TERM

PAPER
PESTLE Analysis of
Indian Agriculture

Submitted by:
Sheikh Talha
RS1904 B25
10906035

Submitted to:
Mr. Vishwas Chakra Narayan

LOVELY PROFESSIONAL
UNIVERSITY
 Acknowledgement

I take this opportunity to present my vote of thanks to all those guidepost who really
acted as lightening pillars to enlighten our way throughout this project that has led to
successful and satisfactory completion of this study.

We are really grateful to our COD Mr.Devdhar shetty for providing us with an
opportunity to undertake this project in this university and providing us with all the
facilities. We are highly thankful to Mr.vishwas chakra Narayan for his active support,
valuable time and advice, whole-hearted guidance, sincere cooperation and pains-
taking involvement during the study and in completing the assignment of preparing
the said project within the time stipulated.

Lastly, We are thankful to all those, particularly the various friends , who have been
instrumental in creating proper, healthy and conductive environment and including
new and fresh innovative ideas for us during the project, their help, it would have
been extremely difficult for us to prepare the project in a time bound framework.

SHEIKH TALHA
 INTRODUCTION
Agriculture’s share in Gross Domestic Product (GDP) has declined from over half at
Independence to less than one-fifth currently, agriculture remains the predominant
sector in terms of employment and livelihood with more than half of India’s workforce
engaged in it as the principal occupation. Agriculture still contributes significantly to
export earnings and is an important source of raw materials as well as of demand for
many industries. India’s agriculture sector has an impressive long-term record of
taking the country out of serious food shortages despite rapid population increase.
This was achieved through a favourable interplay of infrastructure, technology,
extension, and policy support backed by strong political will. The main source of
long-run growth was technological augmentation of yields per unit of cropped area.
This resulted in tripling of food grain yields, and foodgrain production increased from
51 million tonnes in 1950–51 to 217 million tonnes in 2006–07. Production of
oilseeds, sugarcane, and cotton have also increased more than four-fold over the
period, reaching 24 million tonnes and 355 million tonnes and 23 million bales,
respectively, in 2006–07. 1.3 But, although GDP from agriculture has more than
quadrupled, from Rs 108374 crore in 1950–51 to Rs 485937 crore in 2006–07 (both
at 1999–2000 price), the increase per worker has been rather modest. GDP per
agricultural worker is currently around Rs 2000 per month, which is only about 75%
higher in real terms than in 1950 compared to a four-fold increase in overall real per
capita GDP. While slower growth of GDP in agriculture than non-agriculture is
expected, the main failure has been the inability to reduce the dependence of the
workforce on agriculture significantly by creating enough non-farm opportunities to
absorb the labour surplus in rural areas and equipping those in agriculture to access
such opportunities. Half of those engaged in agriculture are still illiterate and just 5%
have completed Higher Secondary education. Incomes and education are of course
least among agricultural labourers. Even families operating farms now suffer from
much smaller holdings (70% below 1 hectare in 2003 compared to 56% in 1982),
and farming members in such families are twice as likely to be illiterate as non-
farming members. Ensuring food security and farmer welfare thus require support
systems to extend technology and scale benefits in a sustainable manner to a huge
existing workforce in agriculture that lacks non-farm skills and is also ageing and
getting feminized.

Growth of agricultural GDP decelerated from over 3.5% per year during 1981–
82 and 1996–97 to only around 2% during 1997–98 and 2004–05 . This
deceleration, although most marked in rainfed areas, occurred in almost all States
and covered almost all major sub-sectors, including those such as horticulture,
livestock, and fisheries where growth was expected to be high. Consequently,
growth of agricultural GDP has been well below the target of 4% set in both Ninth
and Tenth Plans. In fact, Tenth Plan growth averaged even less than that during

Ninth Plan because, as was noted in the MTA, growth plummeted to below 1%
during its first three years, that is from 2002–03 to 2004–05. There has been some
upturn since then and growth has averaged more than 4% in the subsequent two
years, with early indications that this is likely to be maintained in 2007–08 also. This
revival gives hope that at least some of the causes of recent poor agricultural
performance are being reversed and that the Eleventh Plan target, set at 4%, may
actually be attainable. 1.6 The improved performance in the second half of Tenth
Plan is a welcome development, but there is no reason for complacency. Not only is
the period too short to reach firm judgment on trends, the prolonged deceleration
over several years has meant that despite the improvements, per capita output of
cereals, pulses, oilseeds, and also of some major vegetables and fruits (e.g.,
potatoes and bananas) in 2006–07 remained below 1996–97 levels. Moreover,
despite significant imports, food prices flared up in 2006. This was unlike during
2000–05 when, although production was even lower, prices remained subdued
because of low domestic demand and depressed world prices. Part of the recent
production upturn is clearly price-led, following a marked hardening of world
commodity prices and possibly also responding to the fact that domestic food
demand has responded positively to higher overall GDP growth at the introduction of
Rural Employment Guarantee. However, although important in the short-run, such
price response alone cannot be the basis of sustained agricultural growth at 4%. The
recent trend towards diversion of food crops for biofuels in surplus countries means
that food security needs a stronger production response based on tackling supply
side problems in the foodgrains sector. The supply side performance of agriculture is
affected by a large number of factors, several of which interact among each other.
These factors are the natural resource base (including rainfall), technology,
infrastructure (including irrigation), and the economic environment comprising price
signals and institutions . Analysis by the Steering Group for the Eleventh Plan has
identified technological change (using yield potential of varieties of major crops
released by the National Agricultural Research System [NARS] as a proxy), public
investment (including investment on irrigation), and diversification (represented by
area under fruits and vegetables) as the most important proximate determinants of
growth. The Steering Group analysis shows that progress on first two of these
factors slowed down from early 1990s. However, the negative effect in growth was
offset by private investment, which was the fourth most important factor in the
analysis, because the terms of trade, which affect profitability and thus private
investment, improved during 1990–97. As a result, growth continued to be relatively
high in this period. However, terms of trade turned against agriculture from 1999–
2000 to 2004–05 and reduced profitability of farming quite sharply.
POLITICAL FACTORS AFFECTING
INDIAN AGRICULTURE

