination of market information about price and demand conditions in various strong markets ,storage and warehousing facilities etc were given due attention . 3. Technological Reforms

The biggest contribution of government in agricultural development has come in the form of research and development (R&D) in agriculture by which new technologies were developed and employed in agriculture .The high yielding varieties of seeds ,fertilizers like nitrogenous ,phosphatic and potassic fertilizers ,mechanised farming etc.,all represent strengthening of the technological base of agricultural. The manifold increase in agricultural output and productivity and the ushering in of the 'Green Revolution' in the country is the direct outcome of the emphasis that our govt placed on.

4. Price Incentives
In order to safeguard farmers from undue fluctuations in market prices of agricultural commodities ,the government provides price support to the agricultural producers to prevent fall in farmers income .The price support is given through the policy of MSP ,declares the min prices at which the government will purchase various goods. In case if prices falls below the minimum support prices, the farmers can sell their output to government. However if prices are higher, the farmers are free to sell in the market and make profits. Moreover, Government also helps farmers by providing tem highly subsidised inputs. Subsidised inputs induce farmers to use modern inputs such fertilizers.

5. Food security and Public Distribution system
To enable people to purchase necessary amount of fair price shops .the shops supply subsidised food grains to poor people at subsidised rate, the distribution of food grain ,sugar, and other essential goods through fair price shops is known as Public distribution system(PDS). The system ensures a certain minimum availability of goods to poor masses and thus provides the 'food security' .Government is also implementing no. Of schemes for the benefits of rural poor. Self employment and wage employment generating programmes, training of woman and rural youth, creating rural infrastructure etc.are all aimed at providing alternative means of living for the rural poor and reducing excessive burden on agriculture to make way for increased use of modern input and technology and thus speed up agricultural progress.

It aims at accelerating agricultural development, creating more employment, liberalising agriculture and achieving greater investment in agriculture. The policy seeks to achieve agricultural growth rate 4 % per annum. It aims at protecting farmers against foreign competition .It focuses on efficient use of technology and providing necessary credit and other inputs to the farmers. It seeks to promote private sector in agricultural and asks for direct private investment in crops, research and HRD .it seeks to evolve location specific economically viable crops ,horticulture ,livestock species etc.,It aims at abolishing all restrictions on movement of agricultural goods within country. It seeks to keep agriculture goods within the country .It seeks to keep agricultural tax free .Rural electrification and use of renewable energy sources and insurance of all agricultural operations are the other major planks of National Agricultural Policy,2000

Agriculture is the mainstay of Indian economy because of its high share in employment and livelihood creation; it reduced contribution to the nation's GDP. The share of agriculture in national income has been declining from 56.5% in 1950-51 less than 17 in 2008-09 .While the share of agriculture in national income has been declining; the workforce engaged in agriculture has exhibited only a marginal decline. Data provided by the Census of India reveals that whereas in 1961, 75.9% of total workforce was engaged in agriculture (absolute number being 143.2 million workers) fell to 63.8 in 1993-94 and 59.9 in 1999-2000. ITEM| 2007-08| 2008-09|

1.Growth in GDP in Agriculture %Allied sectors| 4.7| 1.6| Agriculture| 5.0| 1.1|
Forestry and logging| 2.2| 2.9|
Fishing| 6.0| 6.3|
2.Share in GDP-Agriculture and Allied Sectors| 16.4| 15.7| Agriculture| 13.9| 13.2|
Forestry&Logging| 1.7| 1.7|
Fishing| 0.8| 0.8|
3. Share of Agriculture &Allied sectors in total GCF| 7.01| 9.05| Agriculture| 6.43| 8.39|
Forestry And logging| 0.07| 0.09|
Fishing| 0.51| 0.58|
4. Share of Agriculture imports in total imports at current pricesShare of agriculture Exports in total exports at current prices| 2.9512.05| 2.7410.23| 5. Employment in agriculture sector as share of Total employment in 2004 -05 as CDS| _______| 52.1|

Agricultural crops can be broadly grouped into two categories, viz .,food crops and non foodcrops.Food crops further consists of : a) Cereals such as rice ,wheat,jowar,maize,bajra,etc.,and
b) Pulses, such as gram .masur,moong,etc.
Thus cereals and pulses together comprise food crops. The non food crops which are also called cash crops, consist of such varied crops as oilseeds Groundnuts.sunflower.,)sugarcane,cotton,jute,tobacco,etc Potatoes ,tea,coffee,cashew ,coconut,vegetables.fruit,etc are also counted under cash crops .In india ,food crops are grown over nearly three fourth of gross sown area.Following table trends in production of food and non food crops in india as well as the area under these crops.

Crops| 1950 -51| 1960-61| 1970-71| 1980-81| 1990-91| 2000-01| 2005-06| 2006-07| 2007-08| 2008-09| Rice| 668| 1013| 1123| 1336| 1740| 1901| 2102| 2131| 2202| 2186| Wheat| 655| 851| 1307| 1630| 2281| 2078| 2619| 2708| 2802| 2891| Jowar| 353| 533| 446| 660| 814| 764| 880| 844| 1021| 952| Miaze| 547| 926| 1279| 1159| 1518| 1822| 1938| 1912| 2335| 2355| Bajra| 288| 286| 622| 458| 658| 688| 802| 896| 1042| 1011| Pulses| 441| 539| 524| 473| 578| 544| 598| 612| 625| 655| Oilseeds| 481| 507| 579| 532| 771| 810| 1004| 916| 1115| 1016| Sugarcane| 33| 40| 48| 532| 65| 69| 67| 69| 69| 62| Cotton| 88| 125| 106| 58| 225| 190| 362| 421| 467| 419| Jute| 1044| 1080| 1186| 1245| 1833| 2026| 2362| 2342| 2260| 2194|

Largest increase in productivity has been in the case of wheat ,where the yields per hectare has gone up from 650kgs in 1950-51 to about 2900 kgs in 2008-09 over four fold increase during nearly six decades. This tremendous increase in yield has been possible due to the widespread use high yielding varieties of seeds, extension of irrigation facilities, fertilisers, etc.

But our major crops viz., rice has not shown a similar increase in per hectare yield though the increase there has also been nearly three fold and thus quite significant.


A comparison of productivity levels in Indian agriculture with the levels in other countries shows how low the productivity in Indian agriculture is .International comparisons reveal a wide gulf in India’s performance between achievements in output and productivity .While India compares favourably in terms of total output ,it compares poorly in terms of yield .

