(Indian Economy) Agriculture - Research & Education, Credit, Extension, Irrigation and Mechanisation




According to the new series of national income released by the CSO at 2011-12 prices, the share of agriculture in total GDP was 18 per cent in 2013-14, Performance of agriculture in the Twelfth Plan has been below the targeted level of 4 per cent so far. The growth rate of agriculture in the first year of the Plan (2012-13) was 1.2 per cent at 2011-12 prices, 3.7 per cent in 2013-14 and 1.1 in 2014-15. However, foodgrains production estimated for 2014-15 was 257 million tonnes compared to 266 million tonnes in 2013-14 and 257 million tonnes in 2012-13. Decline in foodgrains production in 2014-15 has been on account of lower production of rice, coarse grains, cereals and pulses due to erratic rainfall conditions.

However, a notable feature in this regard has been that from a food deficit economy for many years, India has turned into a food surplus economy in recent years due to various factors like increase in net sown area, use of High Yielding Variety (HYV) seeds, expansion of irrigation facilities, use of improved farm implements, use of MSP for various crops, better technology for pest management, etc. the agriculture sector has registered an annual growth of 3.8 per cent in the value added in the decade since 2004-05 on the back of an increase in real prices at the rate of 3.1 per cent average annual from 2004-05 to 2011-12. During this period, terms of trade between agriculture and non-agriculture have also become favourable for agriculture.

A major challenge is to reverse the deceleration that has taken place in agricultural growth rate in the first three years of the 12th Plan. There have been rising cases and incidence of farmers suicides due to lack of credit at affordable rates, falling global commodity price, high prices of inputs and relative neglect of agriculture which has r3esulted in low productivity and rising indebtedness. To improve resilience of agriculture and bolster food security, including availability and affordable access, the strategy for agriculture has to focus on improving yield and productivity. There is a huge gap in yields vis-à-vis other countries and even within different states showing that there are possibilities of raising production by increasing yield without necessarily increasing prices.

An inverse relationship is noticed between increase in yield over time and the average cost of production of various crops in real terms. This clearly points towards the fact that productivity increases, especially in low productivity states can significantly contribute towards reducing cost-push food inflation. A yield is contingent upon several factors like variety and quality of seeds, soil quality, irrigation- including quality of water - fertilisers - including their proportion- pesticides, labour and extension services. Prices received by farmers and the certainty or assurance of getting a particular price also incentivize farmers to take to a particular crop and use quality inputs in its cultivation. The status of some of these factors in India is described in the following paragraphs.

Agricultural Research and Education

The Indian Council of Agricultural Research is engaged in developing new crop varieties with specific traits that improve yield and nutritional quality along with tolerance/resistance to various biotic and abiotic stresses, it matches crop production and protection technologies to target agro-ecologies. A total of 104 varieties of different crops were released for different agro-ecological niches. To ensure effective seed chain for making quality seed available to farmers, 11,835 tonnes of breeder seeds of recommended varieties of different field crop management technologies has resulted in enhancement of production and productivity of cereals, pulses, and other field crops.

While greater outlay on applied research, education, and extension will result in more assured outcome in terms of reduction in average cost and increase in average yield/productivity, and growth, the paradigm shift in yield/productivity required for the second green revolution can be achieved, with greater outlay on basic research by creating research institutions on the pattern of Indian Institutes of Technology (IIT) and Indian Institutes of Sciences (IIS). It is imperative to make Indian agriculture growth science-led by shedding ‘technology fatigue’. Budget 2014-15 provided for the establishment of two institute of two institutes of excellence in Assam and Jharkhand.

Agriculture Extension

The NSSO 70th round survey indicates that about 59 per cent of farmers do not get much technical assistance and know-how from government-funded farm research institutes or extension services. So they have to rely on progressive farmers, media, and private commercial agents such as dealers of farm inputs like seeds. Fertilizers, and pesticides for technical information, to ensure last-time connectivity, extension services need to be geared up to address emerging technological and information needs, Effectiveness of the lab-to –farm programme can be improved by leveraging information technology and e- and mobile (m-) applications, participation of professional NGOs, etc. the Budget 2014-15 allocation of Rs. 100 crore to Kisan TV for disseminating real-time information to farmers regarding new farming techniques, water conservation, organic farming, etc. will partly make up for the existing adverse ration of one extension worker for every 800 to 1000 farmers and provide farmers a direct interface with agricultural experts.


The central government initiated the Accelerated Irrigation Benefit Programme (AIBP) in 1996-97 for the completion of incomplete irrigation schemes. An irrigation potential of 85.03 lakh ha is reported to have been created under the AIBP by states from major/medium/minor irrigation projects till March 2013. The Command Area Development Programme has also been amalgamated with the AIBP to reduce the gap between irrigation potential that has been created and that is utilised. Suggestions for a National Water Grid for transferring water from water surplus to water deficit areas have been made from time to time. In spite of these scheme, Indian agriculture is still heavily rainfall dependent with just 35 per cent of total arable area being irrigated, and distribution of irrigation across states is highly skewed. Focus on micro-irrigation systems like drips and sprinklers would significantly increase water-use efficiency and productivity. The wide gap between gross cropped area and gross irrigated area which has not improved much since the First Five Year plan period needs to be bridged for increasing productivity, production, and resilience.