Political influence on Indian agriculture is very much widespread. It ranges

from incorporation of new policies for the farmers to the steps taken on their welfare
and development. Political factor is often related directly with the central government
that is in power. Some of the factors influencing the agriculture are as follows:

Rashtriya Krishi Vikas Yojana (RKVY):

Economic reforms initiated since 1991 have put the Indian economy on a
higher growth trajectory. Annual growth rate in the total Gross Domestic Product
(GDP) has accelerated from below 6 per cent during the initial years of reforms to
more than 8 percent in recent years. The Planning Commission in its approach
paper to the Eleventh Five-Year-plan has stated that 9 per cent growth rate in GDP
would be feasible during the Eleventh Plan period. However, Agriculture that
accounted for more than 30 per cent of total GDP at the beginning of reforms failed
to maintain its pre-reform growth. On the contrary, it witnessed a sharp deceleration
in growth after the mid-1990s. This happened despite the fact that agricultural
productivity in most of the states was quite low as it were, and the potential for the
growth of agriculture was high.

The GDP of agriculture increased annually at more than 3 per cent during the
1980s. Since the Ninth Five-Year Plan (1996 to 2001-02), India has been targeting a
growth rate of more than 4 per cent in agriculture, but the actual achievement has
been much below the target. More than 50 per cent of the workforce of the country
still depends upon agriculture for it’s livelihood. Slow growth in Agriculture and allied
sectors can lead to acute stress in the economy because the population dependent
upon this sector is still very large. A major cause behind the slow growth in
agriculture is the consistent decrease in investments in the sector by the state
governments. While public and private investments are increasing manifold in
sectors such as infrastructure, similar investments are not forthcoming in Agriculture
and allied sectors, leading to distress in the community of farmers, especially that of
the small and marginal segment. Hence the need for incentivising states that
increase their investments in the Agriculture and allied sectors has been felt.

Concerned by the slow growth in the Agriculture and allied sectors, the
National Development Council (NDC), in its meeting held on 29th May, 2007
resolved that a special Additional Central Assistance Scheme (RKVY) be launched.
The NDC resolved that agricultural development strategies must be reoriented to
meet the needs of farmers and called upon the Central and State governments to
evolve a strategy to rejuvenate agriculture. The NDC reaffirmed its commitment to
achieve 4 per cent annual growth in the agricultural sector during the 11th plan. The
Resolution with respect to the Additional Central Assistance scheme reads as below:

Introduce a new Additional Central Assistance scheme to incentivise States to

draw up plans for their agriculture sector more comprehensively, taking agro-climatic
conditions, natural resource issues and technology into account, and integrating
livestock, poultry and fisheries more fully. This will involve a new scheme for
Additional Central Assistance to State Plans, administered by the Union Ministry of
Agriculture over and above its existing Centrally Sponsored schemes, to
supplement the State-specific strategies including special schemes for beneficiaries
of land reforms. The newly created National Rainfed Area Authority will on request
assist States in planning for rainfed areas.

Basic Features of the RKVY:

The Rashtriya Krishi Vikas Yojana (RKVY) has been envisaged as a comprehensive
intervention based on local agro-climatic conditions to enhance investment to
achieve 4% agricultural growth rate in the 11th Five Year Plan. RKVY is a quantum
jump in evolution from the variegated schematic approach followed so far through
diverse but strait-jacketed schemes, to a completely new approach in agriculture
planning by allowing the States to first plan a strategy and then designs the schemes
to meet that strategy by providing variety and flexibility in scheme design. Under
Stream-I of RKVY States have undertaken projects in the field of Micro/Minor
Irrigation, Watershed Development, Horticulture, Marketing Infrastructure etc. in
2007-08. An amount of Rs. 1247.59 crore has been released to States under RKVY
during 2007-08.

The RKVY aims at achieving 4% annual growth in the agriculture sector

during the XI Plan period, by ensuring a holistic development of Agriculture and
allied sectors.
The main objectives of the scheme are :
(i) To incentivise the states so as to increase public investment in Agriculture and
allied sectors.
(ii) To provide flexibility and autonomy to states in the process of planning and
executing Agriculture and allied sector schemes.
(iii) To ensure the preparation of agriculture plans for the districts and the states
based on agro-climatic conditions, availability of technology and natural
resources.
(iv) To ensure that the local needs/crops/priorities are better reflected in the
agricultural plans of the states.
(v) To achieve the goal of reducing the yield gaps in important crops, through
focussed interventions.
(vi) To maximize returns to the farmers in Agriculture and allied sectors.
(vii) To bring about quantifiable changes in the production and productivity of
various components of Agriculture and allied sectors by addressing them in a
holistic manner.
AGRICULTURE POLICIES:

The beneficial impact on agricultural situation in India of a host of well-

intentioned government policies has not been as great as originally envisaged.
Agriculture being a State subject, India lacks an Agricultural Policy at the National
level and the onus of framing policies for agricultural development lies with the State
government. The Standing Advisory Committee on Agriculture, appointed during
1989-90 made a note of it and commented, Even after four decades of
independence, India has not been able to come out with a comprehensive
agricultural policy nor has there been any worthwhile debate on the role of
agriculture in the process of economic development. The earlier school of thought,
that growth and advances in the industrial and service sector would transitively
benefit the agricultural sector on the whole, has always cast agricultural development
in the shadows of industrial growth.

Industrial growth in India has always been given precedence over agricultural growth
and the emphasis and favours bestowed on it have continued even beyond the stage
of infancy. The simplistic, reductionist assumption that agricultural sector would
automatically respond to the exogenous stimuli through the trickle-down effect
generated by the forces of development in industrial, trade and service sectors has
prove to be a misplaced conceptualisation under the existing agrarian structure and
socio-economic setup of the farming community. Industrial sector so far has been
receiving a major portion of the incentives and subsidies, at the cost and neglect of
the agricultural sector. It has led to a constant decline in the share of agriculture in
India s Gross Domestic Product since independence, with no decrease in proportion
of employment provided by this sector.

