india growth

Robust agricultural growth is key to India 's economic growth prospects
Ajay Modi Business Today, September 17, 2013 | UPDATED 08:55 IST
A farmer works in a wheat field against the backdrop of residential apartments undergoing construction in Noida on the outskirts of New Delhi January 1, 2012. (Reuters
Last week, the prime minister 's Economic Advisory Council projected 4.8 per cent growth for agriculture in 2013/14. In comparison, agricultural growth last year was 1.9 per cent.

If the projection proves accurate, it will come as a shot in the arm for the ailing Indian economy. Robust agricultural growth is expected to contain inflation, support industry and services, and increase employment opportunities in rural India. It might also ease pressure on government employment schemes. A government statement said that the early monsoon season has had a positive impact on sowing. The reservoir position at the end of August was 29 per cent better than the overall average of the last 10 years. Both kharif and rabi seasons are expected produce good output. Agriculture 's contribution to the overall gross domestic product (GDP) has fallen from about 30 per cent in 1990/91 to less than 15 per cent in 2011/12. Nonetheless, given that roughly half of India 's workforce is engaged in agriculture, it remains the backbone of the Indian economy. Agriculture 's performance assumes greater significance in view of the recently passed Food Security Act and the ongoing National Rural Employment Guarantee Scheme. Agriculture supports the vast majority of low income, poor and vulnerable people in the country.

An average Indian spends almost half of his total expenditure on food. N R. Bhanumurthy, Professor at the National Institute of Public Finance and Policy, says this year 's agricultural production will in turn drive industrial growth and consequently have a positive impact on services. "With all these, I will be not surprised if GDP growth is between five and 5.5 per cent," he adds. According to Bhanumurthy, low agriculture growth pulls down overall growth because of its indirect connection to industry and services. "The rise in agricultural activity will ensure a lower pressure on public spending and employment schemes. For the common man in urban areas, this should logically lead to lower inflation. In rural areas, there will be increased demand for employment in both farm and non-farm activities ," he says.

But Madan Sabnavis, Chief Economist at Care Ratings, says the projection is overstated. "I see agriculture growth in the range of three to four per cent," he says.High growth in agriculture will increase rural incomes, according to him. But how rural India will spend this income is unclear. "Since gold prices are higher than last year, gold will not attract sizeable rural spending. So, higher rural income will be mainly channelised into bank savings and consumer durables, automobile and housing," he adds... This will have positive implications for steel, cement and manufacturing industries. Migration from rural India may be checked. Sabnavis also said that agricultural commodity prices may not drop on account of higher output, but price increases will be moderate at best. He noted that agricultural output takes into account only the staple crops, while it is commodities like vegetables, eggs and milk that have been driving food inflation in recent times.

Read more at: http://indiatoday.intoday.in/story/agricultural-growth-economic-growth-gdp-inflation-kharif-crop-rabi-crop/1/310168.html

