Posted in Finance Articles, Total Reads: 4556
, Published on 07 November 2011
"Agriculture is the backbone of Indian economy" - this is a statement which epitomises and defines the importance of agriculture in India. It is the driving force of the Indian economy.
The following statistics drive home the point that various agricultural issues and problems need to be addressed and resolved with utmost care for the betterment and sustainability of the economy and society as a whole.
Share held by agriculture (2009-10)
% of total Gross Domestic Product (GDP)
% of total exports
% of nation’s total workforce
58.2% (highest across all sectors)
India was hugely dependent upon food imports for many years post-independence. This prompted the government to develop a model for self-sufficiency in grain production. The Green Revolution, headed primarily by Dr.Swaminathanproved to be "successful" in this regard. Consequentially, the country also created substantial reserves for the same.
Challenges faced in the 21st Century:
The benefits of the Green Revolution were evident till the early 1990s. Henceforth, however, the slowdown in agricultural growth became a major cause for concern. Currently, India’s rice yields are one-third of China’s and about half of that of Vietnam and Indonesia (true for most agricultural commodities). Bold action from policymakers will be required to shift away from the existing subsidy-based regime that is no longer sustainable, to build a solid foundation for a highly productive, internationally competitive and diversified agricultural sector.
Canal Irrigation (major dam projects) – no more in favour
Major and medium canal irrigation projects are no longer efficient in functioning. They are fast becoming out dated and hugely expensive to maintain.
Research studies indicate that:
Water saving is about 40 – 80%,
Incurs less labour and fertilizer cost and
The output yield increase is up to 100% for different crops.
Drip irrigation (type of micro-irrigation) is proven to be technically feasible and socially acceptable for small, marginal and large farms.
Unaffordable initial installation cost
In this regard, the government facilitates increase in micro-irrigation by subsidising 50% of the cost of equipment and issuing the balance by institutional credit.
Illiteracy and communication problems
Farmers need to be educated so that they can make well-informed decisions with respect to crop cultivation and harvest. The ITC e-choupal is an excellent venture and lays prime focus on farmer problems.
We know that there has been tremendous penetration of mobile phones in the rural market over the past few years. The potential is huge and the most important part is that the farmer does not have to be literate to use a mobile application.
Concepts which can benefit the farmer community:
Two-way audio/video broadcasts and communication system facilitating direct communication between agricultural experts and farmer community.
Mobile social network of local farming community
Farming mobile alerts software giving information on government conferences, market price fluctuation, weather updates etc.
Agricultural mobile query system
Inbuilt radar system on mobile phones for regular updates
Inadequate financial inclusion in the rural areas
Financial inclusion is critical for the inclusive growth of a country. According to the National Bank for Agriculture and Rural Development (NABARD), nearly 73% farmers do not have access to any credit facility - formal or informal. This has an effect on the farmer’s marketing strategy as well.
The following facilities can create a positive impact:
Mutual fund and other financial products
Use technology for providing last mile connectivity
Rural credit bureaus
Generation of employment
Alleviation of poverty and
The financial institutions must commit to extending support to their customers during both turbulent and growth periods.
Other Problems which need attention are:
Fragmented land holdings
Lack of technological development
Rampant industrialisation and soaring real estate prices
Rise in fuel prices – produces a cascading effect such that
Expenditurepatterns of the farmer community fluctuate
Transportation cost increase
Inflation due to rise in market prices and
Buying power plummets.
Reforms that can make a difference – Tackling food crisis
Production, processing, storage, distribution and value addition – all activities require modern technology for efficient functioning.
Developing countries like India do not have the latest technological solutions in most cases.This is where ‘Technology transfer’ comes into the fray. Bilateral and multi-lateral technology agreements and formation of blocs between countries will help this cause.
It increases the information intensity so that the farmer can make an informed decision. This is done by accurate mapping of different geographical areas by GIS software. GIS is a Geographical Information System (GIS) for soil/land resource analysis.
Precision farming generates an output containing spatial and non-spatial variations based on multiple inputs obtained from linking of spatial databases, analytical and crop simulation models at the same time. Resource characterisation is important to obtain worthy results from GIS. The farmer obtains the distribution of crop yield and water resources as a function of soil and weather conditions. This essentially makes GISan ideal tool for crop planning and management whichallows the farmer to better estimate budgets for crop planning.
Widely acclaimed by government agencies, GIS - Precision farming is set to be the next big thing in Indian agriculture. It also involves a significant quantum of technology transfer seen in recent times. This strategy will reduce the demand-supply mismatch because farmers will make better decisions rather than simply going for crop diversification in anticipation of monetary gains.
Government plans to distribute cash instead of kind (food) through the Public Distribution System (PDS) will only increase corruption and wastage of funds. Instead the PDS can be used to procure all locally produced grains at respectable MSPs and distribute them equitably. This will mitigate the problem of agrarian crisis and create employment opportunities.
The Food Security Bill is a landmark achievement and it is based on the ideology of ‘Right to Food-for-All’.
Ration cards in the name of women (for women empowerment in the rural areas). Only concern is the accuracy of the database of the BPL families.
Gurudwara-like langar system in all religious places.
Addressing the problem of food storage:
Focus should be laid on the following points to increase food storage capacity:
Cold chain infrastructure for storage of excess food
Upgrading the package materials
Usage of tested pesticides
Increased co-operation between the state and central governments and
Proportional increase of food grain output and storage capabilities.
Food security: GM crops and the burden it carries:
The future implications of the GM technology are not concrete. This is a cause of concern because India cannot afford to face the problem of self-sufficiency again. There is no doubt that GM technology is a revolutionary concept but being circumspect is necessary in this case.
The need of the hour is ‘sustainability’ in all aspects of life. We cannot afford to procrastinate addressing this issue any further because there will soon be a point of no return. It is the question of the existence of the human race and in this regard, sustainability of agriculture and self-sufficiency of countries in terms of food is of paramount importance.
About the Authors
This paper won the first place in Ecoprastuti, 2010 which is a national B-school paper presentation event held by the Economics Cell of NMIMS. This paper has been co-authored by Aakarshan Saboo, Karan Mutha and Tushar Kumar students of II Year, MBA Core, NMIMS.
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