Nevertheless, statistics pertaining to performance of Indian economy in the late

nineties indicate that agricultural performance has a vital role to play in boosting the
overall economy. The economic data for 1998-99 reveals that agriculture has once
again come to the rescue of Indian economy by maintaining a high growth rate.
Projections for 1999-2000 provided by Central Statistical Organisation points out that
even if the industry maintains a low growth rate of 5.7 percent, the bumper
agricultural performance during this year could help scale India's Gross Domestic
Product of 6 percent.

India has made impressive strides on the agricultural front during the last
three decades. Much of the credit for this success should go to the several million
small farming families that form the backbone of Indian agriculture and economy.
Policy support, production strategies, public investment in infrastructure, research
and extension for crop, livestock and fisheries have significantly helped to increase
food production and its availability. During the last 30 years, India’s foodgrain
production nearly doubled from 102 million tons in the triennium ending 1973 to
nearly 200 million tons (mt) in the triennium ending (TE) 1999. Virtually all of the
increase in the production resulted from yield gains rather than expansion of
cultivated area. Availability of foodgrains per person increased from 452
gm/capita/day to over 476 gm/capita/day, even as the country's population almost
doubled, swelling from 548 million to nearly 1000 million.

Increased agricultural productivity and rapid industrial growth in the recent

years have contributed to a significant reduction in poverty level, from 55 percent in
1973 to 26 percent in 1998. Despite the impressive growth and development, India is
still home to the largest number of poor people of the world. With about 250 million
below the poverty line, India accounts for about one-fifth of the world’s poor. Child
malnutrition extracts its highest toll in this country. About 25% children suffer from
serious malnutrition. More than 50 percent of the pre-school children and pregnant
women are anemic. The depth of hunger among the undernourished is also high.

India has high population pressure on land and other resources to meet its
food and development needs. The natural resource base of land, water and bio-
diversity is under severe pressure. The massive increase in population (despite the
slowing down of the rate of growth) and substantial income growth, demand an extra
about 2.5 mt of foodgrains annually, besides significant increases needed in the
supply of livestock, fish and horticultural products. Under the assumption of 3.5%
growth in per capita GDP (low income growth scenario), demand for foodgrains
(including feed, seed, wastage and export) is projected in the year 2020 at the level
of 256 mt comprising 112mt of rice, 82mt of wheat, 39mt of coarse grains and 22mt
of pulses. The demand for sugar, fruits, vegetables, and milk is estimated to grow to
a level 33mt, 77mt, 136mt and 116mt respectively. The demand for meat is projected
at 9mt, fish 11mt and eggs 77.5 billion (Table 1).

Future increases in the production of cereals and non-cereal agricultural

commodities will have to be essentially achieved through increases in productivity,
as the possibilities of expansion of area and livestock population are minimal. To
meet the projected demand in the year 2020, country must attain a per hectare yield
of 2.7 tons for rice, 3.1 tons for wheat, 2.1 tons for maize, 1.3 tons for coarse
cereals, 2.4 tons for cereal, 1.3 tons for pulses, 22.3 tons for potato, 25.7 for
vegetables, and 24.1 tons for fruits. The production of livestock and poultry products
must be improved 61% for milk, 76% for meat, 91% for fish, and 169% for eggs by
the year 2020 over the base year TE 1999. Average yields of most crops in India are
still rather low.

Emerging Trends
The agriculture sector recorded satisfactory growth due to improved
technology, irrigation, inputs and pricing policies. Livestock, poultry, fisheries and
horticulture are surging ahead in production growth in recent years and will have
greater demand in the future. Industrial and service sectors have expanded faster
than agriculture sector resulting in declining share of agriculture in national accounts.
Despite the structural change, agriculture still remains a key sector, providing both
employment and livelihood opportunities to more than 70 percent of the country's
population who live in rural areas. The contribution of small farmers to the national
and household food security has been steadily increasing. The water availability for
agricultural uses has reached a critical level and deserves urgent attention of all
concerned.
 India has high population pressure on land and other resources to meet its
food and development needs. The natural resource base of land, water and bio-
diversity is under severe pressure. Food demand challenges ahead are formidable
considering the non-availability of favourable factors of past growth, fast declining
factor productivity in major cropping systems and rapidly shrinking resource base.

Vast uncommon opportunities to harness agricultural potential still remain,

which can be tapped to achieve future targets. There are serious gaps both in yield
potential and technology transfer as the national average yields of most of the
commodities are low, which if addressed properly could be harnessed.

Concentration was on enhanced production of a few commodities like rice and

wheat, which could quickly contribute to increased total food and agricultural
production. This resulted in considerable depletion of natural resources and the
rainfed dry areas having maximum concentration of resource poor farmers remained
ignored, aggravating problems of inequity and regional imbalances. This also led to a
high concentration of malnourished people in these rainfed, low productive areas.
This era also witnessed rapid loss of soil nutrients, agro-biodiversity including
indigenous land races and breeds.

The agriculture policy must accelerate all-round development and economic

viability of agriculture in comprehensive terms. Farmers must be provided the
necessary support, encouragement and incentives. It must focus both on income
and greater on-farm and off-farm job and livelihood opportunities.

NATIONAL RESEARCH CENTRE FOR

WOMEN IN AGRICULTURE (NRCWA):

The National Research Centre for Women in Agriculture(NRCWA) has been

functioning at Bhubaneshwar, Orissa,for developing methodologies, for identification
of gender implications in farming systems approach and to develop women specific
technologies under different production systems. There are 16 ongoing research
projects in the areas of gender study on agriculture and household economy,
management of coastal agro-eco system, extension methods for farm women,
standardization of women specific field practices, occupational health hazards,
reducing drudgery of women in agricultural operations, improvement of farming
system suited to farm women, eco-friendly pest management technologies for
vegetables among farm women, evaluation of interactive learning modules,
technological needs in empowering women in rural aquaculture, and improvement in
storage practices of seeds and grains.