Seed is the basic input for enhancing agricultural production and productivity. Efficacy of all other agricultural inputs such as fertilizers, pesticides, and irrigation as well as impact of agro-climatic conditions is largely determined by the quality of the seed used. It is estimated that the quality of seed accounts for 20-25 per cent agricultural productivity. During 2014-15, there has been shortfall in the availability of certified/quality gram, lentil, pea, soyabean, and potato seeds. Given our import dependence on oils and pulses and susceptibility of potato to inflation, steps are necessary to avoid shortages of certified seeds of these commodities. Given the lack of evidence on negative consequences from Bt and other genetically modified (GM) crops, and the significant potential productivity, food security, and sustainability benefits, the corresponding regulatory frameworks and their implementation deserve rethinking.


The following major initiatives were taken in the fertilizer policy of the government in 2014-9015: (i) Notification of the Modified New Pricing Scheme (NPS-III) for existing urea units on 2 April 2014 in order to address the issue of under-recoveries of the existing urea units on account of freezing of fixed cost at the 2002-03 Level. The modified policy has been implemented for a period of one year from the date of notification. (ii) Further, the government had notified the New Investment Policy 2012 on 2 January 2013 to facilitate fresh investment in the urea sector to make India self-sufficient.


The following measures have been taken for improving agricultural credit flow and binging down the rate of interest on farm loans: (i) Agricultural credit flow target (ii) Farmers have been availing of crop loans up to a principal amount of Rs. 3,00,000 at 7 per cent rate of interest. The effective rate of interest for farmers who promptly repay their loans is 4 per cent per annum during 2014-15. (iii) in order to discourage distress sale of crops by farmer, the benefit of interest subvention has been made available to small and marginal farmers having Kisan Credit Cards for a further period of up to six months (post-harvest) against negotiable warehouse receipts (NWRs) at the same rate as available to crop loan. Other farmers have been granted post-harvest loans against NWRs at the commercial rats. (iv) from 2014-15, in order to provide relief to farmers on occurrence of natural calamities, interest subvention of 2 per cent will continue to be available to banks for the first year on the restructured loan amount on account of natural calamities and such restructured loans will attract normal rate of interest from the second year onwards as per the policy laid down by RBI.

The Interest Subvention Scheme for short-term production credit (crop loans) which was started by the Government of India 2006-07 was extended to private-sector banks from 2013-14. Presently the total number of loan accounts stands at 5.72 crore. Studies conducted by the RBI and National Bank for Agriculture and Rural Development (NABARD) indicate that the crop loans are not reaching intended beneficiaries and there are no systems and procedures in place at several bank branches to monitor the end use of funds Also, although overall credit flow to the agricultural sector has increased over the years, the share of long-term credit in agriculture or investment credit declined from 55 per cent in 2006-07 to 39 per cent in 2011-12. According to NSSO 70th round data, as much as 40 per cent of the finances of farmers still comes from informal sources, despite an increase in the flow of institutional credit to agriculture in recent years. Usurious money lenders account for a 26 per cent share of total agricultural credit.

Inadequate targeting of beneficiaries and monitoring/supervision of the end-use of short-term crop loans for which interest subvention scheme is applicable and decline in long-term/investment credit to agriculture are issues that need to be addressed on priority basis.


Agricultural mechanization increases productivity of land and labour by meeting timeliness of farm operations and increases work output per unit time. Besides its paramount contribution to the multiple cropping and diversification of agriculture. Mechanization also enables efficient utilization of inputs such as seeds, fertilizers, and irrigation water. Although India is one of the top countries in agricultural production, the current level of farm mechanisation, which varies across states, averages around 40 per cent as against more than 90 per cent in developed countries. Farm mechanization in India has been growing at a rate of less than 5 per cent in the last two decades. The main challenges to farm mechanization are, first, a highly diverse agriculture with different soil and climatic zones, requiring customised farm machinery and equipment and , second, largely small Landholdings with limited resources. Credit flow for farm mechanization is less than 3 per cent of the total credit flow to the agriculture sector. A dedicated Sub-mission on Agricultural Mechanisation has been initiated in the Twelfth Plan, with focus on spreading farm mechanization to small and marginal farmer and regions that have low farm power availability.

GCF in Agriculture and Allied Sectors

The GCF in agriculture and allied sectors relative to agri-GDP in this sector has shown an improvement from 13.5 per cent in 2005-05 to 21.2 per cent in 2012-13 at 2004-05 prices. Given the vast investment needs of the sector, greater public investment would only help increase private investment.


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