International Comparison of Yield Selected Countries 2004-05 (Metric Tonnes/ha.) Rice/Paddy| Wheat | Cotton | Major Oilseeds |
Country | Yield | Country | Yield | Country | Yield | Country | Yield | Egypt | 9.8| China | 4.25| China | 11.10| Argentina | 2.51| India | 2.9| France | 7.58| U.S.A| 9.58| Brazil | 2.48| Japan | 6.42| India | 2.71| Uzbekistan | 7.98| | 2.05| Myanmar | 2.43| Iran | 2.06| India | 4.64| India | 0.86| Korea | 6.73| Pakistan | 2.37| Brazil | 10.96| Germany | 4.07| Thailand | 2.63| U.K| 7.77| Pakistan | 7.60| U.S.A| 2.61| U.S.A | 7.83| Australia | 1.64| | | Nigeria | 1.04| World | 3.96| World | 2.87| World | 7.33| World | 1.86|

I. General causes
Pressure of Population on Land: With increasing pressure of population on land, per capita cultivated land has declined from 0.444 hectares in 1921 to 0.296 hectares in 1961 and further to 0.219 hectares in 1991. Increasing pressure of population on land is partly responsible for the sub-division and fragmentation of holdings resulting in low productivity. II. Institutional Causes

Land tenure system: A very important reason of low agricultural productivity has been the exploitative land tenure system in the form of zamindari system. Legislations passed for abolition of intermediaries in the post-Independence period did not break the stranglehold of the zamindars on the rural economy. They only changed their garb and became large landowners. Uneconomic holdings: According to the National Sample Survey, 52 percent holdings in 1961-62 had a size of less than 2 hectares. In 1990-91, 78 percent of total holdings fell under this category. Most of these holdings are not only extremely small, they are also fragmented into a number of tiny plots so that cultivation on them can be carried out only by labour-intensive techniques. This results in low productivity. III. Technological Causes

Outmoded Agricultural techniques: Most of the Indian farmers continue to use outmoded agricultural techniques. Wooden ploughs and bullocks are still used by a majority of farmers. Use of fertilizers and new high-yielding varieties of seeds is extremely limited. In brief, Indian agriculture is traditional and therefore, productivity is low. Irrigation plays an important role in Indian agriculture. Currently, nearly 45% of the 175 million ha of the country’s cropped area is irrigated. Unirrigated crop areas have actually declined and the rate of yield improvement on these areas has been far slower overall, compared to irrigated areas. This shows that even now about 55 percent of the gross cropped area continues to depend on rains. Rainfall is often insufficient, uncertain and irregular. Accordingly, productivity is bound to be low in all those areas which lack irrigation facilities and are totally dependent on rains. MEASURES TO IMPROVE AGRICULTURAL PRODUCTIVITY

Productivity in Indian agriculture is quite low. The organisational and technological reforms made during the past few decades have-not doubt, raised productivity levels,in case of some crops ,but even now our productivity remains very low when compared to some agriculturally developed nations .Therefore, further efforts are needed to implement such measures that help in raising productivity levels. 1. Reduction of population pressure on land

Agricultural land in India has ,over the years ,come under excessive pressure of population .India's rural population has increased from around 21 crore persons in 1901 to over 72 crores persons in 2001,while the cultivable area has not much changed has resulted in low per productivity per worker ,thereby giving rise to disguised employment .if some people can be withdrawn from agriculture by providing them alternative avenues of employment outside agriculture, the pressure of population on land will be reduced .This would provide scope for introduction of new technology and mechanisation of agriculture that would increase productivity.

2. Improvement in Quality of labour
To improve agricultural productivity, these farmers must be made aware of scientific methods and given training for their use through demonstrations, training programmes and extension services. Thus enabling them to understand, accept and apply new methods that lead to improvements in productivity. 3. Use of Modern Technology

To increase productivity, area under HYV seeds must be expanded and use of fertilisers must be increased to provide required nutrition to plants .Adequate and timely water supply must be assured through expansion of irrigation facilities. Seed fertiliser water -pesticides technology has given tremendous boost to output and productivity in areas where it has been used so far. Therefore use of this technology must be expanded. Condition must be created for use of this technology on a wider area further increase agricultural productivity. 4. Expansion of Credit facilities for Agriculturists.

This new agricultural technology enable farmers to use cheap and timely credit must be made available, though measure have been taken through cooperatives societies ,rural banks and other institutions, still the actual flow of credit has not been commensurate with the requirements of the farmers. Thus there is need for expanding credit facilities for the farmers, particularly the small cultivators so that they could make use of modern agricultural technology. GROWTH PERFORMANCE OF AGRICULTURE

Agriculture is a very significant part of the Indian economy. It employs a bulk of India’s workforce and contributes substantially to its national income. Agriculture, thus plays an important role in determining the rate of overall economic progress. However, growth rate of agriculture and allied sectors has been quite slow and erratic over the plans. Only over the Sixth and the Eighth Plan periods, agricultural growth rate exceeded 4 percent per annum. In a number of years growth rate has been negative or extremely low, thus, pulling down the overall growth rate of GDP. Some success has been achieved in making agriculture more vibrant and relatively stronger segment of the economy through technological innovations and strategies grouped under the common name of ‘Green Revolution’. The table shows the trends in growth rate of agricultural and allied sectors as well as GDP and overall economy’s GDP growth rates. It is indeed said that that even after nearly six decades of economic development, growth rate of agriculture has been extremely low and sometimes even negative as in 2002-03(when it was -7%) except for the Sixth and Eighth Plans, where agricultural growth rate was above 4%, the remaining period has been of dismal performance as growth rate varied between 1 to 3 % with some years of negative growth, thus showing extreme vulnerability of our development performance to exogenous factors like time and adequate rainfall and other favourable conditions.

Growth rate of GDP and Agriculture and Allied Sectors

Period| Growth rate of Agriculture and Allied Sectors| Growth Rate of GDP| 1951-1980| 2.4| 3.5|
Sixth Plan1980-1985| 4.3| 5.7|
Seventh Plan1985-1990| 3.2| 6.0|
Annual Plan1990-1992| 1.3| 3.5|
Eighth Plan1992-1997| 4.7| 6.7|
Ninth Plan1997-2002| 2.5| 5.5|
Tenth Plan2002-2007| 2.5| 7.8|
Eleventh Plan2007-20082008-20092009-2010|||

There are many factors contributing to slow and erratic growth rate of agriculture during the five years plans.

Fortunately, the Indian agricultural scientists achieved a major breakthrough in agricultural technology that was capable of bringing about revolutionary changes in agricultural production and productivity. This new technology comprised of package of high yielding varieties of seeds, fertilizers, water and pesticides, the use of which could usher in an era of tremendous increase in agricultural productivity.


Indian agriculture, seen in its historical perspective, has always largely remained closed and immune from the global economic developments. This is because whereas. on the one hand , India’s exports were mainly limited to a few commercial crops like tea,coffee,spices etc. its imports were largely restricted to provide a measure of protection to the farmers . However, with the implementation of various clauses of the WTO many export restrictions are being removed in India as well as other member countries and with this India’s export orientation or degree of openness (which is measured by the ratio of value of exports to GDP in an year) are increasing. Increased export orientation of Indian agriculture is bound to have some impact on agricultural development , farmers’ income and cropping pattern. Here we analyse some such aspects of globalization of Indian agriculture. MAJOR ISSUES IN THE CONTEXT OF GLOBALIZATION:

Following issues need to be addressed in the context of globalization of the agricultural sector. These are: i) Self-sufficiency in production
ii) Price stability
iii) Cropping pattern
iv) Adverse effects on weaker sections and
v) WTO commitments
These issues are examined below.
Theoretically, if a country globalizes its agricultural sector, it cannot achieve the objective of self-sufficiency in production because it will be forced to concentrate on production of those commodities in which it has comparative advantage in production. India, with large population and lower purchasing power, the impact of globalization on availability of food at relatively lower prices is of concern both politically and ethically. Hence, food self-sufficiency at the national level, not necessarily 100 per cent, is desirable so that the reliance on trade can be kept within limits. Undue concentration on production of some agricultural commodities in the long-term may create serious consequences for the quality of land, ecological balance and employment opportunities. We need to judiciously globalise the sector so as to avoid the undesirable outcomes. Another issue related to globalization is the likely price instability in the domestic market due to the convergence of domestic prices with the international prices. Given the high level of instability of commodity prices in the international market, mainly due to variations in crop production and speculative nature of the market, it is quite likely that prices of commodities in the domestic market will be highly unstable. Hence, dismantling of trade barriers is likely to increase volatility of domestic prices and farm incomes. Also precaution has to be taken in case of large-scale import of agricultural commodities. Freeing trade in agricultural commodities is likely to change the cropping pattern in the country. Globalization of the sector may have its adverse effects on certain areas, some crops and some group of people. With export promotion and globalization, the benefits will be accrued to only some areas which are well endowed in terms of resources, some crops which are having comparative advantage in production and some sections of the population who are producing the exporting commodities. The country’s commitment to WTO, which in a way may facilitate the process of globalization, is likely to have some consequences for the sector. Currently, the commitment for reduction of subsidy may not affect the quantum of subsidy given to the farmers. However, once the exemptions provided to the developing countries are withdrawn, there can be some pressure for reduction of subsidy for food procurement and its distribution through the PDS. Given the fact that no country in the world can have comparative advantage in production of all commodities required by it, the restrictions on imports in the face of liberalization of exports will not be beneficial in a liberalized economic environment. The following priority tasks are identified for the government to help Indian agriculture adjust to globalization: * Food self-sufficiency at the national level is desirable so that the reliance on trade can be kept within limits. * Safety nets are needed to protect the interests of crops, people and regions which are likely to be affected by globalization. * Precautions on imports in view of the removal of quantitative restrictions. * Agricultural export policies need to be synchronized with the import policies to avoid price fluctuations. There is a need for sequencing of measures. In view of the removal of quantitative restrictions in the coming days, tariffication process needs to be done judiciously.

During the current Five Year plan, agriculture growth is estimated at 3.28 per cent against a target of 4 per cent. The Approach Paper to the Twelfth Five Year Plan emphasises the need to “redouble our efforts to ensure that 4.0 per cent average growth” is achieved during the Plan if not more. Without incremental productivity gains and technology diffusion across regions, achieving this higher growth may not be feasible and has implications for the macroeconomic stability given the rising demand of the 1.2 billion people for food. Growth in agricultural sector:

Agriculture including allied activities, accounted for 14.5 per cent of gross domestic product (GDP)at 2004-05 prices, in 2010-11. In terms of composition, out of the total share of 14.5 per cent that agriculture and allied sectors had in GDP in 2010-11, agriculture alone accounted for 12.3 per cent, followed by forestry and logging at 1.4 per cent and fishing at 0.7 per cent . Key Indicators| Item | 2009-2010| 2010-2011| 2011-12|
1.| 1 GDP – share and growth (at 2004-05 prices) Growth in GDP in agriculture & allied sectors Share in GDP - Agriculture and allied sectors Agriculture Forestry and logging Fishing | 1.014.712.41.50.8| 7.014.512.31.40.7| 2.513.9| 2.| Share in total Gross Capital Formation in theCountry (per cent at 2004-05 prices) Shareof agriculture & allied sectors in total Gross Capital Formation Agriculture Forestry and logging Fishing||| |


Agriculture and allied sectors recorded slightly lower average growth than targeted in the Eleventh Plan period due to severe drought experienced in most parts of the country during 2009-10 and drought/deficient rainfall in some states, namely Bihar, Jharkhand, eastern UP and West Bengal in 2010-11. However, timely and corrective measures taken by the government helped boost agricultural production and growth in agriculture and allied sectors reached 7.0 per cent in 2010-11, the highest growth rate achieved during the last six years. In 2011-12 agriculture and allied sectors are estimated to achieve a growth rate of 2.5 per cent. However a matter of great concern is the fact that agricultural growth is still, to an extent, characterized by fluctuations due to the vagaries of nature.


As per the Advance Estimates, production of food grains during 2011-12 is estimated at an all time record level of 250.42 million tonnes which is a significant achievement mainly due to increase in the production of rice and wheat.

Agricultural Production (kharif)

Times of India dated 25th march 2012


Given the growth rate of population, the rise in demand for food is a natural concomitant. Further, the rise in income levels and change in tastes and preferences of people have also contributed to the increased demand for diverse food products. The recent spurt in food prices was mainly driven by increase in prices of items like fruits and vegetables, milk, meat, poultry, and fish, which account for approximately 70 per cent of the wholesale price index (WPI) basket for primary food items. An examination of food consumption expenditure in the country during the period 1987-88 to 2009-10 clearly reveals that there has been a shift in expenditure towards milk and milk products, egg, fish, meat, and vegetables both in rural and urban areas, whereas the share of consumption of cereals in the total food basket has gone down

Item-wise share of Expenditure to Total Food Expenditure

| Urban| Rural|
| 2009-10| 1987-88| 2009-10| 1987-88|
Cereals| 41.1| 29.1| 26.6| 22.4|
Pulses and products| 6.3| 6.9| 6.0| 6.6|
Milk and products| 13.4| 16.0| 16.8| 19.2|
Egg, fish and meat| 5.2| 6.5| 6.4| 6.6|
Vegetables | 8.1| 11.6| 9.4| 10.6|
Sugar | 4.5| 4.5| 4.3| 3.7|
Food Total| 100| 100| 100| 100|


There has been a decline in overall area under food grains during 2011-12 (2nd Advance Estimates) as compared to 2010-11. The area coverage under food grains during 2011-12 stood at 1254.92 lakh compared to 1267.65 lakh last year. The area coverage under rice during 2011-12 is around 444.06 lakh .The area coverage under sugarcane during the current year has slightly improved to 50.81 lakh , and the area under cotton has increased significantly to 121.78 lakh


India’s trade policy on agricultural items is guided by the twin objectives of ensuring food security and building export markets for enhancing the income of farmers, depending on domestic availability. In wheat, non-basmati rice, and cotton under open general licence. India is among 15 leading exporters of agricultural products in the world. As per the International Trade Statistics 2011, published by the World Trade Organization (WTO), India’s agricultural exports amounted to US $ 23.2 billion with a 1.7 per cent share of world trade in agriculture in 2010. On the other hand, India’s agricultural imports amounted to US $ 17.5 billion with a 1.2 per cent share of world trade in agriculture in 2010.


Improvement in yield, which is key to long-term growth, depends on a host of factors including technology, use of quality seeds, fertilizers, pesticides, micronutrients, and irrigation. Each of these plays a role in determining yield level and in turn augmentation in the level of production.


Agriculture being a state subject, the primary responsibility for increasing agriculture production, enhancing productivity, and exploring the vast untapped potential of the sector rests with the state governments. However, in order to supplement the efforts of the state governments, a number of centrally sponsored and central-sector schemes are being implemented for enhancing agricultural production and productivity in the country and increasing the income of the farming community. A few of them are: * National Food Security Mission (NFSM)

* Rashtriya Krishi Vikas Yojana (RKVY)
* National Mission for Sustainable Agriculture (NMSA)


The Eleventh Five Year Plan envisages overall growth of 6-7 per cent per annum for the sector. In2010-11, this sector contributed 121.84 million tones of milk, 63.02 billion eggs, 42.99 million kg wool, and 4.83 million tonnes of meat. The Eighteenth Livestock Census (2007) has placed total livestock Population at 529.7 million and total of poultry birds at 648.8 million.


Agricultural Credit

Agricultural credit plays an important role in improving agricultural production and productivity and mitigating distress of farmers. Government has taken severa l measures for improving agricultural credit flow and bringing down the rate of interest on farm loans. Important achievements/ initiatives taken by the government in recent years are the following.