Under project on Development and testing of extension methods for

farmwomen in eastern India, the extent of participation of farm women in different
farming systems and farm enterprises and the role of change agents in that context,
were studied. Contrary to the situation at coastal tract the male extension agents
maintained higher contacts with farmwomen than the lady extension agent.

The studies under Identification and improvement of farming systems suited

to farmwomen in Eastern India project revealed that there is intense involvement of
farmwomen in vegetable cultivation necessitating to take follow up supportive
activities and interventions in the area of vermicomposting, natural plant pesticides,
biological control and IPM.

Under the project Standardization of women specific field practices in rice in

Orissa data were collected from women heads of 50 farm families on participation of
women in relation to varying operations in rice cultivation. Women of family
contributed highest hours per season (61.66) in harvesting and post harvesting
operations and participated lowest in land preperation. Same pattern was observed
from the paid women and total women (family + paid labour).

FARM PRODUCE PRICE POLICY:

The main objectives of the Government's price policy for agricultural produce aims at
ensuring remunerative prices to the growers for their produce with a view to
encouraging higher investment and production. Towards this end, minimum support
prices for major agricultural products are announced each year which are fixed after
taking into account the recommendations of the Commission for Agricultural Costs
and Prices (CACP). The CACP, while recommending prices takes into account all
important factors, viz:

1. Cost of Production
2. Changes in Input Prices
3. Input/output Price Parity
4. Trends in Market Prices
5. Inter-crop Price Parity
6. Demand and Supply Situation
7. Effect on Industrial Cost Structure
8. Effect on General Price Level
9. Effect on Cost of Living
10.International Market Price Situation
11.Parity between Prices Paid and Prices Received by farmers (Terms of Trade).

Of all the factors, cost of production is the most tangible factor and it takes
into account all operational and fixed demands. Government organizes Price
Support Scheme (PSS) of the commodities, through various public and cooperative
agencies such as FCI, CCI, JCI, NAFED, Tobacco Board, etc., for which the MSPs
are fixed. For commodities not covered under PSS, Government also arranges for
market intervention on specific request from the States for specific quantity at a
mutually agreed price. The losses, if any, are borne by the Centre and State on
50:50 basis. The price policy paid rich dividends. The Government have raised
substantially the MSPs in recent year

Recent government policies affecting Indian

Agriculture:
In the recent Union Budget (2007-08), agriculture has got considerable attention with
the various policy initiatives from the side of finance ministry. Some of the imp0ortant
policies are:
 During 2006-07 (until December 2006), 53.37 lakh new farmers were brought
into the institutional credit system. A target of Rs. 225,000 crore as farm credit
and an addition of 50 lakh new farmers to the banking system have been fixed
 for the year2007-08. The two per cent interest subvention scheme for short
term crop loans will continue in 2007-08, and a provision of Rs.1,677 crore
has been made for that purpose.
 A special purpose tea fund has been launched for re-plantation and
rejuvenation of tea. Government soon plans to put in place similar financial
mechanism for coffee, rubber, spices, cashew and coconut.
 Accelerated Irrigation Benefit Programme (AIBP) has been revamped in order
to complete more irrigation projects in the quickest possible time. As against
an outlayof Rs.7,121 crore in 2006-07, the outlay for 2007-08 has been
increased to Rs.11,000 crore.
 Rs.17,253 crore had been budgeted for fertilizer subsidies in 2006-07.
However, according to the Revised Estimates, this will rise to Rs.22,452
crore.
 The National Insurance Scheme (NAIS) will be continued for Kharif and Rabi
crops during the year 2007-08. The two per cent interest subvention scheme
will continue in 2007-08.
 Rs. 100 crores have been allocated to new Rain fed Area Development
Programme, set up for coordinating all schemes for watershed development.
ECONOMIC FACTORS AFFECTING
INDIAN AGRICULTURE

Economic factors extend to a large number of areas which are as follows:

Micro Finance:
Micro finance scheme has been introduced by National Bank for Agriculture
and Rural Development (NABARD), the apex bank for agriculture and rural
development in India, to improve the access of the rural poor to formal institutional
credit and other financial products. In all 547 banks, which include 47 commercial
banks, 158 RRBs, 342 cooperative banks are now actively involved in the operation
of Self Help Group (SHG)- Bank Linkage Programme to spread the facility of micro
finance to the needy small and marginal farmers and tiny entrepreneurs. The
programme has enabled nearly 329 lakh poor families in the country to gain access
to micro finance facilities from the formal banking system.
Capital Formation in Agriculture: The share of the agriculture sector's capital
formation in G.D.P. declined from 2.2% in the late 1990s to 1.9% in 2005-06.
Stagnation or fall in the public investment in irrigation is partly responsible for this
fall. However there is indication of a reversal of this trend with public sector
investment in agriculture accelerating since 2002-03.The share of public investment
in gross investment in agriculture increased by 6.5 percentage points from 1999-
2000 to reach 24.2% in 2005-06.

Agricultural Finance:

Credit: Availability of adequate credit is vital for every sector and agriculture is not
an exception. In India, Commercial Banks, Cooperative Banks, and Regional Rural
Banks ( RRBs) are responsible for smooth flow of credit to agricultural sector. But a
huge unorganized market exists for credit to agricultural sector in India, which
provide timely fund to this sector but at the exorbitant rate of interest. Among
organized credit disbursement to agriculture commercial banks play a vital role with
a share of about 70% where as cooperative sector and RRBs contribute 20% and 10
% respectively.Kisan Credit Card (KCC) scheme was introduced to provide adequate
and timely support from the banking system to the farmers for their cultivation needs.
This scheme has made rapid progress and more than645 lakh cards issued up to
October 2006. The 'Farm Credit Package' announced by the Government of India in
June 2004 stipulated doubling the flow of institutional credit for agriculture in ensuing
three years. Annual targets for this package are being surpassed in the two
consecutive years from its introduction and it is likely to surpass in the third year
also.

