Indian Government has set its next target and the goal is to hit 5 Trillion Mark by 2024. Which will be the last year of NDA’s term in the Government after winning 2019 elections with a whopping majority. While 5 years look so long for ordinary people like us, but for Govt, 5 years is a fraction when you look at the amount of work to be done in nation-building!
Some facts: Indian economy is right now placed at 7th rank with $2.72 trillion which in Indian rupees is 139.2 lakh crore rupees. For India to achieve the 5 Trillion mark Indian economy should make more $2.2 trillion in a span of 5 years. Through a series of posts in the next few months, I’ll be writing on the various sectors contributing to GDP and the challenges posed by them. Today, let’s start with the most difficult and challenging of them all, Agriculture.
Agriculture – a 70-year-old teenager – Yes, agriculture in India has been the major source of GDP in the early years. Though the time progressed farmers still remained the same with no change in ideas. This led to a huge part of the budget allocated for Agriculture, apart from the subsidies and loan waivers. Despite all this, 22% of farmers are below the poverty line as per 2015 report and there is a huge agrarian crisis across the country.
This led to Govt come up with the target of doubling farm income by 2022. To facilitate this Govt came up with a six-point formula. I will today give my views on how if these six points are implemented effectively could lead to doubling of farm income by 2022.
1. Improvement in productivity: Agriculture productivity is measured as per hectare productivity. With India having 40% of irrigation facilities, our productivity stands at 30,000₹ productivity per hectare as of today. But if the Govt and Indians take the irrigation levels to 60% then production will go to 60,000₹ per hectare, double of the productivity now.
Target: 20% more agricultural lands need to be provided with irrigation facilities.
2. Resource efficiency: Efficiency of the land is of utmost importance for any farmer. The total factor productivity which is the Incremental increase in productivity with respect to change in technology, skill and manpower in India stands at a mere 2% growth per year. This shows how much the farmers aren’t able to use the technology to the optimum.
If Indian Govt manages to take TFP to 6%, it will lead take the farmers income up by 100%. Target: Triple the rate at which farmers are taught the usage of technology and effective farming methods.
3. Increasing cropping intensity: There are two crops in Inia Kharif and Rabi. Only 38% of the cropping area cultivate both crops. More than 60% area has only a kharif crop. If that 38% is taken to 65% the automatically the farm income will double.
4. Diversification to high-value crops: High-value crops in India such as sugarcane, spices, fruits and cash crops account for just 19% and 77% is by the staple crops like cereals, pulses and oilseeds. A 1% increase in High-value crops leads to a 5% increase in farm income. If we can make cash crop vs staples in 35-65 ratio also the farm income can double.
5. Shifting from farm to non-farm occupations: Agriculture is divided into two kinds of activities. Farm and non-farm activities. At present, there is a 64% workforce in farm activity and 36% workforce in the non-farm activity. There are totally 21.5 crore people engaged in farming activity and 12.1 crore people involved in the non-farm activity.
According to the 2011 Census:
• Per worker, the farm is seen at 62,000₹
• Per worker under the non-farm category is seen at 1,80,000₹.
This proves that India must encourage a number of people non-farming business.
6. Improving the prices received by farmers: Government another ambitious target is to double the farmer prices by the end of the year. For which Government is taking all necessary solutions. Minimum Selling Price is more.
Agriculture as per the 2018-19 GDP contributes 394 billion dollars out of 2726 billion accounting to 14% of our GDP. So, if the aim is to make India a 5000 billion or 5 trillion economy then the contribution of Agriculture should go to 532 billion or 0.5 trillion contributing 10% of our GDP.
This is the challenge in front of Govt, and we will have to observe how we progress from here. In the last 5 years, Agriculture grew just 10% accounting to 2% average growth. To achieve 532 billion we need to grow at 30% in the next 5 years which is 6% average growth per year.