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Agriculture Sector in India

February, 2013


Agriculture is the mainstay of the Indian economy because of its high share in employment and livelihood creation. More than half of the Indian population still relies on agriculture for employment and livelihood. During the past five years, agriculture sector has witnessed spectacular advances in the production and productivity of food grains, oilseeds, commercial crops, fruits, vegetables, food grains, poultry and dairy.

Agriculture is the dominant sector of the Indian economy, growing at an average rate of 3.4 per cent from FY 2004-05. “India is the second-largest producer of food in the world and holds the potential of being the biggest on global food and agriculture canvas,” according to a Corporate Catalyst India (CCI) survey.

The Indian agriculture sector is now moving towards another green revolution. The transformations in the sector are being induced by factors like newfound interest of the organised sector, new and improved technologies, mechanised farming, rapid growth of contract farming, easy credit facilities, etc.

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

  • Agriculture accounts for about 10 per cent of the total export earnings and provides raw material to a large number of industries. “Exports of agricultural products are expected to cross US$ 22 billion mark by 2014 and account for 5 per cent of the world's agriculture exports,” according to the Agricultural and Processed Food Products Export Development Authority (APEDA)
  • South Korea has become a key market in Far-East for Indian coffee exports. “Indian coffee exports to South Korea have seen a five-fold jump in volume in the last three years,” according to Jawaid Akhtar, Coffee Board Chairman
  • Spice Board of India plans to promote exports of spices by establishing 25-30 spice parks in different parts of the country. This will help in achieving export of spices worth Rs 30,000 crore (US$ 5.57 billion) by 2020, as per Dr G K Vidyashankar, Deputy Director (Marketing), Spice Board
  • National Bank for Agriculture and Rural Development (NABARD) has estimated Bihar's total credit potential under priority sector for the year 2013-14 at Rs 40,829 crore (US$ 7.57 billion), which is almost 22 per cent more than the current year

Major Developments and Investments

  • The total planned expenditure for the Department of Agriculture and Cooperation has increased by 18 per cent from Rs 17,123 crore (US$ 3.18 billion) in 2011-12 to Rs 20,208 crore (US$ 3.75 billion) in 2012-13. The outlay for Rashtriya Krishi Vikas Yojana (RKVY) is being increased from Rs 7,860 crore (US$ 1.46 billion) in 2011-12 to Rs 9,217 crore (US$ 1.71 billion) in 2012-13. Further, the amount of Rs 1,000 crore (US$ 185.53 million) has been allocated for “Bringing Green Revolution to Eastern India (BGREI)” initiative, compared to Rs 400 crore (US$ 74.22 million) in 2011-12
  • A memorandum of understanding (MoU) has been signed between Indian Council of Agricultural Research (ICAR) and University of Horticultural Sciences, Bagalkot, Karnataka for establishment of 631st Krishi Vigyan Kendra in Kolar District at National Bureau of Plant Genetic Resources (NBPGR), New Delhi
  • The Centre has proposed to construct 11 new food grains godowns at different locations in the state of Assam to strengthen Public Distribution System. Besides this, additional storage capacity will also be created at three existing locations in the state. These godown to be constructed or expanded by the Food Corporation of India (FCI), will add food grain storage capacity of 3,47,000 million tonnes (MT) in the state of Assam
  • The Chennai based Indian Overseas Bank (IOB) keeping its thrust on agricultural lending under priority sector area has proposed to open 15 special agricultural credit branches in Karnataka and Maharashtra. The bank intends to lend about Rs 500 crore (US$ 92.77 million) through these branches
  • Allocation to the Department of Agriculture & Cooperation has increased considerably from Rs 5560 crore (US$ 1.03 billion) in 2007-08 to Rs 20,208 crore (US$ 3.75 billion) in 2012-13 facilitating more investment in the sector