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Agriculture Sector in India

November, 2013

Agriculture is the backbone of Indian economy, which determines the growth and sustainability. A majority of Indian population relies on agriculture for employment and livelihood. Steady investments in technology development, irrigation infrastructure, emphasis on modern agricultural practices and provision of agricultural credit and subsidies are the major factors contributed to agriculture growth. Indian agriculture sector employs around 58.2 per cent of the total workforce.

The country has today emerged as a major player in the global agriculture market. Though, agriculture accounts for 14 per cent of gross domestic product (GDP) and about 11 per cent of our total exports, it is an essential link in the supply chain of the manufacturing sector and at the same time constitutes a big market for the industrial products. Indian agri-exports in 2012-13 were US$ 41 billion against agri-imports of US$ 20 billion, giving a net trade surplus of US$ 21 billion.

The Department of Agriculture and Cooperation under the Ministry of Agriculture is the nodal organisation responsible for development of the agriculture sector in India. The organisation is responsible for formulation and implementation of national policies and programmes aimed at achieving rapid agricultural growth through optimum utilisation of land, water, soil and plant resources of the country.

Market Dynamics

Given the good rainfall, the agriculture sector in India is likely to grow in the range of 5.2-5.7 per cent in 2013-14 agriculture year (July-June), nearly three times more than the last year. The farm sector had grown at 1.9 per cent last fiscal.

In 2012-13, the share of exports of agricultural and processed food products in overall exports rose to 10.6 per cent. Guar gum has emerged as India’s largest item of agricultural export and responsible for pushing the country’s overall farm exports during the period.

Total exports of Indian agricultural and processed food products during April–November 2013 stood at US$ 14,515.10 million as compared to US$ 13,281.47 million during the same period last year, according to data released by the Agricultural and Processed Food Products Export Development Authority (APEDA).

India's tea production in April–December 2013 grew by 9 per cent to 1,116.98 million kg on account of higher output in Assam and West Bengal. The production was 1,025.01 million kg during the corresponding period last year, according to the Tea Board of India.

Coffee consumption in India has been growing at the rate of 5-6 per cent in the last five years, according to the Coffee Board of India. It has increased to 90 grams per capita a year over the last decade.

The foreign direct investment (FDI) inflows in agricultural services and machinery sector during April 2000–November 2013 stood at US$ 1,666.49 million and US$ 338.01 million respectively, as per the data released by the Department of Industrial Policy and Promotion (DIPP).

Major Developments and Investments

Fluid management company Kirloskar Brothers Ltd (KBL) has collaborated with Tata Power to install the world’s largest circulating water pumping system for the latter’s Ultra Modern Power Plant (UMPP) at Mundra in Gujarat.

The National Bank for Agriculture and Rural Development (NABARD) has sanctioned Rs 1,112 crore (US$ 178.58 million) for creation of 1,336 warehouses in various States and State Government Corporations in the country, which will create 0.75 million tonnes (MT) of additional storage space.

Under Private Entrepreneurs Guarantee (PEG) Scheme, a capacity of 20.38 trillion tonnes (TT) has been approved for construction of godowns at various locations in 19 States to store food grains procured for Central Pool.

Indian Council of Agricultural Research (ICAR) has sought Rs 5,700 crore (US$ 915.03 million) to strengthen Krishi Vigyan Kendras (KVK) in the 12th Five Year Plan. The allocation for KVK was Rs 2,000 crore (US$ 321.10 million) during the 11th Plan.

For the 12th Five Year Plan, the Union Ministry of Commerce has received approval from the Planning Commission for a 60 per cent increase in the allocation to coffee sector at Rs 950 crore (US$ 152.49 million) as compared to the 11th Plan.