India is an agriculture-dependent country. In a country like this, most of the people belonging to the lower and middle income groups find their livelihood in agriculture. There are certain reasons why most of the population relies on agriculture despite so much digitalization of the country in almost every sphere. If you are one, who would like to analyze the agricultural sector of India and gain insights related to this topic, this article is a pot of gold for you.
Being an agro-economy and providing jobs to 58% of the population, it becomes a very important sector to be functioning smoothly. It is just as valuable for industries and firms as it is to all of us.
Contributions of Agriculture to Industries:
Supply of raw materials to industries:
Many industries look to the agricultural sector for the supply of raw material.
Agriculture and foreign trade:
Though India has been importing food grains for quite sometime after independence, it has also been exporting the products of Argo-based industries, thereby, helping the country, not only to pay for the food imports but also for other imports which includes capital goods. It is important to note here that the major traditional exports of India are the cotton textiles, Jute textiles, and tea.
Provision of the market for the industrial sector:
The increasing income of the farm sector leads to expanded demand for the consumer’s goods produced in the industrial sector. Though no inquiry directly pertaining to this issue has been conducted in India, the data collected by the National Sample Survey organization does indicate that the goods produced in the industrial sector are finding their way into the consumption schedule of the rural people.
Let's look at some numbers and estimates about the market size of various goods and production to know about the sector in detail.
During the 2019-20 crop year, food grain production was estimated to reach a record of 295.67 million tonnes (MT). In 2020-21, the Government of India is targeting food grain production of 298 MT. Production of horticulture crops in India was estimated at a record 320.48 million metric tonnes (MMT) in FY20 as per second advance estimates. India has the largest livestock population of around 535.78 million, which translates to around 31 per cent of the world population. Milk production in the country is expected to increase to 208 MT in FY21 from 198 MT in FY20, registering a growth of 10 per cent.
Sugar production in India reached 26.46 MT between October 2019 and May 2020 sugar season according to the Indian Sugar Mills Association (ISMA). India is among the 15 leading exporters of agricultural products in the world. The organic food segment in India is also expected to grow at a CAGR of 10 per cent during 2015-25 and is estimated to reach Rs 75,000 crore (US$ 10.73 billion) by 2025 from Rs 2,700 crore (US$ 386.32 million) in 2015.
Agricultural export from India reached US$ 38.54 billion in FY19 to US$ 28.93 billion in FY20 (till January 2020).
It is imperative to increase the fertility of the land and the production of crops, the farmers need investment and aids from the government. It not only increases their earnings but gives us more edge in the world market.
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$ 9.98 billion between April 2000 and March 2020.
Some major investments and developments in agriculture are as follows:
In March 2020, Fact, the oldest large-scale fertilizer manufacturer in the country, crossed one million production and sales mark.
Nestle India will invest Rs 700 crore (US$ 100.16 million) in the 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 the Indian Council of Agricultural Research (ICAR) - Indian Veterinary Research Institute (IVRI) and the Japanese Encephalitis ELISA were launched in October 2019.
An investment worth Rs 8,500 crore (US$ 1.19 billion) has been announced in India for ethanol production.
Some of the recent major government initiatives in the sector are as follows:
In May 2020, Government announced the launch of an animal husbandry infrastructure development fund of Rs 15,000 crore (US$ 2.13 billion).
In September 2019, Prime Minister, Mr. Narendra Modi launched the National Animal Disease Control Programme (NADCP), expected to eradicate foot and mouth disease (FMD) and brucellosis in livestock. In May 2020, Rs 13,343 crore (US$ 1.89 billion) was allocated to the scheme.
In May 2019, NABARD announced an investment of Rs 700 crore (US$ 100 million) venture capital fund for equity investment in agriculture and rural-focused start-ups.
Under Union Budget 2019-20, Pradhan Mantri Samman Nidhi Yojana was introduced where a minimum fixed pension of Rs 3000 (US$ 42.92) was to be provided to the eligible small and marginal farmers, subject to certain exclusion clauses, on attaining the age of 60 years.
Though many steps and policies are being framed by the governments, the real problem lies in their effective implementation. Hence, there should be a focus on making the benefits of these policies available to the deserved and required farmers which in turn will boost the agriculture.
What do you think about the agriculture sector of India? Any suggestions on how to increase productivity? Drop it in the comments below.
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