Beyond the News - FACT Analysis

Importance of agriculture in Indian economy

H.S. Hoon

December 23

India’s History of Agriculture Farming dates back to Indus Valley
and Ancient Times when farming produce was entirely dependent on soil
conditions and irrigation source was only dependent on monsoon with
climate conditions prevailing in different parts of the Country. Floods,
untimely rains and other calamities from time to time and years to years
has been resulting in the poor conditions of the farmers. Similar is the state
of affairs Globally as well.

Importance of Agri in Indian Economy

Agriculture first developed in the world between14500 and 12000 B.P. in
Asia at the end of the palcothlic period. Asia accounts for the 40% of the
Global Economy and contributed 2/3 rd Globally in GDP growth as on date
with Asia producing 50% of the World’s Agricultural Products. This is
even when average Farm of China is 0.06% and India is 1.13 Hectare
(Very Small by Western Standard), yet these two countries have emerged
as global leaders in agricultural production. Prior to Partition in India,
agriculture was the base economy of the country. Even after partition in
1947 Indian economy from the First Five Year Plan for growth of the
country was agriculture and contribution of the Farmers was more than
60% and Country was dependent on agriculture and India is known as
Agriculture Based Economy. This is inspite of the fact that 80% Farmers
are Small and Marginal having less than 5 Hectares of land with minimal
sources of producing a crop. In the past decades and even as on date,
agriculture products are providing raw materials to various sectors which
are Agro Based Industries like sugar, jute, cotton, Vanaspati, fruit
processing industries, fisheries, milk products etc.

Starting from the first five year plan to this day, Agriculture is
considered as Prime Revenue Collecting Sector for Both Central and State
Government for Huge earnings from agricultural and its allied activities,
Cattle, Rearing, Animal Husbandry, Poultry Farming, Fishing etc. Indian
Railways and State Transport System also earn a Handsome earnings as
freight charges for both agricultural finished and semi finished products.
Farmer is the Backbone of Nation. Word Farmer means – Hard work
and Dedication and a person not only feed himself and his family with avery less amount of income but also the Country and this is the fact of
their world. Fact is that Agriculture Development is possible without
Industry but Industry Development is impossible without agriculture.
History Amply Demonstrated that Industrial Revolution was proceeded by
Agriculture Revolution.

In India 2/3 rd of the population lives in villages and agriculturists
provide employment to 52% of the population of India. After Green
Revolution Power of Large Farmers increased due to enhanced income
and negligible Tax burden. India is the Second Biggest Farm Producing
Country in the World worth Present US dollars 396987000 after China
978455000 and much ahead of US and Indonesia amongst Four Top
Countries of the World. It provides food to over 1210.2 million
population. Its contribution to Gross Domestic Product (GDP) is around
18% on date. However the economic condition of agriculture to Indian
GDP is steadily declining to 14-15% because of development in other
sectors, of course with Raw Material provided by Agriculture Sector.
MSP (Minimum Support Price)

In India the MSP is fixed by Government of India and is prevalent
in all the States for 23 Crops. But the cost depends upon type of soil,
irrigation system, fertilizers, pesticides machines, Interest and other
expenses. State Government can give bonus to the Farmers so that they get
the Right Price of the Crop. Our country has network of Co-operatives at
the Local, Regional, State and National level. Cost of products and the
price at which Central Government buys under MSP varies from State to
State though agreed for 150% of the cost of produce. Central Government
buys crops only at the fixed price through Food Corporation of India (FCI) with maximum stipulation of 60% depending upon the availability of
storage capacity. State Govt. quota is also fixed and State Govt. cannot
buy anything beyond this causing State Govt. to incur heavy losses.
As farmers are always under stress because of getting low return of
their products depending upon climatic conditions, Dr. Swaminathan
suggested in his report of Oct 2006 Govt. of India to ensure that Farmer
gets minimum of Rs. 18000 per Hectare, But His report has not been
implemented till date and farmers are not getting even MSP fixed by the
Govt. of India, what to think of new three Farm Bills.

Cost of cultivation varies from State to State depending upon the
quality of soil, mode of irrigation facilities, labour, fertilizers, pesticides,
machines, interest and other expenses which includes cost of farm and
farm labour of the Family at the wage rate premium. One day agriculture
wage in Andhra Pradesh is Rs. 312, UP Rs. 264, Punjab Rs. 349, Haryana
Rs. 367 vis-a-vis other States. Total expenditure of Paddy cultivation over
one Hectare in A.P is Rs. 80303, UP-58429, Punjab 76079, etc.

State Govt. can increase the rate of MSP by way of bonus but they don’t
because the Central Govt. buys a crop at a fixed price. The idea behind is
to keep the food grain price bare minimum to control inflations as
everything starts from Food Grain only. This is the main cause of Farmers
pitiable condition inspite of the fact that the contribution of Farmers
towards the Country, towards the Economy, towards Employment,
towards feeling the population, towards providing Raw material for
development of other sectors.

State wise Production and Procurement of Rice and Wheat give the
clear picture of the Farmers and the disparity amongst the States of MSP
being paid variably.

(The author is the Senior Advisor with The Fact News)