Role of Agriculture in India

Back when India gained independence, a whopping 70% of the population relied on agriculture for their livelihoods. In 1950-51, agriculture contributed a substantial 56.6% to the national income. With the growth of industries and the service sector in subsequent years, the scenario changed. By 2012, the percentage of people employed in agriculture dropped to 51%, reflecting a shift towards other sectors.

In 1960, 74% of the workforce was engaged in agriculture, but this dwindled to 51% by 2012. Meanwhile, the industry and service sectors saw an increase in their share of the labor force, rising to 22.4% and 26.5%, respectively, in 2012.
Despite this shift, agriculture remains crucial for our food supply. The production of food grains has skyrocketed from 55 million tonnes in 1950-51 to an impressive 259 million tonnes in 2012-13.
This surge in food grain production has significantly reduced India’s reliance on importing food grains.
The increase in food grain production is attributed to the growth of cereals and various cash crops, though pulses still pose a challenge.
Agriculture is not just about feeding the nation; it’s also a major contributor to foreign exchange earnings through exports.
In 2011-12, 12.3% of India’s exports came from agriculture, with items like tea, sugar, tobacco, spices, cotton, rice, fruits, and vegetables leading the way.

Current Scenario

Approximately 58% of the Indian population relies on agriculture as their main source of livelihood. In the fiscal year 2019-20, the combined value of agriculture, forestry, and fishing activities reached Rs. 19.48 lakh crore (US$ 276.37 billion), contributing 17.8% to India’s Gross Value Added (GVA). Despite the challenges posed by the pandemic, consumer spending in India is expected to rebound in 2021, showing potential growth of up to 6.6%.
The Indian food industry is on the brink of significant expansion, consistently increasing its share in global food trade. This growth is attributed to the substantial possibilities for value addition, especially within the food processing sector. India’s food and grocery market holds the sixth position globally, with retail accounting for 70% of total sales. The food processing industry, comprising 32% of the country’s total food market, stands as one of India’s largest sectors, ranking fifth in terms of production, consumption, export, and anticipated growth.
Notably, India’s principal agricultural commodities export for the period of April 2020 to January 2021 amounted to a substantial US$ 32.12 billion.

Market Size

The Economic Survey of India for 2020-21 revealed some good news for farmers. In that fiscal year, the country witnessed a whopping 296.65 million tonnes of food grain production, up by 11.44 million tonnes compared to the previous year. The government even set a goal to buy 10% more, aiming for 42.74 million tonnes from the central pool in FY21.
Looking ahead to the current fiscal year (FY22), the government has set an ambitious target to increase food grain production by 2%, reaching a record-breaking 307.31 million tonnes. Although in FY21, we slightly exceeded our target by producing 303.34 million tonnes against the goal of 301 million tonnes.
India is not just about grains; our horticulture sector is thriving too! FY20 saw a record estimate of 326.6 million metric tonnes in horticulture crops, a significant increase from the previous fiscal year. On the livestock front, we boast the world’s largest population, around 535.78 million. And guess what? Our milk production is on the rise, expecting to hit 208 million tonnes in FY21, a 10% jump from FY20.
Between October 2019 and May 2020, sugar production in India touched 26.46 million tonnes, as reported by the Indian Sugar Mills Association (ISMA).
India is making waves in the global agricultural market! We are among the top 15 exporters of agricultural products worldwide. In FY19, our agricultural exports reached an impressive US$ 38.54 billion, slightly dipping to US$ 35.09 billion in FY20.
The organic food segment in India is on a roll, with an expected growth rate of 10% from 2015 to 2025. By 2025, it’s projected to reach a whopping Rs. 75,000 crore (US$ 10.73 billion), a significant leap from Rs. 2,700 crore (US$ 386.32 million) in 2015.

Investments

According to the Department for Promotion of Industry and Internal Trade (DPIIT), the Indian food processing industry has cumulatively attracted Foreign Direct Investment (FDI) equity inflow of about US$ 10.24 billion between April 2000 and December 2020.
In March 2020, Fact, the oldest fertiliser manufacturer in the country, crossed one million production and sales mark. Nestle India will invest Rs. 700 crore (US$ 100.16 million) in construction of its ninth factory in Gujarat. In November 2019 Haldiram entered into an agreement for Amazon’s global selling program to E-tail its delicacies in the United States.
In November 2019, Coca-Cola launched ‘Rani Float’ fruit juices to step out of its trademark fizzy drinks. Two diagnostic kits developed by Indian Council of Agricultural Research (ICAR) – Indian Veterinary Research Institute (IVRI) and the Japanese Encephalitis lgM ELISA were launched in October 2019. Investment worth Rs. 8,500 crore (US$ 1.19 billion) have been announced in India for ethanol production.

