Macro Economy

Agriculture growth dips, but share in overall economy goes up

TV Jayan New Delhi | Updated on January 31, 2020

The use of farm machinery in agriculture is languishing at 40-45 per cent   -  THE HINDU

Economic Survey calls for increasing mechanisation of farming to improve productivity

Even though the growth in agriculture was estimated to be lower in 2019-20 at 2.8 per cent as compared to 2.9 per cent in the previous year, the share of agriculture in the overall pie moved up to 16.5 per cent from 16.1 per cent in 2018-19, indicating that the bigger malaise is experienced by the other segments of the economy.

In 2019-20, the gross value added (GVA) of agriculture and allied sectors in current prices is expected to be ₹30.47 lakh crore against ₹27.76 lakh crore in 2018-19, according to the Economic Survey on Friday.

It pointed to a need for bringing in a shift in focus in agriculture to commercial farming from subsistence farming as India has long addressed concerns associated with food security. In this regard, the Survey called for increasing mechanisation of farming in the country. While China and Brazil have achieved farm mechanisation of 57 per cent and 75 per cent, respectively, the use of farm machinery in agriculture is languishing at 40-45 per cent.


The mechanisation is also expected to improve the productivity of farms to meet the increasing demand for foodgrains, which the country is expected to witness with population explosion. Farm mechanisation market in India grew at a compound annual growth rate (CAGR) of 7.53 per cent during 2016-2018. The Survey said the government is committed to doubling farm power availability to 4 kiloWatt (kW) per hectare by 2030 from 2.02 kW in 2016-17 in order to improve the productivity to meet increasing demand for productivity.

The government has finally acknowledged the fact that foodgrains are sold at abysmally lower prices under the National Food Security Act (NFSA), a fact that has been pointed out by experts time and again in the past. The Survey said it was time that both rates and coverage of foodgrains under the NFSA revised to cut down the burgeoning food subsidy bill.

The population that is covered by the Targeted Public Distribution System currently gets nutri-cereals, wheat and rice at ₹1, ₹2 and ₹3, respectively. This has resulted in the food subsidy bill ballooning from ₹1,13,171 crore in 2014-15 to ₹1,71,128 crore in 2018-19. It also called for prudent management of buffer stocks maintained by state-owned procurement agencies.

The urvey also highlighted the role of the livestock sector, growing at an annual rate of nearly 8 per cent, in enhancing the farmer’s income, employment and nutritional security. It also called for more focussed attention to the food processing sector — which grew at 5 per cent in six years till 2017-18 — because of the sector's role in reducing post-harvest losses and creation of additional market for farm outputs.

Even though agricultural exports grew to ₹2.75 lakh crore in overall value terms, exports of most produce, barring basmati, oilmeals, sugar and fresh vegetable, registered a slide. Similarly, there is a lot of disparity in agricultural credit flow between the States with most southern States accounting for 7 to 15 per cent of credit disbursed, while Chhattisgarh, Jharkhand and north-eastern States getting 0 to 1 per cent credit.

Published on January 31, 2020

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