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Agricultural growth rate has fallen sharply, to 1.4 per cent in 2023-24, compared to 4.7 per cent growth rate of 2022-23, mainly because of a drop in the food grain production due to delayed and poor monsoons caused by El Nino, revealed the Economic Survey Report 2023-24 tabled in the Parliament on July 22, 2024.
The 2023-24 growth rate of 1.4 per cent is according to provisional estimates.
The five-year annual average growth rate of the agriculture sector was 4.18 per cent, with the period's lowest recorded in 2023-24.
In the last year, food grain production saw a marginal dip — from 329.7 million tonnes in food grain production in 2022-23 to 328.8 million tonnes in 2023-24.
Meanwhile, the trend of allied activities — livestock and fisheries — performing better than the traditional crops such as cereals, continued. The share of livestock and fisheries in agriculture gross value added (GVA) at current prices increased from 24.38 per cent and 4.44 per cent in 2014-15 to 30.23 per cent and 7.25 per cent in 2022-23 respectively.
At the same time, the share of the crops sector in agriculture GVA has fallen to 55.28 per cent at current prices in 2022-23, compared to 61.75 per cent in 2014-15.
While India is a major agriculture producer, being the second largest producer in rice, wheat, cotton, among other crops, and the largest producer of milk, pulses and spices, the crop yields in the country were much lower than the other major producers.
“That this is so despite the fact that the bulk of the government support goes to rice and wheat is a cause for reflection,” said the report.
Some of the reasons for the low yields that the report pointed out were fragmented land holdings, low farm investment, lack of farm mechanisation, insufficient access to quality inputs and inadequate marketing infrastructure leading to post harvest losses, rainfall dependence and short growing seasons.
The report also mentioned the Centre's ambitious project of “doubling farmers’ income”, which had a target of 2022 but could not be met. The Doubling of Farmers’ Income (DFI) report 2016, had indicated that to double farmers’ income over the period of 2016-17 to 2022-23, income would need to grow at an annual rate of 10.4 per cent in the farm sector, which in turn would require an annual growth rate in agriculture investment of 12.5 per cent.
However, agriculture sector’s gross capital formation (GCF) which refers to the total investment in physical assets over a specific period, grew at an average annual rate of 9.7 per cent from 2016-17 to 2022-23. The GCF grew at the rate of 19.04 per cent in 2022-23.
“Despite the increasing trend in GCF, there is a need to further boost agriculture investment, especially in the context of doubling farmers’ income,” the Economic Survey pointed out.
The report contrasted the public investment in agriculture with subsidies in increasing agricultural productivity and farmers’ incomes. It went on to say that active participation was needed from private corporate entities, especially in post-harvest infrastructure.
“Input subsidies support short-term increases in agricultural productivity and farmer incomes. Higher investment levels, on the other hand, are required for the long-term modernisation of this sector,” the report said.
Subsidies to the agriculture sector more than doubled between 2011-12 and 2020-21, with the fastest increase seen in fertiliser and power. While public investments grew at the same rate as the subsidies, they remained at about one-third of the subsidies, according to the report.