EconSurvery
Productivity rise, diversification key to farm sector growth
This story was originally published at 16:48 IST on 31 January 2025
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NEW DELHI – An increase in farm productivity along with diversification of crops are crucial for the growth of the agricultural sector in India, the Economic Survey for 2024-25 (Apr-Mar) said. "As a major global cereal producer, India accounts for 11.6% of the world's total output. However, crop yields in the country are considerably lower compared to those of other leading producers, underscoring the need for productivity improvements," the survey, tabled in Parliament by Finance Minister Nirmala Sitharaman, said on Friday.
The crop sector has experienced a modest compound annual growth rate of 2.1% from FY13 to FY22. The increase is also largely driven by increases in the production of fruits, vegetables, and pulses, it said. The survey has also raised concerns over the slower growth rate of oilseeds at 1.9%, considering India's heavy reliance on imports to satisfy domestic edible oil demands.
Suggesting that diversification will play a crucial role in helping to increase productivity and reduce the yield gap compared to the global average, it cited the examples of Andhra Pradesh, Madhya Pradesh and Tamil Nadu, which had compound annual growth rates of 8.8%, 6.3% and 4.8%, respectively, in agriculture and allied sectors, excluding forestry, between 2011-12 and 2021-21. "These states have diversified towards crops where yield is high. For example, Andhra Pradesh diversified towards jowar, Madhya Pradesh towards moong and Tamil Nadu towards maize," it said.
It said productivity in agriculture is closely linked to on-farm and post-harvest inputs, such as improved access to quality seeds, better irrigation facilities, efficient water management practices, soil health improvements, modern post-harvest infrastructure and accessible markets. Additionally, agricultural price policies play a crucial role in facilitating informed decision-making by protecting farmers from market price volatility and encouraging them to diversify their crops, it said.
The survey also cited climate change as a problem in India's agricultural growth. "There has been an increase in the frequency of dry spells during the summer monsoon season, which are 27% more common from 1981 to 2011 compared to 1951 to 1980," it said. Not only has there been an increase in the number of years with deficient rainfall at an all-India level, but more subdivisions have experienced rainfall deficits - reflecting an increase in the frequency and the geographic spread of droughts, it said.
Citing studies, the survey said that India's agricultural productivity may decline by 8-12% by 2099 due to rising temperatures and changing rainfall patterns. Specifically, a potential 2 degree centigrade rise in temperature and a 7% increase in rainfall are expected to have a significant impact. The survey said it is pertinent to increase the area under irrigation and diversify towards heat and water-resistant crops.
The survey said the Indian agriculture sector has demonstrated resilience despite challenges. The agriculture sector grew 3.5% in Oct-Dec, a recovery compared to the previous four quarters when growth rates varied from 0.4-2.0%.
The survey said assured remunerative prices, improved access to institutional credit, crop diversification, support for sustainable practices, and enhancement in productivity have played a crucial role in the sustained growth of the agriculture sector.
It also highlighted the importance of an assured minimum support price, which it said, serves as a guiding signal for farmers in planning their future crop compositions. "The minimum support price for essential crops such as wheat, rice, pulses, oilseeds, and nutri-cereals acts as a safety net for farmers, reassuring them of a guaranteed minimum price for their crops from the government," it said. End
Reported by Pallavi Singhal
Edited by Saji George Titus
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