Insurance: Insurance is a prime necessity to mitigate uncertainty that persists in

agriculture. In India, agriculture is still affected by such factors, which are beyond
control of human being. So, there is a great need for agricultural insurance in India.
Keeping this inmind, Government of India in coordination with the General Insurance
Corporation of India (GIC), had introduced National Agricultural Insurance Scheme
(NAIS) from rabi 1999-2000 season. The main objective of this scheme is to protect
the farmers against losses suffered by them due to crop failure on account of natural
calamities. Agricultural Insurance Company of India (AICIL) which was incorporated
in December 2002 took over the implementation of NAIS.
AICIL introduced Rainfall Insurance Scheme called 'Varsha Bima' during 2004
southwest monsoon period. Varsha Bima provided for five different options suiting
varied requirements of farming community:

1. Seasonal rainfall insurance based on aggregate rainfall from June to September.

2. Sowing failure insurance based on rainfall between June 15 and August 15.
3. Rainfall distribution insurance with the weight assigned to different weeks June
and
September.
4. Agronomic index constructed on the basis of water requirements of crops.
5. A catastrophe option covering extremely adverse deviation of 50% and above in
rainfall during the season.
During kharif 2006, this Varsha Bima scheme is being implemented in around 150
districts covering 16 states across the country. AICIL is also piloting another weather
related insurance product for mango and coffee.

INFLATION:
Inflation raises prices for farm inputs as well as farm products, resulting in uncertain
effects on the current net incomes of farmers, the National Council of Applied
Economic Research (NCAER) said in its monthly report.

Inflation may benefit people with flexible money incomes but not those whose money
incomes are fixed.

Farmers have flexible money incomes. Therefore, theoretically at least, they should
benefit from an unanticipated increase in the rate of inflation. Empirical studies
however, have not found this connection, the NCAER study said.

As inflation increases, prices paid by farmers for various inputs increase faster than
the prices they receive for their products, thereby the terms of trade for farmers
deteriorate as the rate of inflation rises.

General inflation when accompanied by growth may be associated with a slight

increase in the demand for farm output. However, increase is likely to be small due
to the low-income elasticity of demand for farm output.

On the other hand, higher marketing margins due to imperfections in the agricultural
markets, stirred up by higher wages and various other marketing costs, reduce the
demand for farm output at the farm level, NCAER said.

These opposing forces suggest that the net impact of inflation in the national
economy on prices received by farmers is small in comparison to the impact on
prices paid.

Studies in the United States have observed that in the short run, a rise in input prices
by 10 per cent reduced net income of farmers by 2.3 per cent in short run of 1-2
years and 1.2 per cent in the long run.
The impact of inflation on agriculture is multifaceted. Firstly, it raises the sector's
costs of production through increased material input costs.

Secondly, higher production costs may be shifted to consumers, but this possibility is
limited by the competitive imports, thus reducing farmers' rate of return, the NCAER
study said.The low current income from farming motivates farmers to seek higher
support prices and to extend price support policies to more commodities. Such
policies result in further higher prices and higher rates of inflation.

The high input prices lead farmers to take recourse to more credit, especially non-
institutional credit for their farm operations which ultimately leads farmers into a debt-
trap, the study said.

Policies towards agriculture, especially in an inflationary setting, must come to grips

with trade-offs intensified by the phenomenon. Policies that may have beneficial
effects in periods of stable prices quite frequently have overwhelming adverse side
effects during inflationary periods impeding achievement of the original policy goals,
it said.

Agriculture hasn’t received the investment it requires, considering nearly

two-thirds of our population depends on crops, animal husbandry, fisheries, forestry
and agro-processing for their livelihood. The recommendations of the National
Commission on Farmers are crying for attention.”
This area is a blind spot. Domestic policies of agriculture do not address the long-
term problem of food security. The result of these policies has been that the country,
which was self-sufficient in food, had to import nearly 7.5 million tones of wheat
during 2006 and 2007.
The imports were made at substantially higher prices than paid to Indian farmers,
creating a reason for more criticism. Moreover, the high-price imported wheat also
added to the subsidy bill. Paying higher prices for imports, even as domestic farmers
are given a minimum price barely enough to recover costs, is certainly not justified. It
is clear that the government has to focus on the supply side.
SOCIAL FACTORS AFFECTING INDIAN
AGRICULTURE

Since long time, Indian farmers have been facing a number of socioeconomic
problems, such as harassment by moneylenders, inability to repay debts following
crop loss, inability to get medical treatment for the family, etc. The problem is
compounded by lack of positive and cooperative support from banks especially in the
face of inclement weather and market fluctuations. Economic plight of farmers might
be illustrated with the fact that a farmer having as much as 15 acres of land and
hence considered a well off farmer in Vidarbha, with an average income of Rs 2700
per acre per annum, had an income just little more than what he would have earned
the legal minimum wage for all 365 days of the year.

India consisting of 16% of world's population sustains only on 2.4% of land resource.
Agriculture sector is the only livelihood to the two-third of its population which gives
employment to the 57% of work force and is a raw material source to large number
of industries. Despite of portrayal of farming as a healthy and happy way of life,
agriculture sector experiences one of the highest number of suicides than any other
industry. Farmers' suicide is not only reported in Vidarbha region of Maharashtra, but
also from Punjab, Uttar Pradesh, Kerala, and Karnataka.

In 1990s, India woke-up to a spate of suicide among farmers community. The first
state where suicides were reported was Maharashtra with particular reference to
Vidarbha region. A look at the figures given out by State Crime Records Bureau
makes it evident those farmers as a professional category is suffering from this
problem of high-suicide rates. Approximately 3.4 million cotton farmers occupy the
Vidarbha region (includes Akola, Buldana, Washim, Amravati, Nagpur, Chandrapur,
Gondia, Bhandara, Yavatmal, Gadchiroli, and Wardha districts) and 95% of them
struggle with massive debt, according to the Vidarbha Jan Aandolan Samiti (VJAS;
Local Farmers' Support Network). Incidence of farmers ending their lives in this
region had hit epidemic like proportions recently .
In a country of 70 million farmers, it is 10 in every 100,000 farmers committing
suicide. This is higher than the total national suicide rate. The number of farmers
committing suicide in India is more than twice of the total number of suicides being
committed in the top 100 countries on the suicide list! This indeed is worrying factor.
The Government's measures including waiving off loans, construction of dams, and
other assisting measures have not produced positive results so far.

