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Farm sector

Kisan jam


The farm sector can't reap success without addressing key problems like fragmented land holdings and declining public investment.

About 60 per cent of Indians earn their living through agriculture. More than half of India's population spends more than half of its income on food. So, from the points of view of both income and expenditure agriculture is the key to half the people of this country. That is no mean number - it is over 600 million people.

In the urban-centric way of thinking, these numbers are usually ignored. After all, agriculture contributes only about 14 per cent to India's GDP. Agricultural growth too has improved from an average of 2. 7 per cent in 2002-2007 to 3. 6 per cent in 2007-2012.

Put these two sets of figures together - over 600 million people working to produce just 14 per cent of the economy's output - and you start getting a sense that something is very wrong in the system. Hunger, poverty, un- and under-employment, landlessness, social oppression and even persistence of medieval discrimination - these and many more are the direct consequences of the unacknowledged crisis in Indian agriculture.

But what exactly is the problem? Here are four millstones, dragging not just rural residents but the whole country down.

1 | LAND

Ownership of land, the primary resource from which agricultural wealth derives, is highly skewed in the country. Just 2. 5 per cent of households in rural areas operate almost a third of the land. On the other hand, 80 per cent of households operate less than a hectare of land each. This includes some 45 per cent of the total who have no land. This army of landless is forced to eke out an existence from agriculture because there are no jobs to be found in industry.

Laws passed to take over land in excess of prescribed ceilings have remained on paper. A recent estimate says that in the five decades since Independence, 3. 68 million hectares (ha) land was declared surplus under land ceiling laws, of which 2. 3 million ha were actually taken over and 1. 8 million ha distributed among roughly 5 million beneficiaries. The total area vested is barely over 2 per cent of India's arable land area.

Recently released agricultural census data shows increasing fragmentation of land with the number of marginal farms (0. 5 to 1 ha) zooming up by 143 per cent, and the small farms (1 to 2 ha) going up by 82 per cent between 1970-71 and 2010-11. Large farms (> 10 ha) declined by 39 per cent in the same period.

According to professor VK Ramachandran of the Indian Statistical Institute, Kolkata, agricultural census data on land holdings is suspect since, in most states, actual census does not take place, and only data from land records is collated. "Most of these records are deceptive, and so, data can't be relied upon, " he said. Yet perhaps it does give a glimpse of the fragmented, skewed nature of agricultural land holdings in India.


After land, water is the most important factor determining agricultural production. Consider this: 56 per cent of food grains are produced from 47 million hectares (Mha) of irrigated land while the rest - 44 per cent - is produced from 95 Mha of rain-fed land. Food grain output could double simply by making available adequate and timely water for crops. This would go a long way in helping farmers break the vicious cycle of poverty.

But irrigation has largely been ignored by successive governments. The country has an ultimate irrigation potential of about 140 Mha. Till the end of the Tenth Plan, over 21 Mha still remained to be developed. But even more serious was the fact that utilisation efficiency of irrigation has dipped from 1 (full utilisation) in 1951 to about 0. 83 currently. A Task Force set up by the government said in its report in 2009 that lack of canals to take the water from reservoirs to fields and poor maintenance of existing canals was the main reason that water was available but not being utilised.

Since 1996, Rs 45, 552 crore have been spent on 96 projects that are lying in different stages of incompleteness. Estimated costs for completing them would go up by 35 per cent says the water resources minister, Harish Rawat. But the real problem is that sufficient money was not invested at the time when it was needed, and nor was money kept aside for maintenance.


In 1980-81, gross capital formation in agriculture was about 11 per cent of the agriculture GDP. This means that the fixed assets in agriculture like dams, canals, warehouses, etc, and inventories increased by a value which was about 11 per cent of the value of all the output from agriculture. This is a way of assessing how much investment is being made in agriculture. It has two components: public and private, denoting who is doing the investing. In 1980-81, public and private investments in agriculture were about 50 percent each.

By 1996-97, GCF as a share of agricultural GDP had dropped to just 8 per cent. This neglect is the reason for crumbling irrigation canals and incomplete projects. It revived after that and according to the latest Economic Survey, touched a high of 20 per cent in 2009-10, and is currently hovering around that mark. But there is a change in its composition: public investment component is down to just 25 per cent and private investment is up to nearly 75 per cent. Note that private includes all the money spent by households on building assets.

While the increase in investment compared to the past is welcome, the fact that public investment is still meager means that long range development of agriculture is still not on the cards - reservoirs, canals, silos, etc will not be made by family savings, they need huge government investment.


India has very low productivity or yield in food grains, that is, the amount of wheat or rice harvested from say a hectare of land is low. China produced about seven tons of rice per hectare - nearly double the amount produced in India. The US produces even more, nearly eight tons per hectare. In wheat, India is able to manage about three tons per hectare, compared to China's five, France 6. 5 and Germany's whopping seven tons per hectare. The reason for this is not laziness on the part of farmers as some seem to think. It lies in the factors listed above - lack of public investment, lack of water, etc, as also the current lack of technological impetus.

But technology alone will not ensure a turnaround, as still others think. Any high-yielding variety of seed will require higher inputs like water and fertilisers. This is what happened in the Green Revolution, which was successful only where adequate water was available through irrigation. This is what is happening with Bt cotton, which has driven up yields but demands huge inputs and costs.

Apart from these four crucial features, there are several other major and minor factors that need attention if Indian agriculture is to be transformed into an engine of both prosperity and equity. These include better seeds, better training and techniques, niche technologies like dryland agriculture, diversification of crops, better wages for agricultural labour, a more efficient marketing and storage system free of excessive middlemen, and so on.

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