A Deep Dive into Indian Agriculture: Production, Exports and Challenges

Table of Contents

• Agriculture Development in India
• Transformation of Indian Economy through Agriculture
• Agriculture Production in India
• Major Seasons in India
• Indian Agricultural Export
• Investments in Agriculture Sector
• Challenges in Indian Agriculture
• Government Policies to support Agriculture

Agriculture Development in India

Indian agriculture is a crucial sector that employs almost half the nation's population directly or indirectly. In India, around 70% of the population earns its livelihood from agriculture. It is an important source of raw material for many Agro-based industries. Now, India is the largest producer of several commodities, including spices, pulses and milk. Also, it is among the leading producers of tea, fruits, vegetables, sugarcane, wheat and rice. The agriculture sector is growing with higher investments in infrastructure, including warehouses, cold storages and irrigation.

From the infrastructure development for scientific agriculture to the introduction of Green Revolution in 1965, India's image transformed on the global stage from a food-deficit nation to a leading agricultural nation. The Green Revolution changed agriculture in India by contributing to increased farming areas, allowing double cropping, promoting HYV seed adoption, increasing the use of pesticides and inorganic fertilisers, enhancing irrigation facilities, and enhancing the measures for crop protection. After 2000s, the country exports different agricultural products that significantly contribute to the country's economy.

Transformation of Indian Economy through Agriculture

The growth and development of India not only offers opportunities to increase farmer earnings but also boost the Indian economy. Following are the reasons for the importance of agriculture in Indian economy:

• Major Contributor in Gross Domestic Product (GDP) - The agricultural sector in the country contributed around 18% to the GDP in 2022-23. Around 65% of the population is directly involved in agriculture and allied activities.
• Provides Employment Opportunities - Agriculture is the primary source for the livelihood of more than half of the total population of India. The food and processing industries, farm mechanization, agricultural services, etc. are running through agriculture which brings employment opportunities in the country.
• Export Contribution to International Trade - Agriculture plays an important role in providing supply of food to the country’s people contributing to the nation’s food security. Agricultural products such as coffee, sugar, tea, nuts, spices and others are exported and makeup 50% of the total exports. The total worth of agriculture exports in 2022-23 was US$ 52.50 billion. The commercial use of agricultural products helps the government earn revenue, thus contributing significantly to the Indian economy.
• Source of Raw Materials to Agro-Based Industries - Agriculture provides raw materials to various Agro-based industries, including cotton textiles, jute, cotton, etc. Food processing industries also rely on agriculture. Thus, the growth of these industries is directly linked to agricultural development.
• Contributor in Government’s Revenue - Agriculture helps to generate a high revenue as a source of income for central and state governments. The government is getting money from land expansion and sectors like railways.

Agriculture Production in India

The agricultural sector of India is expected to reach 24 billion dollars by 2025. The grocery and food market of India is already the sixth largest, and retail contributes around 70% of the sales. Some of the facts about agriculture in India are:

• The nation's total food grain production was 148.5 million tonnes in 2023-24.
• India is also the world’s 2^nd largest producer of food grains, fruits and vegetables and the 2^nd largest exporter of sugar.
• The area under rabi crops increased by 3.25% in 2022-23, reaching 720.68 lakh hectares.
• India's horticulture output hit 351.92 million tonnes, which is an increase of 1.37% in comparison to the last year.
• Around 52% of the gross sown area had irrigation access in 2022-23, which is around 73 million hectares.
• During 2023-24 (April-October), the export of agricultural and processed food products was worth US$ 27.01 billion.
• India has a wide ranging and large raw material base suitable for food processing industries, due to its diverse Agro-climatic conditions.
• Farm equipment is also very useful as these improves the productivity by up to 30% and reduce the input cost by about 20%. Tractor accounts for most of the farm mechanisation in India. The country is also the largest market in the world for tractors.

The major commercial crops and food grains production (in metric tonnes) in the year 2022-23 are given below:

Major Seasons in India

Indian Agricultural Export

The export of agricultural and processed food products was at 53.12 billion dollars in 2022-23. The export was at around 27 billion dollars from April to October in 2023-24.