In India, the national data show that suicide rate was 9.7/lakh population in
1995. [1] The population of Vidarbha is 12 lakhs, so number of suicide should be
around 116 per year. But according to Vidarbha Jan Andolan Samiti, suicides in
Vidarbha is 600 in 2007 till June, 1065 in 2006, 572 in 2005, 620 in 2004, 170 in
2003, and 122 in 2002. These figures definitely suggest suicide rate in Vidarbha is
high since 2002 in comparison to national suicide figure. A total of 7000 farmers
have committed suicide during the last 3 years. That is an average of over six
farmers committing suicide per day! More than 2190 per year!! Farmers' suicides in
Vidarbha in the last 3-4 years have already crossed 2500 causing a great anxiety.

Wardha district in particular is also facing this problem with increasing number of
claims for government ex gratia grant on steady rise. [9] In 2008 till April alone there
were 26 claims, as compared to 29 in 2004, 26 in 2005, 154 in 2006, and 128 in
2007. Subsequently Hon. Prime Minister Manmohan Singh visited Vidarbha and
promised a package of Rs. 11,000 crores to be spent by the government in
Vidarbha. The families of farmers who had committed suicide were also offered an
ex gratia grant to the tune of Rs. 1 lakh by the government. This figure kept on
varying, depending on how much pressure the government was facing from the
media and the opposition parties for being uncaring toward the farmers' plight.
TECHNOLOGICAL FACTORS AFFECTING
INDIAN AGRICULTURE
Long since the start of green revolution Indian Agriculture has moved very far.With
the inception and adoption of new technology and improved way of farming
agriculture sector has taken long strides. Few of the factors affecting Indian
agriculture are:

Agricultural Mechanisation:

Strategies and programmes have been directed towards replacement of traditional

and inefficient implements by improved ones, enabling the farmers to own tractors,
power tillers, harvesters and other machines, availability of custom services, support
services of human resource development, testing and evaluation and research and
development. A large industrial base for manufacturing of the agricultural machines
has also been developed. Introduction of technologically advanced equipments
through extension and demonstration besides institutional credit has also been taken
up. Equipments for resource conservation have also been adopted by the farmers.

Under various Government sponsored schemes like Macro Management of

Agriculture, Technology Mission for Oilseeds, Pulses and Maize, Technology
Mission on Horticulture and Technology Mission on Cotton, financial assistance is
provided to the farmers for the purchase of identified agricultural implements and
machines.

 Farm Machinery Training and Testing Institues: Farm Machinery Training

and Testing Institutes (FMT and TIs) have been established at Budni (Madhya
Pradesh), Hissar (Haryana), Garladinne (Andhra Pradesh) and at Biswanath
Chariali (Assam) having capacity to train 5,000 personnel annually on various
aspects of agricultural mechanisation. These institutes also undertake testing
and performance evaluation of agricultural machines including tractors in
accordance with the national and international standards. Since inception
about 93,503 personnel have been trained and about 2,162 machines tested
by these Institutes till 31 March 2006. During 2005-06 these Institutes have
 trained 5734 personnel and tested 112 machines. The training programmes
have been revised for giving more emphasis on crop/area/technology specific
issues for optimised training duration for their implementation through Farm
Machinery Training and Testing Institutes w.e.f. 1 April 2005.

 Outsourcing of Training: This is a new component approved for the Tenth

Plan under the Central Sector Scheme “Promotion and Strengthening of
Agricultural Mechanisation through Training, Testing and Demonstration” in
order to train large number of farmers at nearby places. The training
programme shall be arranged through the identified institutions by each State
namely State Agricultural Universities (SAUs), Agricultural Engineering
Colleges/ Polytechnics, etc. This Department has released Rs 73 lakh during
the year 2004-05 and Rs 38.03 lakh during the year 2005-06 to various State
Governments and ICAR for conducting training programmes at the identified
institutions. For the year 2006-07, a target to train 3000 farmers has been
kept.

 State Agro Industries Corporation: Seventeen State Agro Industries

Corporations, Joint Sector Companies, have been promoted by the
Government of India and by the State Governments concerned. The
objectives of these Corporations envisage manufacture and distribution of
agricultural machines, distribution of agri-inputs, promotion and execution of
agro based industries and providing technical services and guidance to the
farmers and others. The Government of India’s share in Six State Agro
Industries Corporations viz. Tamil Nadu, Karnataka, Rajasthan, Gujarat, Uttar
Pradesh and West Bengal have been disinvested in favour of the respective
State Governments.

 Legislative Framework: The Dangerous Machines Regulation Act, came into

force with effect from 14 December 1983. The Act provides for the regulation
of trade and commerce and production, supply and use of products of any
industry producing dangerous machines with a view to securing the welfare of
persons operating any machine and for payment of compensation for death or
bodily injury suffered while operating any such machine. Power threshers
used for threshing of the agricultural crops have been brought under the ambit
of this Act. The Government of India have notified the laying down the
 specifications for the feeding chutes and for installation of the power
threshers. Apart from power threshers the inclusion of power operated chaff-
cutter and sugarcane crusher under this Act is in process.

 Demonstration of newly developed agricultural/horticultural equipments:

With an objective of introducing new technology in agricultural production
system, demonstration of newly developed/improved agricultural and
horticultural equipments has been approved from the year 1999-2000 which
now forms a component of the restructured Central Sector Scheme
“Promotion and Strengthening of Agricultural Mechanisation through Training,
Testing and Demonstration”. Under this component, 100 per cent Central
grant-in-aid is provided to implementing agencies for procurement and
demonstration of new/ improved equipments. The Scheme is implemented
through State/Central Government organisations. This component has helped
in adoption of new agricultural/horticultural equipments by the farmers. During
2005-06, 8099 demonstrations of different new equipments were conducted
benefiting 3, 06,798 farmers. During 2006-07, 1500 such demonstrations will
be conducted through the implementing agencies.

