SECTORIAL ISSUES IN INDIAN ECONOMY (Semester VI)
Submitted by- Aditi Meher, 2022/0097, B.A (H) Sociology
1. “It was targeted that farmers’ income will double by the year 2022”. Estimate and
analyse farmers’ income since 1983-84 to 2011-12. Explain in detail.
Ans- The Indian government, in 2016, introduced the goal to double farmers' income by 2022,
which necessitated an immediate intervention to tackle agrarian distresses such as suicides and
distress among farmers. That implied real income had to increase at a compound annual growth
rate of more than 10%, much greater than past trends. Even with the Green Revolution and food
self-sufficiency, Indian agriculture became unremunerative, especially for smallholders. By the
early 2000s, agriculture was accounting for less than 15% of India's GDP but sustaining around
50% of the population. Increasing input prices, uneconomical farms, and flat productivity made
farming economically unfeasible for most.
● Trends in farmer incomes between 1983-84 and 2011-12:
1983-84 to 1993-94: Low growth because of stagnant productivity
1993-94 to 2004-05: Slightly improved, supported by diversification into high-value crops and
animals.
2004-05 to 2011-12: Maximum real income growth at 3.94% CAGR – the quickest phase over
three decades. The growth was still not enough to decrease rural poverty.
● The NSSO assessment surveys give direct estimates of farmer household incomes.
2002-03: Average annual income per agricultural household ₹25,380.
2012-13: This went up to ₹77,112. This is a nominal CAGR of 11.75%, which sounds
impressive. After inflation adjustment, the real CAGR was a mere 5.24%, suggesting it would
take about 13.5 years to double income.
Also, there are inequalities based on farm size such as landless and marginal farmers experienced
lower income growth. Large farmers experienced greater income growth, doubling their income
in less than 8 years. Approximately 85% of farmers in marginal and small categories, their real
income doubling would take around 15 to 20 years at such growth rates.
● State-level statistics indicate wide variations in farmer income and its growth as highest
nominal growth rates are 17.48%, 17.24%, and 16.7% in Haryana, Rajasthan and Odisha
respectively. And highest real growth- Madhya Pradesh (9.81%), Rajasthan (9.39%),
Odisha (9.17%).
NSSO statistics indicate that income sources of farmers were becoming more diversified.
Cultivation is still the main source but contributes to less than 50% of total income. Wage
income is important for landless and marginal farmers. Livestock income increased from 4% in
2002-03 to 12% in 2012-13 — a good trend. Non-farm business income, previously considered a
potential source, dropped marginally. Income diversification worked better among landless and
smallholders, and it assisted in lowering vulnerability. Nevertheless, the majority of income
originates from agriculture, hence the necessity to reform the farm sector core.
Constraints to Income Growth
● Low MSPs and poor market access – Farmers were offered poor prices for their produce,
particularly when they were sold under distress.
● Excessive input costs – Fertilizers, seeds, and energy prices rose disproportionately.
● Small and scattered holdings – 85% of farmers have less than 2 hectares, restricting
profitability.
● Poor irrigation and infrastructure – Particularly in the eastern and rainfed areas. Poor crop
insurance and risk management processes.
● Institutional credit shortfall – Most small farmers take high-interest informal loans.
Madhya Pradesh recorded real income growth of 9.81% from 2002-03 to 2012-13. Its strategy to
double incomes consisted of: Productivity increase (30% of total increase), diversification
(20%), area expansion (14%), cost reduction and improved price realization (15% each),
reduction of post-harvest losses (6%). This multi-pronged strategy emphasizes the significance
of customized, state-specific interventions.
Strategies for Doubling Farmer Incomes
To double farmer revenues realistically, India will have to implement a combination of
supply-side and demand-side measures:
● Increase Productivity: Narrow yield gaps with better seeds, water management, and
extension.
● Diversify Cropping Pattern: Inspire horticulture, pulses, and oilseeds above cereals.
● Invest in Allied Activities: Foster dairy, fisheries, and poultry for ancillary income.
● Enhance Non-Farm Rural Employment: Skilling and promotion of rural enterprises.
● Enhance Market Access: Enhance infrastructure, FPOs, and digital platforms for price
discovery.
● Ensure Price Support: Install effective MSP mechanisms and procurement systems.
● Reform Input Subsidies: Channel subsidies into productivity-linked investments.
● Use Technology and Data: For precision agriculture, weather advisories, and financial
services.
Conclusion- The period from 1983-84 to 2011-12 saw gradual but uneven growth in farmer
incomes, with a slight acceleration in the 2000s. However, this growth remains inadequate when
benchmarked against the 2022 doubling target. Structural impediments, small landholdings,
rising input costs, and market failures continue to hinder income growth, especially for small and
marginal farmers. Doubling farmer incomes demands a transformative approach — one that
converges productivity improvement, diversification, reduced costs, and sustainable use of
resources with institutional facilitation. While some states have achieved quantifiable gains, an
extent-pan India level seems a distant dream without serious policy innovation, decentralized
planning, and farmer-oriented reforms.
2. Explain the concept of global food security and slow evolution of India's food
policy.