The primary commodities for this period were:

• Marine products at 4.5 billion dollars,
• Rice (basmati and non-basmati) at 5.86 billion dollars,
• Spices at 2.24 billion dollars,
• Sugar at 1.49 billion dollars,
• Oil meal at 894 million dollars and
• Other processed items at 967 million dollars.

Investments in Agriculture Sector

The key points related to important developments and investments in agriculture are:

• In 2023 Union Budget, the Digital Agriculture Mission was allocated ₹450 crores to promote digital agriculture and fund projects using modern information technologies like robotics, IoT, block chain technology and artificial intelligence. 
• A Memorandum of Understanding (MoU) was signed among NBCC, NABARD (National Bank for Agriculture and Rural Development) and NCDC (National Cooperative Development Cooperation) to construct the largest grain storage in the cooperative sector.
• Under Aatmanirbhar Bharat Horticulture Clean Plant Program, a budget of ₹2,200 crores was dedicated for promoting high-value horticulture crops.
• The agriculture and allied sector have been allocated around 1.9% of the total budget for the financial year 2024. Around 8.3% of the Union Budget will fund key subsidies, like petroleum, fertilizer and food subsidies. Around 1.3% is set aside for the PM KISAN Yojana to assist small and marginal farmers.
• India signed deals to export 5,00,000 tons of new season basmati rice in Europe and the Middle East in November 2023.
• India has performed tremendously in agritech funding. Between 2017 and 2022, India received 1 billion dollars in agritech funding. By 2025, Indian agritech companies are likely to witness investments worth US$ 30-35 billion.

Challenges in Indian Agriculture

The challenges in Indian agriculture are broadly divided into two categories.

• Productivity related Challenges
• Environmental Challenges

Let’s discuss each in detail.

1. Productivity related Challenge

• Farm Sizes- The average farm size in India has been declining, thus hampering the overall productivity. The total agricultural land in India in 2021 was at around 60%. However, a majority of this is small farm sizes, which limits economies of scale.
• Irrigation Coverage- Many farmers and agriculture in India depend on monsoon for irrigation necessities. This restricts them from increasing their crop intensity. Around 50% of the Gross Cropped Area is under irrigation coverage. 
• Credit- Credit is another challenge faced by agriculture in India. Even though a significant budget is allocated to agriculture in the Union Budget for farmers to have access to credit, around 30% of the farmers still borrow money from non-institutional agencies. 

2. Environmental Challenges

• Soil Health- The constant degradation of the soil health is such a threatening challenge which is affecting the overall agricultural productivity. The excessive use of pesticides and fertilizers leads to the deterioration of the soil. Apart from this, drought, floods, forest fires, nutrient deficiencies are responsible for the degradation of soil.
• Water Availability- Water unavailability is a significant issue leading to bad environmental changes. Farmers still lack water facilities, hampering their farm tasks, leading to lower crop yields. Moreover, with the increase in global temperature, the situation related to water availability for irrigation is worsening. Several areas are affected by the lack of proper water availability or drought. Water scarcity restricts the full potential of agriculture. However, the government is helping farmers improve water management to ease water availability in India.

Government Policies to support Agriculture

1. National Mission for Sustainable Agriculture (NMSA): National Mission for Sustainable Agriculture (NMSA) helps in enhancing agricultural productivity especially in rainfed areas focusing on integrated farming, water use efficiency, soil health management and synergizing resource conservation.
2. Pradhan Mantri Krishi Sinchayee Yojana (PMKSY): This scheme has been formulated for extending the coverage of irrigation 'Har Khet ko Pani' and improving water use efficiency 'More crop per drop' in a focused manner with end-to-end solution.
3. Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan): It is a central sector scheme with 100% funding from the Government of India. Under the scheme an income support of 6,000/- per year in three equal instalments is provided to all land holding farmer families.
4. Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA): The Scheme is aimed at ensuring remunerative prices to the farmers for their produce. Basically, it provides Minimum Support Prices (MSP) to the farmers.
5. Pradhan Mantri Fasal Bima Yojana (PMFBY): This scheme aims to provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop because of natural calamities, pests & diseases.
6. Paramparagat Krishi Vikas Yojana (PKVY): It is an extension to Soil Health Management (SHM) in the National Mission on Sustainable Agriculture (NMSA) 's Centrally Sponsored Scheme (CSS).