(i) Farmers have been receiving crop loans up to a principal amount of ` 3 lakh at 7 per cent rate of interest since 2006-07. (ii) Initiative has been taken to provide kisan credit cards (KCC) to all eligible and willing farmers in a time-bound manner. The scheme includes reasonable components of consumption credit and investment credit within the overall credit limit to provide adequate and timely credit support to farmers for their cultivation needs. About 10.78 crore KCCs had been issued up to October 2011.

Agricultural Insurance

Agricultural Insurance various major crop insurance schemes are being implemented in the country since 1999-2000 season with the objective of providing financial support to farmers in the event of failure of crops as a result of natural calamities, pests, and diseases. Under implementation in the country. the major ones are: i) National Agricultural Insurance Scheme (NAIS)

ii) Modified NAIS (MNAIS)
iii) Pilot Weather Based Crop Insurance Scheme (WBCIS)

A recent nationwide survey (NSS 59th Round, Report 498, 2005) brings out the grave agrarian situation in terms of farmer indebtedness. Almost 50 per cent of the farming households are indebted, but the proportion is much higher in states like Andhra Pradesh (82 per cent), Tamil Nadu (74.5 per cent), Kerala (64.4 per cent), which are also states with relatively high investments. More than 50 per cent of the borrowing is for investment in agriculture, but it is much higher in Andhra Pradesh (77 per cent), Karnataka (73 per cent) and Maharashtra (83 per cent). Institutional sources account to about 50 per cent on an average, but it is much lower at 30 per cent in states like Andhra Pradesh, where the remaining 70 per cent comes from informal sources.There has been a steep increase in the costs of farming across the country, which is substantially due to the reforms. The fertilizer price index increased from 99 in 1990-91 to 228 in 1998-99 at a compound annual growth rate of 11 per cent. And one estimate across the crops and country, suggests that fertilizers presently account for 29 per cent of farmers’ inputs costs. There have also been increases in the water charges in some states. There is the steep rise in cost of living in rural areas as indicated by the CPI for agricultural labor (CPIAL) while the farmers’ income languishes. This is a familiar scissors crisis in agriculture often resulting in pauperization of the peasantry. This has also resulted in widening of disparities between agricultural and non-agricultural incomes. The disparities have doubled over the last two and a half decades, leaving agriculture way behind. Per worker Income in Agriculture and Non-agriculture Sectors in India | Income per worker| Ratio of non-agriculture to Agriculture| Growth Rates in the Last Decade (per cent)| | Agriculture| Non-agriculture| | Agriculture| Non-agriculture| 1978-99 to 1983-84| 9961| 28,430| 2.85| -| -|

1988-89 to 1993-94| 11,179| 39,335| 3.52| 1.16| 3.31| 1998-99 to 2003-04| 11,496| 59,961| 5.22| 0.28| 4.30|

According to the 11th plan, the strategy to accelerate agricultural growth to 4 per cent per annum would action in the following broad areas: * Bringing technology to the farmers.
* Improving efficiency of investments, increasing systems support and rationalizing subsidies. * Diversifying, while also protecting food security concerns. * Fostering inclusiveness through a group approach by which the poor will get better access to land, credit and skills.

It is also necessary to impart a strategic focus to adaptive research making it location-specific and aimed at identifying regionally relevant best practice. Public expenditure on agriculture research will need to increase from around 0.7 per cent of agriculture GDP at present to 1 per cent by end of Eleventh Plan. Irrigation:

The Government of India has taken up irrigation potential creation through public funding and assisting farmers to create potential on their own farms. The total irrigation potential in the country has increased from 81.1 million hectares in 1991-92 to 102.08 million hectares up to the end of the Tenth Five Year Plan. However, only 87.2 million hectares is actually utilized. It is suggested in the 11th plan:

* More emphasis must be placed on Participatory Irrigation Management (PIM) to reduce gap between potential created and the actual utilized. * Comprehensive water balance accounts must be prepared of current use, both at the system level and at the level of water user associations, to highlight the extent of avoidable waste. * The subsidy structure on micro-irrigation equipment must be restructured to enable promotion of community sprinkler systems. Strengthening Input and Support Services and Rationing Subsidies: The present unbalanced and irrational system of fertilizer subsidy is an important cause of deteriorating soil quality. There is an urgent need to rationalize subsidy across nutrients and also examine methods by which the delivery of some part of the presently huge subsidies can be transferred from fertilizer producers to farmers or a group of farmers directly. There is also a need to ensure adequate and timely supply of the quality inputs recommended. There is a need to revamp the seed production and distribution system by strengthening public sector seed agencies and by involving private trade in seed multiplication and distribution system. An associated issue is that of credit outreach. Farm credit has expanded very significantly in recent years, but this has not prevented decline in the number of credit accounts, particularly small accounts, reflecting mainly the poor financial health of the cooperative sector. Another aspect of risk mitigation is to reduce price uncertainty. Minimum support prices exist, and farmers in every region need to be supported in at least one food and one non-food crop in each marketing season.

According to the World Food Programme Report, 1997-2000 of the United Nations Food and Agricultural Organisation (FAO), India is the home to nearly half of the world’s hungry people and is still classified as a low income and a food deficient country. Around 35% of India’s population – 320 million people are considered food insecure, consuming less than 80% of the minimum food requirements. Food management has, thus, emerged as an important issue and a major objective of economic development in India. Food management means building up a system which ensures that all the people at all times have physical as well as economic access to quantitatively sufficient and adequately nutritive food. Main components of food security are:

(A) Increase in production, supply and availability of food grains (B) Assured minimum prices and income to the farmers
(C) Well organized Public Distribution System
(D) Maintaining adequate buffer stocks.

A sound agricultural price policy can do a great deal to ensure a relatively stable income to the farmers and less fluctuating food prices to the consumers. In fact, a suitable price policy has a great role to play in agricultural economy of our country.The food grains prices committee 1964 set up an agricultural prices commission. It stated that it was desirable that, ‘’the price policy of all agricultural commodities should/could be evolved and the claims of competing crops on limited resources can be resolved in the perspective of overall needs of the economy.’’ The agricultural prices commission was accordingly set up in January 1965. It was renamed commission for agricultural costs and prices (CACP) in 1985.ever since the inception, the commission has been announcing support prices, procurement prices and issue prices for a no. of agricultural commodities. The government has accordingly been fixing these prices for different agricultural prices. Minimum support prices are in the nature of long term guarantee to the producers so that in the event of glut, prices are not allowed to fall below these announced minimum prices. To ensure this, government indulges in large-scale purchase of food grains at declared minimum prices. Procurement prices are fixed at higher level as compared to the minimum support prices and are meant essentially for the purchase of quantities need by government for maintaining the public distribution system and for building the buffer stocks. Issue prices indicate the prices at which the government supply food grains through the fair price shops and at which the government supplies food grains through fair price shops and rations depots. Impact of minimum support prices

However, the yield deceleration from early 1990s, has made it more difficult to reconcile the interest of producers, consumers and fiscal, especially with MSP being used in the early 1990s as an instrument to compensate farmers for cuts in fertilizer subsidy. The system ran into crisis during the ninth plan when large increases were continued despite falling world prices and simultaneously the PDS was converted from universal targeted benefit. Also since MSPs prices were above market prices, full cost pricing caused the APL to exit PDS, rendering many FPS unviable while FCI bought almost entire market revivals in traditional surplus areas. PDS sales declined from 19 million tonnes in 1996-1997 to less than 12 million tonnes in 2000-2001 .The increased cost of holding doubled food subsidy to 1% of GDP. BPL prices were further cut and quotas increased sharply in 2001-2001. But such cheap supplies depressed from prices of cereals whenever MSP was ineffective and per unit subsidy is much higher because about 80% of PDS supply is now at BPL and are far below MSP and another 80% even below the Antyodaya Anna Yojana (AAY). Therefore main function of prices that is to act as signals for allocation of resources has been made subsivient to income, parity and food security objectives. Superior technology is available. In recent years we have largely neglected its aspect of price policy. In we can go on basis of public pronouncements the objectives sought to be achieved the price policy include ensuring A. reasonable prices for the growers