 Extension Activities:

Agricultural Extension aims at improving technology dissemination of farm

technologies to the farmers. The Extension System has undergone several
changes over a period, in terms of content and delivery approaches.
Agricultural Extension is a State subject, however, the Ministry of Agriculture
supplements States’ efforts in improving extension services.

The Department of Agriculture and Cooperation lays down major policy

guidelines on extension matters and the Directorate of Extension implements
specific programmes and activities in close collaboration with the State
Departments of Agriculture, the State Agricultural Universities and other
concerned agencies.

Current efforts in improving extension services include the following:

 o Providing innovative and decentralised institutional arrangements in the
form of an Agriculture Technology Management Agency(ATMT) to
make extension system farmer driven and farmer accountable

o Encouraging Public Private Partnership (PPP) in various modes/forms

can provide synergistic approach in the extension efforts

o Augmentation of Mass Media Support to Agriculture Extension by

providing for location-specific broadcasts through 96FM stations of All
India Radio, 180 Low Powered/High Powered Transmitters, 18
Regional Kendras of Doordarshan and also on DD National Channel
for 30 minutes, 5/6 days a week;

o Operation of Kisan Call Centres through toll free(1551) lines throughout

the country to provide expert advise to farmers from 6.00 am to 10.00
pm on all 7 days of the week. The replies to the queries of the farming
community are being given in 21 languages

o Providing fee based advisory and other support services to the farmers
by training agriculture graduates in agri-business development and
establishing agri-clinics

o Mainstreaming gender concerns in agricultural policies and

programmes.

E-Chaupal:
E-Chaupal is a business platform consisting of a set of organizational
subsystems and interfaces connecting farmers to global markets. It has been
initiated by International Tobacco Company (ITC) who are quite active in
agricultural sector in India. This e-chaupal business platform consists of three
layers each of different level of geographic aggregation. Each of the three
layers is characterized by three key elements
1. the infrastructure(physical or organizational)through which transaction
takes
place
2. the entity( person or organization) orchestrating the transactions , and
3. the geographical coverage of the layer.
The first layer consists of the village level kiosks with internet access
(e-chaupals), managed by an ITC trained local farmer and within walking distance 5
kilometers of each target farmer. Each cluster of five villages gets an e-chaupal,
which is justified by sparse population in rural India. The second layer consists of a
brick and mortar infrastructure called hub managed by the traditional intermediary
who has local knowledge/skills called Samayojak and within tractorable distance(25-
30 kilometer) of then target farmer.

Agricultural Commodities Exchanges: To introduce future trading in

agricultural commodities in India, two commodity exchanges have been introduced in
2003 for future trading. They are, National Commodity & Derivatives Exchange
Limited (NCDEX) and Multi Commodity Exchange of India Limited (MCX). These
exchanges are majorly dealing in agricultural commodities. They are involved in
forward trading to mitigate price risks of the farmers.

ENVIRONMRNTAL FACTORS
AFFECTING AGRICULTURE

The correlation between Indian agriculture and monsoon: Rains is the

lifeblood for India agricultural sector. The country is one of the world's largest
producers and consumers of everything from sugar, rice, vegetables t soybeans.
Agriculture sector employs around 60 per cent of the total workforce in India an
contributes about 17 per cent of the India' GDP. Agriculture also contributes about 20
25 per cent of India's national income; hence a decline in agricultural growth will pull
down the overall growth rate in GDP. If agricultural output declines, overall GDP
growth will perhaps be restricted at 5-6 per cent instead o 7-8 per cent.

In India, monsoon is crucial for summer sow crops, like, soybean, rice, cotton an
sugarcane. With only 40 percent of farmland irrigated, the vast majority of India's
small farmers depend on monsoon to water their seeds. Insufficient rains this year
have cause acreage of all major crops to lag behind in term of year-on-year (Y-o-Y)
estimates, halting prospects for bigger harvests of rice, oilseed and sugar cane.
Indian Farm Minister, Shara Pawar told Parliament on 24th July that monsoon rains
has remained weak in the State of Bihar, India's leading corn producer, an Uttar
Pradesh, which normally produces more than half of India's sugarcane.

Between June 1 and July 15, rains have been 43 per cent below normal in the
crucial Northwest region, the nation's 'Grain Bowl' reported the weather bureau. The
region includes the biggest grain-growing states of Punjab, Uttar Pradesh and
Haryana. All of major agri states of India, including Madhya Pradesh, Andhra
Pradesh, Gujarat Maharashtra, Uttar Pradesh, Punjab and Haryana kept waiting for
rain in the month of June, which ultimately arrived in the last wee of June, but indeed
with a very weak progress.

According to official estimates, the cumulative seasonal rainfall between 1st June
and 15th July is 27 per cent below normal levels. The deficient rainfall has adversely
affected the kharif sowing, as the total are under kharif crops has declined to 112
lake hectares in 2009 compared to 136 lakh hectare in the corresponding period in
2008, a drop of 17.1 per cent. The worst hit crops are rice oilseeds, especially
groundnut and soybean sugarcane. Coincidentally, these are the crops which have
observed sharp price rise in the last year.

Poor rain could affect cane crops in the main growing region of the northern state of
Uttar Pradesh. Other than being the world' top consumer of sugar, India, is also the
biggest producer of it after Brazil. However, it has become the large importer in
2008-09, after exporting a record 5 million tonnes of sugar is the year to September
2008. Now any impact on the production of sugarcane could lead to more imports of
sugar. Such is the impact of report regarding the possible decline in India' sugarcane
production due to weak monsoon that sugar values in the New York raw sugar
market have rallied to a three-year high of 17.3 cents per lb.
LEGAL FACTORS AFFECTING INDIAN
AGRICULTURE

Legal factors include various laws, reforms and new policies drawn up by the
government for improving the current scenario of agriculture sector. Some of the
important aspects of legal factors are discussed below.