Ans- Global food security occurs when everyone has physical, social, and economic access to
sufficient, safe, and nutritious food that is adequate to meet their dietary requirements and food
choices for a healthy and active life. It involves four fundamental dimensions like-
● Consistent production and supply of food.
● Adequate resources to procure suitable foods for a balanced diet.
● Appropriate biological use of food, implying a diet that supplies adequate energy and
nutrients, safe water, and proper sanitation.
● Stability in the other three dimensions over a period of time, without danger of abrupt
deficits through crises or economic instability.
While past views on food security concentrated primarily on food availability, particularly at
national levels, contemporary frameworks focus on individual and household access to diets with
adequate nutrition and safety. Additionally, food security now encompasses wider issues like
sustainable agriculture, climate change resilience, fairness, and the value of diversified,
micronutrient-dense diets rather than simple calorie adequacy.
India's food security journey represents a success story with continuous challenges. Despite the
nation registering great strides in food production and lowering the risk of famine, the transition
towards all-encompassing nutrition security has been exceedingly sluggish. The slow pace of
transition is result of the policy priorities in the past, political economy complications, and the
structural constraints within the agricultural as well as the welfare system.
After independence, India struggled with food deficits, recurrent droughts, and famines. Seeing
the imperative of food availability, policymakers aimed at national self-sufficiency in staple
foods. This resulted in huge public investment in agricultural research, high-yielding varieties of
seeds, irrigation, and fertilizer application, leading to the Green Revolution of the 1960s. This
revolution dramatically raised the output of rice and wheat, turning India from a food-deficient
nation to a predominantly self-sufficient one
However, the staple crop focus of the Green Revolution was at the expense of plant diversity in
farming. Traditional and micronutrient-dense food crops like millets, coarse grains, and pulses
were put on the side lines. Caloric adequacy, therefore, increased, yet hidden hunger or
micronutrient deficiencies remained unabated.
After attaining self-sufficiency, household access to food became the focus of policy. Institutions
such as the Public Distribution System (PDS) provided poor consumers with subsidized access to
staple foods. Food grain procurement at Minimum Support Prices (MSP) helped safeguard
farmers' incomes, and distribution via Fair Price Shops under the PDS met consumption
requirements.
In spite of this transformation, the system generated a gap between farm production and political
interests. High-productivity farmers in states like Punjab and Haryana established powerful
lobbies advocating further procurement and subsidy of staples. This is a deeply embedded
political economy which has rendered reform towards a diversified food system difficult.
Emphasis on Calories Rather than Nutrition
Though India has succeeded in cutting calorie deficiency, it still struggles with chronic
undernutrition, micronutrient malnutrition, and growing rates of overweight and obesity. Food
policy continues to be heavily focused on calorie adequacy instead of balanced dieting.
Government schemes like the Integrated Child Development Scheme (ICDS) and the Mid-Day
Meal Scheme (MDMS), although planned for better health and education indicators, have
become additional avenues for delivering staple foods, which are mostly devoid of diet diversity.
In addition, relative price discrepancies between staples and non-staples have otherwise hindered
diet diversification. Although Green Revolution technologies reduced prices of staple grains,
prices for pulses, fruits, and vegetables did not proportionally decline. For the poor, diversified
diets remained economically infeasible and hence continued causing micronutrient malnutrition
Challenges:
An overemphasis on staple grain production made agricultural diversification difficult.
Procurement and support systems heavily favor rice and wheat over other nutritious crops. The
power of the grain-producing farmer lobbies limits the government’s ability to pivot towards
policies that promote broader food system diversification. In contrast to staples, non-staples such
as fruits, vegetables, and pulses are dependent on weak private sector markets with no robust
procurement or distribution networks. Shifting from in-kind food transfers (PDS) to cash
transfers is beset with challenges in beneficiary identification, targeting, and preference
sensitivities. Deep-rooted dietary habits, ignorance of balanced diets, and weak nutrition
education efforts hinder changes in consumption behavior.
To ensure genuine food and nutrition security, India's food policy has to change fundamentally:
● Separate procurement from consumption subsidies. Transitioning to cash transfers for
food security would sever the reliance on procurement-led staple grain production.
● Policies must encourage the cultivation of pulses, fruits, vegetables, and other
nutritionally dense crops. Investments in agricultural research and development,
extension services, and market infrastructure for non-staples are essential.
● Revamping welfare schemes like ICDS, MDMS, and PDS to prioritize the quality and
variety of food, rather than quantity and calories.
● Public information campaigns on the necessity of balanced food intake and behavior
change communication messages can ensure healthy food options.
● Mobilization of private sector investment in supply chains for non-staple foods can
increase access and reduce the cost of nutritious food.
● Policies for food, agriculture, health, and education need to be integrated to address
simultaneously undernutrition, hidden hunger, and increasing obesity.
Conclusion
India's history with food policy shows both achievements and long-standing challenges. While
Green Revolution ensured food availability and decreased hunger, the path to complete nutrition
security is yet to be achieved. Acknowledging that food security is not just a matter of calories
but also of dietary quality, health, and wellbeing is important. A firm transition from emphasis on
staple crops to a diversified, nutrition-sensitive food system will be required for India and
globally is to realize the sustainable development target of Zero Hunger.