B. reasonable prices for grains to be released from PDS
C. reasonable prices in open market

A moment’s reflection will show that in most circumstances, these aims conflict with each other. The price policy can not resolve all conflicts in the society. Support prices are a weak instrument for income transfers. Our capacity to offer minimum support prices for large no. of commodities is limited. Instrument of minimum support prices has to be used sparingly. National minimum support prices fir food grains and other major commodities are recommended by the commission for agricultural costs and prices (CACP) but are actually set by a committee chained by Prime Minister. CACP recommendations are based on several factors. Apart from the consideration of income transfers price policy can be used to encourage inter crop shifts in resources used. However, when it comes to aggregate agricultural output, greater reliance has to be placed on “non price” factors , for example, generating and expanding more efficient technologies. The available studies clearly bring out that that aggregate supply response of agriculture is weak. Thus any attempt to encourage agriculture production can bring in its wake irreparable distortions in price structure. In a mixed economy like ours an important objective of price policy could be to give directions to the cropping pattern not only on basis of the existing demand and supply situation but also to take into account a qualitatively superior crop mix, for eg to provide a price advantage to nutritionally superior crops or to crops where the country has comparative and dynamic advantage. Infact, in this respect we seem to regressing. In 1970s price policies were used as an effective tool to encourage production of crop where it bey factors have to be assessment of costs of production [COP] and domestic and global market conditions. Hysterically NSPs for wheat and rice generally increased at rates below inflation, and remained well below import parity prices. Beginning with late 1990s, the MSPs set for wheat and rice became increasingly out of step. With domestic market conditions one key factor was and still is that COP concept used in setting the price became a “fuel cost” measure, that in addition to variable inputs cost, included rental value of land and intuited value of family labour and return to management. Therefore, tendencies of MSPs to be increased have been compounded as MSPs benefits to boost land rental, labour and management costs, thus leading to higher COP.

Table :Central Food Grain Buffer Stocks and Buffer Norms
| Wheat| Rice| Total| Buffer Norm|
January 1995| 12.9| 17.4| 30.3| 15.4|
January 2001| 25| 20.7| 45.7| 16.8|
January 2005| 8.9| 12.8| 21.7| 16.8|
January 2006| 6.2| 12.6| 18.8| 20.0|
January 2007| 5.4| 12.0| 17.4| 20.0|
January 2008| 7.7| 11.5| 19.2| 20.0|
January 2009| 18.2| 17.5| 35.7| 20.0|
January 2010| 23.1| 24.3| 47.4| 20.0|

An important factor affecting MSP policy in 1990s concerning the political dimensions of the policy, when India entered the era of coalition governments and farm lobby became more influential.By maintaining high prices government has become responsible for the storage and transport of most of the marketed surplus of wheat and rice in the country – most observers have termed this as default nationalization of default trade. Policy providers little inventive for private investment in gram storage, handling or distribution, with the exception of the fees traders can earn in the import of subsidized grain allocated by the government. Strong price incentive for wheat and rice combined with fertilizer subsidy are contributing to rapid deterioration of ground water resources and soil fertilizers.

It is a national food security system established by the government of india under ministry of consumer affairs, food and public distribution. It is managed jointly with state government in India .It distributes food ND NON-FOOD ITEMS POOR. Major commodities distributed tp consumers includes staple food and non-food items . includes wheat ,sugar, rice, and kerosene through a network of fair price shops ,established in general states across the country ,which are managed by state governments as of the date there are 499 lakhs FPS across India. In terms of coverage and expenditure ,it is considered to be the most important food security network.Both states and central government are to share responsibility relating the PDS while the central government is responsible for procurement, storage and transportation and bulk all location of food grain , the state governments hold the responsibility of distributing the same to the consumers through the network of fair price shops . State governments are also responsible for operational responsibilities including allocation and identification of families below poverty line , issue of ration cards, super vision and monitoring and functioning of PDS. Under PDS scheme, each BPL [below poverty line] family is eligible 35 kg of rice or wheat every month, while an APL (above poverty line) household is entitled to 15 kg of grain on monthly base .Main purpose of the public distribution system in india was to offer support to consumer during the period of food storage of the 1960’s . since 1980’s , the coverage of the pds was extended to the rural areas in some states . thus it acquired the state of welfare program and was made to extend subsidized food grains to all tribal blocks , with network of more than 4.62 lakhs fair price shops , distributing commodities with Rs 30,000 crores annually to about 160 million families . pds in India was of the largest distribution network of ets kind in the world . In several employment generation programmes subsidized food grains were distributed as a part of wages. TARGETED PDS

The functioning of the PDS was severally criticized
a) For its failure to serve below poverty line BPL population. b) For its bias in favor of urban areas.
c) Negligible coverage of poor states with large population of rural poor. d) Wide leakages of the PDS grains produced from food corporations of India .

Realizing this government tried to streamline the system by issuing special cards of BPL families and selling food to them by issuing special cards to BPL with effect from june 1997. Under targeted public distribution scheme each poor family was entitled to 10 kg of food grains at highly subsidized prices . this benefit was further increased from 10kg to 20 kg and then 25kg of grains to poor families . On addition 25kg of food grains was to be produced to the poorest of poor families under the ANTODAYA ANNA YOJANA at a highly subsidized price of Rs 2 per kg for wheat and Rs 3 per kg under PDS . in 2008, out of total 31.6 million tones , BPL families accounted for 143.2 million tones (45%) and antodaya families accounted for 8.7 million tones (27.5%) . this implies that nearly 73% of poor and very poor . this is encouraging development because TDPS has been unable to help nearly three fold of beneficiaries . it is an indicator of the success of TDPS . But on other hand it is argued that TPDS model hits kerala’s PDS model. Experts admit that prior to the introduction of targeting, Kerala had one of the best run and most effective PDS networks in India and a model system worth emulating by other states in the country. Kerala was the only state with near universal coverage of all households. In 1991, nearly 95% of all households were cove raged by the system were equitably spread across income groups in both rural and urban areas . The quantity and the quality of items supplied through 14,000 fair price shops or ration shops, as in Kerala had a significant impact on rural consumption and nutritional requirement. Significantly poor used PDS more than the rich. 85% of consumers met all or part of their rice requirement from fair price shops. Moving to the targeted PDS .from 1997 had major impact on the state and the system. As it lost large share of central allocation of cereals and other items with a sizeable chunk of its card holding families classified above poverty line .The guaranteed and subsidized allocation of grains for BPL households under TPDS accounts for only 10% of the previous PDs supply. According to government figures, Kerala’s total food grain requirement in 1997 was 48 lakh tonnes a year and internal production accounted for only 10 lakh tonnes. 24 lakh tonne used to be provided underPDS.APL card holders have shifted to private trade. Fair price shops owner sales have declined and they have shifted to state of losses.

TPDS/PDS has suffered because of the degradation in agricultural growth: as in year 2006 government (centre) cut the wheat allocation under TPDS by 63% on Account of low stocks, a government official said. The total food grains allocation was cut by 23% with dwindling food food grains stocks. Wheat allocation to the APL was cut by 88%.