Irrigation. Provision has been made in a number of ,states for constructing,

improving irrigation works. The legislative measures passed in Assam, Bihar,
Karnataka, Orissa Madhya Pradesh and Maharashtra provide for the irrigation
works. The policy of entrusting the maintenance of small irrigation works to the
Panchayati Raj organizations has been accepted by the states of Assam, Andhra
Pradesh, Bihar, Gujarat, Jammu and Kashmir, Tamil Nadu, Madhya Pradesh,
Orissa, Karnataka, Kerala, Punjab, Rajasthan and Uttar Pradesh, and in some other
states, the implementation is under way.

The Ministry of Agriculture and Irrigation is considering to undertake a study of all the
existing enactments on state tube-well in the various states with uniform model
circulating it to the states of entrusting the main- works to the Panchayati Raj has
been accepted by the states of Assam, Andhra Pradesh, Bihar, Gujarat, Jammu and
Kashmir, Tamil Nadu, Maharashtra, Madhya Pradesh, Karnataka, Orissa, Kerala,
Punjab, Rajasthan and Uttar Pradesh, in some states the implementation of this
policy is under way.

The ministry of Agriculture and Irrigation has impressed upon the state governments
the need for introducing legislation on ground-water and has circulated a draft model
Bill for the purpose. The purpose of the Bill is to regulate and control the
development of ground-water to Prevent over-exploitation and deterioration in water
quality. It has been suggested to the state governments to introduce legislation
authorizing them to notify the areas for controlling and regulating ground-water
development, granting permits for lifting and using water and for registering the
existing users in such areas. Laws for this purpose are under consideration in the
states of Andhra Pradesh, Bihar, Gujarat, Haryana, Jammu and Kashmir, Karnataka,
Rajasthan, Tamil Nadu, Uttar Pradesh, West Bengal and the Union Territory of Goa.

Crop protection:. The Destructive Insects and Pest Act, 1914, passed by the
central Government provided for means against the entry of diseases from other
countries into India. Suitable provisions also exist in the Act for preventing the
spread of plant pests and diseases from one state to another in the country. For
implementing the provisions relating to the prevention of the entry of injurious pests
and diseases into the country, a chain of plant quarantine and fumigation stations
has been established in all important airports and seaports and land frontiers. The
state governments have also passed suitable legislative measures for dealing with
tile epidemics of plant diseases and pests, empowering them to organize measures
for chemical control. The success of plant protection measures largely depends upon
the efficacy of the chemicals used for controlling the plant pests and diseases. At the
same time, it is important that the chemicals used do not pose any serious risk to
human and animal life. It is necessary to ensure the quality of chemicals
manufactured in the country or imported and marketed for undertaking plant
protection measures.

Fertilizers : The Central government promulgated in May 1957 a fertilizers

(Control) Order, 1957, under Clause 111 of the Essential Commodities Act, 1955.
The law envisaged the statutory control of the prices of three fertilizers, namely
ammonium sulphate, urea and calcium ammonium nitrate; provided for the
registration of dealers in fertilizers; and for restrictions on the specifications of
fertilizers in relation to the maximum and minimum of various important constituents.
Under the provisions of the fertilizers (Control) Order, 1957, powers for fixing the
prices of fertilizers vest with the Government of India and the State Governments
have been authorized to fix the price at which the fertilizers mixture may be sold by a
manufacturer or a dealer. The Central Government also promulgated the fertilizers
Movement Control Order, 1973, in May 1973 under Clause IV of the Essential
Commodities Act, 1955, to ensure the equitable distribution of fertilizers in various
states and to stop the unauthorized inter-state movement of fertilizers. This Order
prohibits the inter-state movement of fertilizers, except by manufacturers listed in the
schedule to the Order, by the Food Corporation of India, central housing
Corporation, State Warehousing Corporation or in accordance with the authority of
the Central Government or the states.

Apart from these positions, most of the states, viz., Bihar, Karnataka, Maharashtra,
Gujarat,Assam, Haryana, Punjab, Orissa, Madhya Pradesh, Andhra Pradesh have
amended their Municipal Acts making obligatory on the part of the Municipal
committees to adopt competing as a method of refuse disposal.

Soil and water conservation: In order to prevent soil deterioration owing to

erosion, most of the states have enacted legislation, empowering their governments
to take up early antisoil-erosion measures.

Legislative measures dealing with soil and water conservation have been passed in
all the states, except Assam, Manipur, Meghalaya, Nagaland and Tripura. Among
the Union Territories, the Land Development Schemes Regulations, 1963, is in force
in the Andaman and Nicobar Islands. In other Union Territories, the question of
enacting suitable legislation is in various stages of examination and consideration. In
many states, there are other Acts which have an indirect bearing on the subject of
soil and water conservation dealing with the preservation and protection of forests,
etc.
 Conclusion

From a nation dependent on food imports to feed its population, India today is not
only self--sufficient in grain production, but also has a substantial reserve. The
progress made by agriculture in the last four decades has been one of the biggest
success stories of free India. Agriculture and allied activities constitute the
single largest contributor to the Gross Domestic Product, almost 33% of it.
Agriculture is the means of livelihood of about two--thirds or 67% of the work force in
the country.

This increase in agricultural production has been brought about by bringing

additional area under cultivation, extension of irrigation facilities, the use of
improved high yielding variety of seeds, better techniques evolved through
agricultural research, water management, and plant protection through judicious use
of fertilizers, pesticides and cropping practices. Yet there are some discrepancies in
the agriculture sector which need to be sorted out so as to represent india on the
forefront of leading agriculturally advanced countries. All the five factors i.e. Political.
Economical, Social, Technological , Legal and environmental need to be addressed
properly wherever needed.
 REFERENCES

 www.india.gov.in

 www.agriculture.indiabiz.com

 www.indianjpsychiatry.org/article.asp?issn=0019-
5545;year=2008;volume=50;issue=2;spage=124;epage=127;aulast=Behere

 http://www.ficci-b2b.com/sector-overview-pdf/Sector-agri.pdf

 http://agricoop.nic.in/Rkvy/Rkvyfinal-1.pdf

 Eleventh Five-year plan report