The agriculture sector in India contributed 18.4% to the total Gross Value Added (GVA) in the year 2022-23 while growing at rate 3.3% over the previous year and it is expected to grow at a rate of 3.6% in the future. Being an agrarian economy with about 55% of its population dependent on agriculture as their primary source of income, India needs dedicated policy efforts for the agriculture sector.
In the year 2023-24, the Agriculture and Allied sector saw an allocation of about 1.9% of the total Union Budget with about 1.3% designated for uplifting the small and marginal farmers (through the PM KISAN Yojana). Also, a significant share— about 8.3% — was put aside for major subsidies like food, fertiliser, and petroleum subsidies.
Several strategic steps over the last few decades have helped in evolving the sector significantly, however, farmers are still unable to realise higher prices due to major issues like fragmented landholdings and low productivity. Despite being one of the countries with the largest cultivated land area, the average landholding size in India is 1.08 hectares. This hampers use of large machines, increases requirement of labour and limits productivity.
Though India is a top producer in the world, India’s productivity trails behind other developed nations. Higher levels of productivity can ensure a better per acre income at the farmer level across the country. The sector also faces other challenges including lack of credit availability, outdate knowledge of agricultural practices and limited avenues for value addition, processing as well as marketing.
Effectively resolving these issues would help India attain self-sufficiency and reach it’s maximum potential as a global exporter.
While acknowledging the challenges above, the Union Budget 2024 allocates ₹1.27 lakh crore to the Agriculture and Allied sectors accounting for 2.78% of the total budget. It continues to support growth and productivity in agriculture through interventions supporting crop insurance, encouraging use of nano fertilisers by expanding their coverage and promoting self-sufficiency in oilseed production.
Government plans to promote public and private investments in aggregation, modern storage as well as marketing and branding under PM-Formalisation of Micro Food Processing Enterprises scheme to strengthen the micro-processing sector. Also, the budget provides impetus to the protein segment by putting significant focus on boosting dairy productivity and supporting sea food.
The budget plans for development of a comprehensive Dairy Development program to support dairy farmers and a sub-scheme under PM-Matsya Sampada Yojana with an investment of ₹ 6000 crore for value chain efficiency in fisheries. The Government also plans to setup 5 integrated aquaparks to step up the implementation of PM-Matsya Sampada Yojana and double the exports to ₹1 lakh crore. These announcements will help provide employment opportunities for the rural economy and benefit rural consumption through infrastructure spending and investments in the sector.
—The author, Anand Ramanathan, is Partner & Consumer, Products and Retail sector Leader, at Deloitte India. The views expressed are personal.
(Edited by : C H Unnikrishnan)
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