World bank study: - despite India spending over 2% of GDP on social protection. Schemes, their returns in turn of poverty reduction are yet to reach a full potential. There are high leakages in the PDS and uneven implementation of NREGA . Quoting data after review of the implementation of anti poverty progammes, the bank said leakage and diversion of grains from the PDS was high only 41% of food grains reached household. Cash transfer vs. in kind under PDS international experience shows that there is a strong case for cash transfer instead of food distribution as a long term reform in PDS . Bihar for instance has already started to introduced food stamps or coupons .

Food right activist COLIN GONSALVES opposed the cash transfer proposal. it will corrupt the system completely. It is worse than PDS. Cash transfers had exceedingly been a success in Brazil. Every person had bank account. “How many sc/st people have bank accounts in India? When we give them cash directly , they may misuse it , he believes, that PDS should be nationalized and the government needs to have its own network to distribute grain.


To ensure food security, the government maintains adequate buffer stocks of food grains. The food corporation of India purchases food grains from the producers at prices fixed by the government called Procurement prices. These stocks are maintained by the FCI in a central pool, from which food grains are supplied for the PDS and also used for supplementing market supply to prevent any sharp rise in food prices in the event of shortfall in production. The minimum size of the buffer stock to be maintained is prescribed at 20 million tons of food grains in January 2009. However, the actual size of buffer stocks was about 47.4 million tons in January 2009.

Providing food grains at affordable prices involves food subsidized because the sale price (issue price under the PDS) has to kept much below the economic cost of food grains to the FCI . Economic cost includes purchase price (procurement price) plus handling, transportation, storage and distribution expenses of the FCI in procuring food grains and providing them to the people through fair price shops.

2000-01| 12,060| 27.8|
2001-02| 17,499| 45.1|
2002-03| 24,176| 38.2|
2003-04| 25,160| 4.1|
2004-05| 25,800| 2.5|
2005-06| 23,071| -10.4|
2006-07| 23,628| 3.3|
2007-08| 31,290| 31.2|
2008-09| 43,608| 40.0|

Food subsidies have grown steadily over time. Between 1990-91and 2000-01, amount of food subsidy increased from Rs 2,450 crores to Rs 12,060 crores , indicating a five-fold rise in ten years. A major factor behind such massive growth of food subsidies is the rapid increase in economic cost of food grains to the FCI. The annual increase in MSP of food grains based more on political motivations rather than economic factors, high state level levies , rising distributional costs and above all, high inefficiency levels of FCI resulting in higher transportation and storage losses coupled with widespread corruption, are some of the main causes contributing to increasing economic costs of food grains over the past years.


Some economists have pointed out the cost of administering the PDS is very high and it is the strongest argument for shift. The amount of money that could be transferred by eliminating PDS is substantial. Kaushik basu made the argument that the government is a major hoarder of food grains and in the process of procuring food grains and creating major stocks we end up increasing prices of food grains in the market. A careful distinction needs to be made between need to hold some buffer stocks and excessive hoarding that would lead to a major increase in food prices. Proponents of cash transfers argues that banking system is less corrupt . but intermediaries will be present even case of cash transfers . but corruption can be bought under PDS , which will automatically have an impact on how the system functions. Setting up of independent on imposing penalties to officials who do not comply with PDS regulations. Irritating independent call centers that could officially lodge complaints. The Chhattisgarh government offers to send a text message to anyone who wishes to monitor ration shops whenever grains are desired. RECENT SCENARIO

6.1K tonnes food grains reported to be damaged in 2010-11: Government PTI Mar 19, 2012, 01.41PM IST
NEW DELHI: The government today said out of the 60 million tonnes of food grains distributed in the country in 2010-11 though the Public Distribution System (PDS), only 0.061 lakh tonnes were reported to be damaged. The total damage reported during 2010-11 was 0.061 lakh tonnes, out of the total 60 million tonnes distributed in the country in 2010-11, Minister of State for Foods and Public Distribution K V Thomas said in Rajya Sabha. He was replying to questions relating to the poor quality of food grains being distributed to the states under the PDS and other food-based welfare schemes. Thomas said the government has laid down procedures to ensure only good quality food grains, free from insect infestation, are issued for PDS and other food-based welfare schemes."Ample opportunities are given to the state governments to check the quality of food grains prior to lifting the stock from FCI godowns," he said. It was reiterated to the concerned state government officials as well as district mid-day meal authorities and FCI officials that joint inspection should be conducted as per as the laid down procedure to ensure that food grains being lifted are of fair average quality," he said. To a question on rotten wheat and rice supply to the hill areas of Darjeeling through PDS, Thomas said state representatives were happy with the quality and had signed a "consignee's report as satisfied with the quality and quantity of stocks issued".

Technology critical input for farm growth, says President
PTI Mar 24, 2012, 06.34PM IST
JALGAON: Maintaining that farmer suicides should not happen any more, President Pratibha Patil said the critical input for any agricultural growth is technology which will help increase productivity."The critical input for any agricultural growth is technology. In fact, it can only be through technological prowess that agriculture productivity can be increased," Patil said, speaking at the convocation function of the North Maharashtra University (NMU) here. Efforts should be made for research and further interaction between students and farmers to enable the former to understand ways of village life and technological requirements of farmers. Students should help them in whatever manner they can, especially dryland farmers, where we find cases of suicide which should not happen any more, she said. In the modern world, an immense amount of information is available, she said. "The challenge is how to use it for research and new discoveries, as we cope with changes and new demands."The university conferred a Doctorate Honoris Causa on the President on the occasion."I can definitely say that it was my education that was my greatest asset in life. I have always advocated the importance of education for all," she said."Education, while preparing students to be knowledgeable and skilled, should also make them aware of their responsibilities towards the growth of the nation, as well as the well being of society."India is a store house of traditions and knowledge, Patil said.


In the year 2011-12, the MSPs of various agricultural crops have been increased as reflected in The MSPs of some major crops exhibit a rising trend in line with costs and as incentive for higher output.

Minimum Support prices

| 2010-2011| 2011-2012| difference|
Kharif cropsPaddy(common)Paddy(Gr.a)Jowar(hybrid)Jowar (maldandi)BajraMaizeRagiArharMoongUradGroundnut in shellSunflowerSoyabean (black)Soyabean (yellow)SesamumNigerseedCotton | 100010308809008808809653000317029002300235014001440290024502500| 10801110980100098098010503200350033002700280016501690340029002800| 808010010010010085200330400400450250250500450300| Rabi cropsWheatBarleyGramMasur (lentil)Rapessed/mustardSafflower | 11207802100225018501800| 12859802800280025002500| 165200700550650700|


The main objectives of food management are procurement of food grains from farmers at remunerative prices, distribution of food grains to consumers, particularly the vulnerable sections of society, at affordable prices, and maintenance of food buffers for food security and price stability. The Instruments at the disposal of the government are the MSP and central issue price (CIP). The nodal agency which undertakes procurement, distribution, and storage of food grains is the Food Corporation of India (FCI).

Buffer Stock

The stock position of food grains in the central pool as on 1 February, 2012 was 55.2 million tones comprising 31.8 million tonnes of rice and 23.4 million tonnes of wheat, which is adequate for meeting the requirements under the TPDS and welfare schemes during the current financial year.