Agriculture Sector in India

Last Updated: August 2013

Introduction
Agriculture is the backbone of Indian economy. The sector plays a vital role in the development of India with over 60 per cent of the country’s population deriving their subsistence from it. Most of the industries also depend upon the agriculture sector for their raw materials.
India ranks first in the production of milk, pulses, jute and jute-like fibres; second in rice, wheat, sugarcane, groundnut, vegetables, fruits and cotton production; and is a leading producer of spices and plantation crops as well as livestock, fisheries and poultry. The rapid growth of agriculture is essential not only for self-reliance but also for meeting the food and nutritional security of the people, to bring about equitable distribution of income and wealth in rural areas as well as to reduce poverty and improve the quality of life.
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
India has improved its position in agricultural and food exports to 10th globally, backed by policy impetus by the government. “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).
Total exports of Indian agri and processed food products from April 2012 to March 2013 stood at Rs 11,633,168.41 lakh (US$ 17.26 billion) as compared to Rs 8,248,025.32 lakh (US$ 12.23 billion) during the same period last year, according to the data provided by APEDA.
India recorded an increase of 22 per cent in the export of spices and spice-based products during 2012-13 to touch 699,170 tonnes, as against 575,270 tonnes in the previous financial year. The soymeal exports during June 2013 was 213,400 tonnes as compared to 180,900 tonnes in the same period of previous year registering an increase of 18 per cent.
Groundnut sowing in Gujarat has touched 1.41 million hectares as on July 1, 2013 as against 0.22 million hectares in the corresponding period last year, according to Agriculture & Co-operation Department, Government of Gujarat.
The foreign direct investment (FDI) inflows in agricultural services and machinery sector during April 2000 to June 2013 stood at US$ 1,620.65 million and US$ 337.21 million respectively, as per the data released by Department of Industrial Policy and Promotion (DIPP).
Major Developments and Investments
A number of memorandum of understandings (MoU) were signed between Indian Council of Agricultural Research (ICAR) and the industry. MoUs have been signed for more than 60 ready-to-commercialize agro-technologies from different agricultural sectors like crops, horticulture, food technology, veterinary, agri-engineering, agri-inputs and fisheries.
The Abu Dhabi-based Al Dahra International Investment LLC is set to invest about Rs 112 crore (US$ 16.61 million) in Kohinoor Foods Ltd (KFL).
Private equity (PE) and venture capital (VC) firms invested US$ 126 million across nine Indian agri-business companies during the first six months of 2013, as per data from Venture Intelligence.
Coromandel International Ltd, India 's leading fertiliser manufacturer, with its joint venture (JV) partners have inaugurated a 1.4 million tonne (MT) phosphoric acid plant in Tunisia.
The Indo-Dutch joint initiative in agriculture envisages setting up about 10 centres of excellence (CoE) in Punjab, Gujarat, Kerala, Maharashtra and Karnataka in the next few years, a move that could help raise output and yields.
The total outlay of Rs 27,049 crore (US$ 4.01 billion) has proposed for the Ministry of Agriculture in the Union Budget 2013-14, which is 22 per cent more than the revised estimates of the year 2012-13. Further, Rs 1,000 crore (US$ 148.38 million) has been allocated to continue support to the new green revolution in Eastern States like Assam, Bihar, Chhattisgarh and West Bengal to increase the rice production. An outlay of Rs 500 crore (US$ 74.19 million) is also proposed for starting a programme of crop diversification that would promote technological innovation and encourage farmers to choose crop alternatives in the original green revolution States.
Government Initiatives
Some of the major initiatives taken by the Government of India are:
The Government of India has set a target of 259 million tonnes (MT) of foodgrains production in 2013-14. It is implementing various crop development programmes/ schemes for achieving production targets of various crops
The government has permitted 100 per cent FDI under the automatic route, subject to certain conditions in Floriculture, Horticulture, Apiculture and Cultivation of Vegetables & Mushrooms under controlled conditions; Development and production of Seeds and planting material; Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, under controlled conditions; and Services related to agro and allied sectors. 100 per cent FDI is also permitted in the tea sector.
For ensuring quality of agrochemicals, the government has set up 71 pesticides testing laboratories across the country that include 68 state laboratories, 2 regional laboratories and 1 central laboratory
The Government of Punjab gave its approval to the expansion plan of state-owned Milkfed entailing setting up of four mega milk plants worth Rs 250 crore (US$ 37.09 million) each in the state
The government has launched a SMS Portal for Farmers on July 16, 2013 for disseminating relevant information, giving topical & seasonal advisories and providing services through SMSs to farmers in language of the State
Under the Union Budget 2013-14,
The government has substantially improved the availability of farm credit to improve investments in the farm sector. The annual agriculture credit target for the financial year 2013-14 has increased to Rs 7 lakh crore (US$ 105.96 billion) from Rs 5.75 lakh crore (US$ 85.32 billion) in 2012-13
The allocation for the Integrated Watershed Programme has been increased to Rs 5,387 crore (US$ 799.37 million) from Rs 3,050 crore (US$ 452.58 million) to provide relief to small and marginal farmers especially in drought prone and ecologically-stressed regions
The National Livestock Mission will be launched to attract investment and to enhance productivity of livestock, taking into account local agro-climatic conditions. Rs 307 crore (US$ 45.55 million) have been provided for the Mission
Road Ahead
With nearly a 1.2 billion population, India requires a robust, modernised agriculture sector to ensure the food security for its population. In order to meet the food grain requirements of the country, the agricultural productivity and its growth needs to be sustained and further improved. The growth target for agriculture in the 12th Five Year Plan is estimated to be 4 per cent as compared to 3.6 per cent for the 11th Plan.
The Ministry of Agriculture is promoting a new strategy for farm mechanization through its various schemes and programs. A dedicated Sub-Mission on Agricultural Mechanization has been proposed for the 12th Plan which includes custom-hiring facilities for agricultural machinery as one of its major components.
Exchange rate used: IINR 1= US$ 0.0148 as on August 30, 2013
References: The Economic Survey 2012-13, Agricultural and Processed Food Products Export Development Authority (APEDA), The Union Budget 2013-14, Press Releases, Media Reports

References: The Economic Survey 2012-13, Agricultural and Processed Food Products Export Development Authority (APEDA), The Union Budget 2013-14, Press Releases, Media Reports