Economic Survey Volume 2 Chapter 7 (Latest)






  • Fluctuating growth rates of agriculture and allied sectors – as more than 50% of agriculture in India is rainfall dependent which aggravate the production risks.


Growth rate (in %)






(-) 0.2






  • Gross Capital Formation (GCF) to GVA has been showing a fluctuating trend from 18.2% in 2011-12 to 16.4% in 2015-16.
  • The Gross Capital Formation in agriculture and allied sectors as a proportion to the total GCF showed a decline from 8.3 percent in 2014-15 to 7.8 percent in 2015-16. This decline can be attributed to reduction in private investment.


As per the Fourth Advance Estimate for 2016-17, the country achieved a record production of food grains estimated at 275.7 million tons, which is higher by 10.6 million tons than the previous record production of food grains in 2013-14.

The production of rice is estimated at 110.2 million tons during 2016-17 which is also a new record.



Growth (in %)

Reason of growth



– Very good rainfall during monsoon 2016-17

– Various policy initiatives taken by the Government











Kharif Production 2017-18

As per the First Advance Estimates, kharif food grains production during 2017-18 is estimated at 134.7 million tons which is expected to be lower by 3.9 million tonnes from the production of 138.5 million tons during 2016-17.



There has been a gradual structural change in agriculture – the share of livestock in GVA has been rising gradually while the share of the crop sector in GVA has been on the decline (impacting sources of incomes of the farm households.

Need of reorientation in policies-

Strengthening the value chain by focusing on allied activities like dairying and livestock development along with gender-specific interventions.


Policy for Women Farmers:

With growing rural to urban migration by men, there is ‘feminisation’ of agriculture sector, with increasing number of women in multiple roles as cultivators, entrepreneurs, and labourers.

The following measures have been taken to ensure mainstreaming of women in agriculture sector:

  • Earmarking at least 30% of the budget allocation for women beneficiaries in all ongoing schemes and development activities.
  • Initiating women centric activities to ensure benefits of various beneficiary-oriented programs/schemes reach them.
  • Focusing on women self-help group (SHG) to connect them to micro-credit through capacity building activities and to provide information and ensuring their representation in different decision-making bodies.
  • Recognizing the critical role of women in agriculture, the Ministry of Agriculture and Farmers Welfare has declared 15th October of every year as Women Farmer’s Day.


Need of gender-specific interventions: An ‘inclusive transformative agricultural policy’ should aim at gender-specific interventions to raise productivity of small farm holdings, integrate women as active agents in rural transformation, and engage men and women in extension services with gender expertise



  • India ranks first, with 179.8 Mha (9.6% of the global net cropland area) of net cropland area according to United States Geological Survey 2017.
  • The Index of Crop Diversification has been computed to examine whether there has been major changes in the cropping patterns across States.
  • Two of the States HP and Jharkhand have shown increasing values in crop diversification while Odisha (80% of the cropped area under rice) and Punjab (wheat and paddy 83%) follow monoculture facing issues such as – declining productivity, lower fertilizer response ratio, degradation of soil health and declining profitability of cultivation.
  • Need to diversify into high value crops and horticulture crops: to improve soil health, productivity and reduce risk( as inverse relationship between change in crop diversification index and variability of output)
  • Crop Diversification Programme is being implemented in the original green revolution states to diversify paddy areas towards less water requiring crops (like oilseeds, pulses, coarse cereals) and shifting of tobacco farmers to alternative crops in tobacco growing states.





Operational Holdings by Educational Status

  • The educational level of farmers has a significant impact on the capacity of farmers to adopt and inculcate new methods of cultivation and input management.
  • As per Input Survey (2011-12), about 69.3% of farmers were literate.


% of farmers

Level of education


Class V


Middle Class




Senior Secondary


Technical diploma


Graduation and above



Use of Inputs by Agricultural Holdings

  • The use of inputs like fertilizers, hybrid seeds and organic manure are critical in increasing productivity in agriculture.



  • In order to promote Seed Replacement Rate (SRR) and Varietal Replacement Rate (VRR), Seed Project entitled, “Seed Production in Agricultural Crops” is being implemented.
  • However, the use of fertilizers and hybrid seeds can bring about better yields if there is adequate coverage of irrigation since agriculture in India is largely rainfed.



  • The all India percentage of net irrigated area to total cropped area was 34.5%, which makes a large segment of cultivation dependent on rainfall.
  • Only 2 states – Punjab and UP have more than 50% net irrigated area to total cropped area and only 7 states have above 34% in 2014-15.
  • To increase the coverage of irrigated area- Prime Minister’s Krishi Sinchayee Yojana (PMKSY) was launched in 2015 with an outlay of Rs.50,000 crore in five years.