Stock position of Wheat and Rice in the Central Pool vis-à-vis Minimum Buffer Norms

| wheat| rice| total|
| Minimum buffer norms| Actual stock| Minimum buffer norms| Actual stock| Minimum buffer norms| Actual stock| January 2009| 112| 182.12| 138| 175.76| 250| 357.88| April| 70| 134.29| 142| 216.04| 212| 350.33|

July| 201| 329.22| 118| 196.16| 319| 525.38|
October| 140| 284.57| 72| 153.49| 212| 438.06|
January 2010| 112| 230.92| 138| 243.53| 250| 474.45| April| 70| 161.25| 142| 267.13| 212| 428.38|
July| 201| 335.84| 118| 242.66| 319| 578.50|
October| 140| 277.77| 72| 184.44| 212| 462.21|
January 2011| 112| 215.40| 138| 255.80| 250| 471.20| April| 70| 153.64| 142| 288.20| 212| 441.84|
July| 201| 371.49| 118| 268.57| 319| 640.06|
October| 140| 314.26| 72| 203.59| 212| 517.85|
January 2012| 112| 256.76| 138| 297.18| 250| 553.94| | | | | | | | | |
Food Subsidy

While the economic cost of wheat and rice has continuously gone up, the issue price has been kept unchanged since 1 July 2002. The government, therefore, continues to provide large and growing amounts of subsidy on food grains for distribution under the TPDS, other nutrition-based welfare schemes, and open market operations. The food subsidy bill has increased substantially in the past few years putting severe strain on the public exchequer

Quantum of Food Subsidies Released by Government

Year | Food Subsidy(crores)| Annual Growth (%)|
2001-02| 17494| 45.66|
2002-03| 24176.45| 38.20|
2003-04| 25160| 4.07|
2004-05| 25746.45| 2.33|
2005-06| 23071| -10.39|
2006-07| 23827.59| 3.28|
2007-08| 31259.68| 31.19|
2008-09| 43668.08| 39.69|
2009-10| 58242.45| 33.38|
2010-11| 62929.56| 8.05|

Allocation of Food grains under TPDS and Other Welfare Schemes

Allocations for the Antyodaya Anna Yojana (AAY) and below poverty line (BPL) families are being made at 35 kg per family per month. For above poverty line (APL) families, allocation varies from 15 kg to 35 kg in different states. During 2011-12, the following allocations have been made so far: * Normal TPDS allocation made is 438.65 lakh tonnes covering AAY, BPL, and APL families. * Additional allocations of 123.67 lakh tonnes of rice and wheat have also so far been made. This Comprises (i) 50 lakh tonnes to BPL families made in May 2011, (ii) 50 lakh tonnes to APL families in June 2011, and (iii) 23.67 lakh tones to 174 poorest/backward districts (allocated as per the Supreme Court’s order) (iv) 3.31 lakh tonnes for calamity relief, etc. * 49.05 lakh tonnes allocated for other welfare schemes such as the Midday Meals Scheme, Wheat Based Nutrition Programme under the Integrated Child Development Services, Annapurna, etc. * Total release of foodgrains during the current year so far has been 614.69 lakh tonnes.

Open Market Sale Scheme (Domestic) [OMSS (D)]

In addition to maintaining buffer stocks and providing food grain stocks for meeting the requirements of the TPDS and other welfare schemes, the FCI on behalf of the Government of India has been undertaking sale of wheat and rice at predetermined prices in the open market from time to time to enhance market supply of food grains to have a moderating influence on open market prices.


The commodity futures market facilitates the price discovery process and provides a platform for price risk management in commodities. Currently, 113 commodities are notified for futures trading of which 50 are actively traded in five national and 16 commodity specific exchanges. Agricultural commodities, bullion, energy, and base metal products account for a large share of the commodities traded in the commodity futures market. During the year 2011-12 (up to January 2012), in value terms bullion accounted for the maximum share of traded value among the commodity groups (57.7 per cent) followed by energy (15.9 per cent), metals (15.2 per cent), and agricultural commodities (11.2 per cent). However, in quantity terms, trade in energy accounted for 57.5 per cent followed by agricultural commodities (33.2 per cent), metals (9.3 per cent), and bullion (0.1 per cent)

Trade in Commodity Futures Market

Commodity| 2009-10Volume Value| 2010-11Volume Value| 2011-12 (upto ’12)Volume Value| Agricultural commodities| 3991.21(39.3)| 1217949(15.7)| 4168(32.6)| 1456390(12.2)| 3878.45(33.12)| 1695550.8(11.2)| Bullion| 4.73(0.05)| 3164152(40.8)| 7.38(0.1)| 5493892(46.0)| 8.86(0.1)| 8758384(57.7)| Metals| 982(9.7)| 1801636(23.2)| 1410(11.0)| 2687673(22.5)| 1081.10(9.3)| 2311689(15.2)| Energy| 5163(50.9)| 1577882(20.3)| 7220.12(56.4)| 2310959(19.3)| 6714.96(57.5)| 2423261.2(15.9)| Other| 2.10(0.02)| 3134(0.04)| 0| 29.04| 0.01| 5.9|

Total| 10143| 7764754| 12805.57| 11948942| 11683.38| 15188891.3|


A central vigilance committee report 2007 concluded that the best available solution to rampant corruption would be to minimize human interaction and introduce computer technology. The government must also initiate and enforce a “zero tolerance “ campaign to target corruption through the PDS system, repealing section 15A so that public officials can be appropriately penalized for misdealing .those in the unorganized sector should also be a top priority i.e. homeless migrants, widows etc. who are unable to protect. Documentation of ration cards ,spot checking can instantly ensure eligibility without lengthy delays ,with “roaming ration cards” distributed to those who cannot stay in one place.

Agriculture and allied sectors have made substantial progress in terms of production and productivity since the beginning of the Planning process. The successive Five Year Plans have emphasized growth in the agriculture sector, as a result of which food grains production reached a record level of 244.78 million tonnes in 2010-11.However, the challenges are far from over. Agricultural growth in the current Five Year Plan is expected to be less than the target. A number of supply-side constraints exist and thereby achieving the food and nutritional security is a challenge. In order to make 4 per cent agricultural growth a reality, adequate efforts are required to focus on addressing the challenges in this sector.

The area under food grains has declined in the last three decades. This calls for speedy improvement in yield in order to increase production through adequate investment in research and development. In yield parameters, India is lagging behind global levels in most crops. With very little growth in area and marginal growth in yields of many crops during the last decade, increasing agricultural production remains a challenge. A holistic approach, spanning agricultural R&D, dissemination of technology, and provision of agricultural inputs such as quality seed, fertilizers, pesticides, and irrigation, would help achieve higher levels of productivity. Access of small and marginal farmers to formal sources of agricultural credit is still inadequate, though the flow of agricultural credit has increased in the recent past. Effective coordination and monitoring of ongoing agriculture and allied sectors programmes need to be ensured for optimum results.

