In the context of global turmoil, India displayed steady economic growth and the Economic Survey credited projection of India’s real GDP growth at 6.4 per cent in FY25 to agriculture (and also services), with rural demand improving on the back of record Kharif production and favourable agricultural conditions. The agriculture sector is expected to rebound and grow by 3.8 per cent in FY25 against 5.4 per cent in FY24.
The chief economic advisor, V Anantha Nageswaran, who is also the principal author of the Survey, termed agriculture as the “sector of the future.”
The ‘Agriculture and Allied Activities’ sector, which has been the backbone of the Indian economy, contributed approximately 16 per cent of the country’s GDP for FY24 (PE) at current prices and supports about 46.1 per cent of the population.
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However, the Survey also said that even though the volatility in agricultural growth has diminished over time due to targeted interventions, the sector remains highly vulnerable to weather variability, with only about 55 per cent of the net sown area receiving irrigation.
Pointing out that climate change and water scarcity are some of the significant obstacles that require focused and targeted interventions, the Survey has said that promoting agricultural production patterns and practices that align with the specific agro-climatic conditions and natural resource availabilities of different regions across the country is vital.
“Investment in research and development, especially on climate-resistant varieties, improved agriculture practices, diversification to high yield and climate-resilient crops, and micro-irrigation, can yield sustainable long-term benefits. The widespread adoption of digital technologies in agriculture will unlock further possibilities for enhancing productivity,” it said.
In its concluding recommendations, the Survey said that farmers must be allowed to receive price signals from the market unimpeded, with “separate mechanisms designed to take care of the cost-of living impact on deserving households” for specified durations. Secondly, it suggested that farmers need to have market mechanisms to hedge their price risks, and third, they need the right policies that nudge them away from impairing their soil fertility with an unbalanced application of fertilisers and from producing already overproduced crops, which deplete India’s water resources and use up electricity excessively.
“These policy shifts will help lift agricultural productivity in the economy by boosting land and labour productivity in the sector. Consistent and stable growth of agriculture at around 5 per cent, with a 20 per cent share of overall GVA in the economy, will contribute 1 per cent growth to GVA,” the Survey said and added that agriculture will then absorb surplus labour even as output per worker and output per hectare rise.