3. How can you define transformation in agriculture, allied sectors, and rural India?
Ans- The evolution of Indian agriculture, allied industries, and rural India in the last seven
decades is influenced by changes in economic priorities, technological inputs, institutional
change, and demographic shifts. Traditionally equated with the rural economy, agriculture has
lost its overriding position in income generation and employment to a more pluralistic rural
economic landscape that incorporates strong allied sectors and a growing non-farm economy.
Indian agriculture since independence can broadly be placed in three phases:
● Phase 1 (1950s–early 1970s): This period was marked by a preoccupation with food
self-sufficiency. A nation suffering from famines and food imports made staple cereal
production a priority. The Green Revolution, initiated in the mid-1960s, introduced
technological innovations such as high-yielding varieties (HYVs), chemical fertilizers,
and irrigation. These interventions significantly increased wheat and rice productivity,
especially in Punjab, Haryana, and western Uttar Pradesh.
● Phase 2 (1970s–early 1990s): This saw the extension of Green Revolution technology to
new crops and regions and supplemented by the White Revolution (Operation Flood) that
made India the world's largest milk producer. Livestock started asserting itself as an
important contributor to agricultural GDP. The Technology Mission on Oilseeds also
eased dependence on edible oil imports.
● Phase 3 (1990s–2010s): Economic liberalisation and globalisation during the 1990s
witnessed a transition from production-oriented paradigms to demand-oriented
agriculture. The growing middle class started consuming high-value food products like
dairy, fruits, vegetables, and meat. This spurred diversification in agriculture and
exponential growth in allied industries such as fisheries and horticulture. The relative
share of the livestock sector in agricultural GDP increased, while cereals started losing
relative significance.
While agriculture remains the overlord of rural conversation, allied industries have become
strong drivers of rural growth:
Livestock has emerged as an important driver of agricultural value-added, contributing more
than 23% to overall agricultural GDP in 2012-13. Dairy, meat, and poultry have registered strong
growth with support from policies promoting private investments and cooperative structures.
Fisheries have witnessed steady growth, with their contribution to overall agricultural
production rising from 2% in the 1950s to more than 5% in the 2010s. This growth has been
spurred by increasing domestic and export demand.
Forestry, which was a major component of the rural economy in the past, has suffered in relative
terms owing to slow growth and regulatory limitations, though it continues to play important
ecological and livelihood functions, particularly in tribal areas.
A significant change that has been noted in recent surveys is the falling reliance of rural India on
farming for livelihood. Only 40% of households in rural areas rely on farming as their primary
source of income, even though 58% of them take part in agriculture, as cited by the NSS 70th
Round (2013). More than 40% of a farmer's earnings also come from non-farming activities like
remittances, small businesses, and wages. This transformation is more drastic in states such as
Kerala and Tamil Nadu, with fewer than one-third of farm households practicing farming. On the
other hand, in Uttar Pradesh and Madhya Pradesh, well over 50% are still reliant on farming,
though the non-agricultural incomes here are also growing.
A few major forces have driven these changes:
● Supply-Side Factors: Public investments in irrigation, research, roads, and rural
electrification. Introduction of better seeds, chemical fertilizers, and pesticides. And,
growth of formal credit systems and price support programs.
● Demand-Side Factors: Increased per capita incomes and urbanization. Change in
consumer demands towards protein food and perishables. Growth of agro-processing
industries and value chains and trade openness increases and agri-exports rise.
● Institutional Changes: Introduction of cooperative dairy models and self-help groups,
decentralized governance via Panchayati Raj Institutions and schemes such as
MNREGA, which changed rural labor patterns.
Challenges:
● More than 85% of Indian farmers are small and marginal, constraining economies of
scale.
● Growth in yields has decelerated in cereals and pulses. Only crops such as Bt cotton have
registered consistent productivity increases.
● Intensive cultivation has resulted in groundwater depletion, soil erosion, and excessive
use of chemicals.
● Rural roads, storage, and market access are poor, constraining farm and non-farm sector
growth.
● In spite of banking penetration, informal lending is still predominantly relied upon by
many rural families. Farm households continue to remain highly indebted, particularly in
low agricultural income states.
Way forward
In light of these developments, a revised rural development plan is required that meets farm
sector development with non-farm employment. Redirect support from cereals to horticulture,
high-value crops, and animal husbandry. Reorient MSP and procurement policy to nutritional
and economic goals. Development of allied sectors by supporting fisheries, dairy, and food
processing sectors. Promote startups and SMEs in villages to provide employment and local
value addition. Increasing infrastructure through rural connectivity, electricity supply, cold
chains, and digital access to support agri-business and service industries to thrive. Encouraging
rural entrepreneurship, crafts, tourism, and industry. Skill development programs must be
oriented towards opportunities outside agriculture. Additionally, redefining rural development
and designing policies that recognize the heterogeneity of rural livelihoods and aspirations.
