‘Better farm productivity is critical for India’

Improving farm productivity is central to the Indian government’s goal of achieving ‘faster, more inclusive and sustainable growth’, the World Bank has said in a recent report ‘Accelerating Agricultural Productivity Growth in India – Issues and Opportunities’.

Although agricultural growth rebounded after 2004-05, two worrying trends emerged: concerns about the nature and sustainability of growth, the report observes, adding that the contribution of yields (productivity) has been limited while prices have been the main growth driver in recent years.

The report suggests that price-led growth without improvements in productivity is not sustainable.

Diversificaton Additionally, diversification in farm production is a key driver of growth as seen in other emerging economies such as China and Brazil, but such diversification in India is rather limited.         Discussing the report with  BusinessLine ,  Madhur Gautam, Lead Economist (Agriculture, Irrigation and Natural Resources) with World Bank said that reducing poverty and achieving shared prosperity requires a redoubling of effort to improve agricultural productivity given the slow pace of structural transformation in India.

“Slow growth in farm productivity has meant slow improvement in the welfare of those dependent on it,” he said.

Arguing that productivity is constrained by a high level of economic inefficiency which hits the potential incomes to farmers, the report observes that the growth in output has primarily been due to increased use of inputs, with limited improvement in productivity.

Commenting on the current state of affairs, the World Bank said the current ‘technology fatigue’ in India is an ‘extension problem’ as indicated in large yield gaps and low technical efficiency.

Fatigue The report also said that ‘policy fatigue’ is affecting productivity. It said that price and other policies used to promote food production are outliving their utility. Gautam said sustainability concerns also support a move to a more diversified production base, even though food security remains a high policy priority.

Important issues He added that there was an immediate need to address crucial long-term policy and institutional issues to make agriculture more climate resilient. He said that there should be a specific focus on scientific water management, investments to mitigate the adverse effects of climate change (both pre-harvest and post-harvest) as well as diversification of income sources on- and off-the farm.

The report has also discussed management of high level of production risk (biotic and abiotic), investment in physical market infrastructure and collective action to link smallholders to value chains.     

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