Indian farmers are mostly small and marginal farmers with small and fragmented landholdings. The average farm size in the country has declined over the years. This poses a challenge in terms of adoption of farm mechanization as well as generating productive income from farm operation. Pooling of many landholdings may yield better economies of scale, for which land laws for leasing with sufficient safeguards in place should be considered. Higher levels of purchasing power are supporting higher demand for protein rich food items. The country has to step up efforts for increasing production of milk and other dairy products, egg, poultry, fish, meat, etc. There have been increases in the prices of these items because supply has not kept pace with demand. Declining per capita availability of food grains has been a matter of major concern. For ensuring nutritional security, it is not only important to increase per capita availability of food grains but also to ensure that right quantities of food items are there in the food basket of the common man. A thrust on horticulture products is required for enhancing per capita availability of food items as well as ensuring nutritional security. Indian agriculture is still dependent on the monsoon. This adds to the risks a farmer faces. The dependency of the Indian farmer on the monsoon has to be reduced largely by increasing the irrigation facilities. Climate change and extreme weather conditions impacting agriculture; there is need to devise insurance schemes linked to indices of various vulnerability parameters. The insurance policy framework needs to be dynamic, incorporating the perspectives of the insured, insurers, and public policy so that it covers a large section of population. 8.80 Storage capacity is a major problem facing the country. Adequate storage facility would help reduce post-harvest losses. Adoption of modern farm implements and tools especially by small farmers is still low because of their lack of resources. This, in turn, hampers the development of the agriculture sector. Addressing infrastructure requirements in the agriculture sector, especially storage, communication, roads, and markets should be a priority. Public private partnership models can be of help in ensuring faster development of these requirements which are of vital importance for the growth of the agriculture sector. Another area for improvement is the generation of real-time market intelligence and also agricultural market reforms. Enhancing the returns farmers get on their production is essential for incentivizing them to produce more. Farmers need to realize the market price for their produce. Setting up of efficient supply chains is essential not only for ensuring adequate supplies of essential items at reasonable prices but also so that producers get adequately compensated. Linking farmers to the market is, therefore, very important. The successful experience of cooperatives in the milk sector in managing the supply chain and providing remunerative prices to the producers may be emulated in the case of agricultural products. The level of secondary food processing in India is very low compared to many western countries. With increasing income and population, demand for processed food is likely to increase. It is necessary to cater to this changing demand and at the same time enhance the income of farmers. So far the focus in food management has been on cereals, mainly rice and wheat. However, the demand for processed food is expected to increase. Investment in food processing, cold chains, handling, and packaging of processed food needs encouragement. There has been substantial increase in the MSPs of various crops over the last few years. This is considered necessary for sensitizing farmers to time, the MSP signals the floor price for the produce which, in turn, has the potential of increasing prices. Addressing the welfare of agricultural producers and consumers simultaneously poses a challenge. Further, inability of a large number of small and marginal farmers to directly access the agriculture market puts a question mark on increases in MSP actually benefiting such farmers. Record procurement of rice and wheat in the last few years has helped build up the buffer stock and strategic reserve of wheat and rice. There is, however, a huge cost involved in the process, in t he form of food subsidy The issue of efficient food stocks management and offloading of stocks in time needs urgent attention.

We need to address the challenges of the agriculture sector through comprehensive and coordinated efforts directed at improving farm production and productivity of foodgrains as well as high value crops, developing rural infrastructure, renewing thrust on the irrigation sector, strengthening marketing infrastructure, and supporting investment in R&D with due emphasis on environmental considerations. These efforts will in time rejuvenate agriculture sector and bring about inclusive growth of the economy.

Finally we would like to conclude by briefing the major challenges faced by the Indian agriculture, how we went about trying to ameliorate the situation and what all do we expect from our agriculture in years to come. PRODUCTIVITY was seen to decline for major period under observation. The general cause leading to this observation was pressure of population on land leading to sub-division and fragmentation of land holdings, thus resulting in low productivity. Some institutional factors like an exploitative land tenure system and extremely small land holdings also led to decline in productivity. Use of outmoded technology in the form of wooden ploughs and bullock cart with abject lack of irrigational facilities worsened the situation. GROWTH of agriculture, employing two-thirds of Indian workforce, has a significant impact on the GDP. Still it has always been quite slow in comparison with other sectors, in fact, only over Sixth and Eighth Plan periods, agricultural growth exceeded 4 percent per annum. . In a number of years growth rate has been negative or extremely low, thus, pulling down the overall growth rate of GDP. The only brief period of success being achieved in terms of growth being the ‘Green Revolution’ period. The main causes of slow growth mostly clash with causes of low productivity, being continued dependence on monsoon, use of modern inputs in limited areas only, failure of land reforms and increasing pressure of population on agriculture. Even currently when economy is booming in all aspects, we have missed the targeted growth rate of 4 percent by about half a percent. The only positive news for us can be seen as food grains production showing an increasing trend. In terms of allied activities the eleventh five year plan envisages overall growth of 6-7 per cent but the path to reach the goal seems to be winding. AGRICULTURAL CREDIT: Government has taken several measures to improve agricultural credit flow and bringing down the rate of interest on farm loans. The flow of credit has consistently exceeded the target since 2003-04 and the farmers have been receiving crop loans up to a principal amount of 3 to 7 lakhs. Kisan credit cards have been provided to all eligible and willing farmers in a time bound manner. AGRICULTURAL INSURANCE schemes have also started since 1999-2000 under which financial support is provided to farmers in the event of failure of crops as a result of natural calamities, pests, and diseases. RURAL DISTRESS is a grave agrarian situation arising due to largely prevalent farmer indebtedness. While almost half of the rural population is indebted, its main cause is cited to be a steep rise in costs of farming and rise in water prices in some states. Steep rise in rural cost of living has also worsened the situation which has further increased the disparity between agricultural and non-agricultural incomes. FOOD MANAGEMENT

To feed half of the world’s hungry people residing in India, we have to engage in food management. The main objectives of food management are procurement of food grains from farmers at remunerative prices, distribution of food grains to consumers, particularly the vulnerable sections of society, at affordable prices, and maintenance of food buffers for food security and price stability. Government uses instruments like minimum support price (MSP) and central issue price (CIP) to achieve these objectives. The poor are provided with minimum nutritional support through provision of subsidized food grains through public distribution system. however PDS suffers from major flaws such as it covered only a small sector of poor population in urban areas ;it involves high subsidy burden ;prices under PDS have also become quite high; inefficient operations and leakages from PDS add to its costs. The benefits of PDS are not uniformly distributed over all the regions .hence there is urgent need to rectify the flaws in government agricultural policies by adopting a more pragmatic approach to the procurement prices and building up of buffer stocks.


* MOF (2012), Economic Survey 2011-2012, New Delhi, Government of India, Ministry of Finance. * Vaidyanathan, A. (2007a), Essays on Agricultural Development (in preparation).

* ______________ (2007b), “Notes for discussion on Agricultural Strategy for the XIth Plan” (personal communication). * Pangariya Arvind (2008).”Output And Productivity Growth In Indian Agriculture”’New Delhi:Oxford University Press * Rakshit Mihir (2008) Food Policy In India:Some Long Term Issues.

* Rao,C.H.H.(2005)Agricultural Growth :Post Reform Trade And Major Issues For Further Reform”,’New Delhi:Oxford University Press * Bhalla,G.S. (2008)Globalisation And Indian Agriculture”New Delhi:Academic Foundation. * Athreya, V.B. (2007), “Food Security in the Context of Globalization,” The Journal of Contemporary Management Research, Tiruchirappalli, India: Bharathidasan institute of Management * NCA (2005), Report of the National Commission on Agriculture, Parts I, II, XIII and XV, New Delhi, India: Government of India, Ministry of Agriculture. * Dandekar, V.M. (2000), The Indian Economy,, Volume 1 Agriculture, New Delhi, India: Sage Publications. * Sengupta, A., J.C. Bhattacharya, and M. Chattopadhyay (2004), "Agricultural Growth and Welfare: A Study of Indian States", South Asian Economic Journal, New Delhi, India: 15(1), 103-130. * Landes ,Rip and Ashok Gulati (2008)”Farm Sector And Performance And The Reform Agenda” New Delhi:Academic Foundation.

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