2017-18 (Target)

Per Drop More Crop

Rs. 1556.7 cr

Rs. 1991.2 cr

Rs. 3400 cr

Area brought under micro-irrigation

5.7 lakh ha

8.4 lakh ha

12 lakh ha


Agricultural Mechanization

  • Farm mechanization and crop productivity has a direct correlation– saves time & labour, reduces drudgery, cut down production cost in the long run, reduces post-harvest losses, boosts crop output and farm income.
  • At present, Indian farmers are adapting farm mechanization at a faster rate in comparison to recent past. Indian tractor industries have emerged as the largest in the world and account for about one-third of total global tractor production.
  • Need to enhance the level of farm mechanization in the country– estimated that percentage of agricultural workers of total work force would drop to 25.7% by 2050 from 58.2% in 2001
  • Human power availability in agriculture also increased from about 0.043 KW/ ha in 1960-61 to about 0.077 KW/ha in 2014-15. However, as compared to tractor growth, increase in human power in agriculture is quite slow.

Shift towards use of mechanical and electrical sources of power (from 7% in 1960-61 to about 90% in 2014-15)

  • Need to consolidate land holdings to reap the benefits of agricultural mechanization



  • The NSSO Report indicated that a very small share of agricultural households engaged in crop production activities was insuring their crops. For wheat and paddy, less than 5% of the cultivating agricultural households insured their crops.

Pradhan Mantri Fasal Bima Yojana (PMFBY)

  • A yield index based crop insurance scheme launched in 2016.
  • provides comprehensive coverage of risks from pre-sowing to post harvest against natural non-preventable risks
  • Uniform premium to be paid by farmer of 2% for all Kharif crops and 1.5% for all Rabi crops and 5% for commercial and horticultural crops.
  • During 2016-17, the target of 30 percent of the Gross Cropped Area (GCA) in the country for PMFBY has been achieved. The target for 2017-18 has been kept at 40% of GCA.
  • Need of proper awareness along with enhanced geographical coverage and simplification of procedures – as major reasons for not insuring the crops- lack of awareness, improper coverage and reach and complicated procedures and lack of resources etc.


Policy to promote Climate Smart Agriculture (CSA):

Climate-smart agriculture (CSA) is an approach that helps to guide actions needed to transform and reorient agricultural systems to effectively support development and ensure food security in a changing climate.

It aims to tackle 3 main objectives:

  • sustainably increasing agricultural productivity and incomes,
  • adapting and building resilience to climate change
  • reducing and/or removing greenhouse gas emissions wherever possible

Mainstreaming CSA

  • climate resilient technologies are being demonstrated in 153 model villages under KVK covering 23 states under “National Innovations on Climate Resilient Agriculture” (NICRA)
  • 623 contingency plans have been prepared so far and hosted on ICAR /DAC websites



  • Credit is a critical input in achieving high productivity and overall production in the agricultural sector. A sum of Rs.20339 crore has been approved by the Government of India in 2017-18 to meet various obligations.
  • The electronic National Agriculture Market (e-NAM) was launched by Government on April, 2016 aims at integrating the dispersed APMCs through an electronic platform and enable price discovery in a competitive manner, to the advantage of the farmers.
  • Farmers need to store their produce in the accredited warehouses, to avail themselves of post-harvest loans (to avoid distress sales). The loans are available to KCC (Kisan Credit Card) holding small and marginal farmers at interest subvention of 2% on such storages for a period of 6 months.


Interest Subvention Scheme (ISS) is a scheme which will help farmers avail short term crop loans up to Rs. 3 lakh payable within 1 year at only 4% p.a.

It will be implemented by NABARD and RBI.

The salient features are-



  • Agricultural R&D is the main source of innovation, which is needed to sustain agricultural productivity growth in the long-term. The actual expenditure of DARE/ICAR has increased from Rs. 5393 crore in 2010-11 to Rs. 6800(BE) crore during 2017-18.
  • A total 209 new varieties/hybrids tolerant to various biotic and abiotic stresses with enhanced quality have been developed for Cereals, Pulses, Oilseeds, Commercial and Forage crops.



The food security system in India is managed by intertwined organizational framework between Centre and States that involves centralized and decentralized procurement of food grains through price support operations, allocation and distribution of food grains at reasonable prices to consumers/beneficiaries through TPDS (Targeted Public Distribution System) and the maintenance of buffer stocks for price stabilization.


Economic cost of food grains to FCI


Pooled cost of grains (weighted MSP of stock) + procurement incidentals + cost of distribution

There has been an increase in the economic cost (both wheat and rice) due to increase in MSPs and proportionate increase in the incidentals.


Open Market Sale Scheme (Domestic)

FCI on the instructions from the Government sells excess stocks out of Central Pool through Open Market Sale Scheme (Domestic) [OMSS (D)] to achieve following objectives:

  1. To enhance the supply of food grains during the lean season and deficit regions
  2. To moderate the open market prices
  3. To offload the excess stocks
  4. To reduce the carrying cost of food grains


The transformation of agriculture and allied sector is imminent by way of appropriate policy interventions related to prices, trade, adoption of Climate Smart Agriculture, increased focus on small, marginal and women farmers.

Though the share of agriculture and allied sector in GVA is on the decline, in the quest for inclusive economic development in India, agriculture sector will remain an engine of broad based growth which will reduce inequalities and provide food security.