Government Initiatives

Some of the recent major Government initiatives in the sector are as follows:

The government set aside Rs. 4,000 crore (US$ 551.08 million) in the 2021-22 budget to implement this scheme, focusing on agricultural irrigation.
In the same budget, the Ministry of Food Processing received Rs. 1,308.66 crore (US$ 180.26 million) for its initiatives.
The government approved a Production Linked Incentive (PLI) scheme in April 2021, allocating Rs 10,900 crore (US$ 1,484 million) over six years to boost the food processing sector.
A significant food park, costing Rs. 107.83 crores (US$ 14.6 million), was inaugurated in Punjab in November 2020, covering 55 acres.
In October 2020, TRIFED added 100 new Forest Fresh Organic Products from tribal communities to its online platform (tribesindia.com).
Nabard proposed the creation of a subsidiary in October 2020 to provide loan guarantees for agriculture and rural development.
The government announced plans in October 2020 to integrate PMFBY, PM-Kisan, and Soil Health Card information into a common database for farmers.
In September 2020, the PM Matsya Sampada Yojana was launched, investing Rs. 20,000 crore (US$ 2.7 billion) over the next 4-5 years in fisheries, dairy, animal husbandry, and agriculture across 21 states.
A fund of Rs. 15,000 crore (US$ 2.13 billion) for animal husbandry infrastructure development was announced in May 2020.
Launched in September 2019, this program received an allocation of Rs. 13,343 crore (US$ 1.89 billion) in May 2020 to combat diseases in livestock.
The TMA scheme provides financial support for transporting and marketing agricultural products to boost exports.
Approved in December 2018, this policy aims to increase agricultural exports to US$ 60 billion by 2022 and US$ 100 billion in the coming years.
The government is investing Rs. 2,000 crore (US$ 306.29 million) in computerizing PACS to ensure cooperatives benefit from digital technology.
Launched with an investment of Rs. 50,000 crore (US$ 7.7 billion), PMKSY focuses on developing irrigation sources for a permanent solution to drought.
The government plans to triple the capacity of the food processing sector, committing Rs. 6,000 crore (US$ 936.38 billion) for mega food parks under the Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters (SAMPADA).
India allows 100% Foreign Direct Investment (FDI) in the marketing of food products and food product e-commerce under the automatic route.

Achievements in the Sector

In the recent Kharif Marketing Season (KMS) until January 10, 2020, the procurement of paddy reached an impressive 534.44 lakh metric tonnes, marking a significant 26.24% increase compared to the previous year’s purchase of 423.35 LMT.
In November 2020, the planting of winter crops exceeded expectations, showcasing a 10% increase over the previous year. Notably, the area dedicated to pulses witnessed a substantial 28% growth, expanding from 6.45 million hectares to 8.25 million hectares.
Out of the 37 mega food parks sanctioned, 22 are currently operational as of January 2021, contributing to the enhancement of the food processing sector in the country.
Minister of Consumer Affairs, Food and Public Distribution, Mr. Piyush Goyal, announced in November 2020 that record paddy procurement of 742 LMT is anticipated during the ongoing Kharif crop season, surpassing the previous year’s figure of 627 LMT.
The Electronic National Agriculture Market (e-NAM), launched in April 2016, aims to create a unified national market for agricultural commodities. As of February 2021, it boasts 16.9 million registered farmers and 157,778 traders. Plans are underway to link an additional 22,000 mandis by 2021-22.The country saw the sale of 880,048 tractors in 2020, with an additional 77,378 units exported, indicating a thriving agricultural machinery market.
Agricultural exports between April 2020 and February 2021 totaled US$ 37.31 billion, with notable positive growth in key commodities:
Wheat and Other Cereals: 727% increase
Non-Basmati Rice: 132% increase
Soya Meal: 132% increase
Raw Cotton: 68% increase
Sugar: 39.6% increase
Spices: 11.5% increase
In FY20 (till February 2020), tea exports amounted to US$ 709.28 million, while coffee exports reached US$ 742.05 million.

Road Ahead

By 2022, India aims to double farm income, thanks to increased investments in agricultural infrastructure like irrigation, warehousing, and cold storage. This boost is expected to create positive momentum in the agriculture sector.
Genetically modified crops are becoming more prevalent in India, offering the promise of improved yields for farmers in the coming years.
Efforts by scientists to develop early maturing varieties of pulses, combined with a higher minimum support price, are expected to make India self-sufficient in pulses in the near future.
The central government plans to invest US$ 9 billion in the fisheries sector over the next five years under PM Matsya Sampada Yojana, with the goal of increasing fish production to 220 lakh tonnes by 2024-25.
To ensure food safety and quality, the food processing industry in India is adopting mechanisms like Total Quality Management (TQM), including ISO 9000, ISO 22000, Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing Practices (GMP), and Good Hygienic Practices (GHP).The government is targeting an agri export figure of US$ 60 billion by 2022, indicating a positive outlook for the future of agricultural exports from India.