Indicus Analytics: Divide and grow

Last Updated: Wed, Apr 13, 2011 20:08 hrs

Agriculture is the main source of livelihood, but growth in the sector has been stubbornly slow

India’s growth story has rested primarily on the services sector. However, agriculture continues to be the main source of livelihood for more than half the country’s population, making growth in this sector critical for the majority of Indians. Over the last six decades, agriculture has grown at 2.6 per cent a year. This is considerably lower than all the other sectors, bringing its share in the GDP down from 49 per cent in the 1950s to 16 per cent in 2008-09. Yet agriculture continues to contribute more than a fifth of the state income in 12 states. Though the agriculture sector saw an annual growth rate of 2.9 per cent due to a significant increase in the area under cultivation in the fifties, the sector was hit by stagnation and low productivity in the sixties. High foodgrain imports necessitated the Green Revolution, which ensured food sufficiency, but growth continued at less than two per cent a year through the seventies. It was only in the eighties that growth moved to a three per cent-plus level with heavy investments in irrigation and an increase in the use of fertilisers, among other measures. However, despite concerted efforts and a multi-pronged strategy in recent years, the target of a sustained four per cent growth in this sector has been elusive.

Regional variations in the growth of agriculture are wide as only two states have broken through with high growth in this sector, according to the latest data from the Central Statistical Organisation (CSO). Taking the latest years for which data on all states are available, 2000-01 to 2007-08, Gujarat is the only state to record double-digit growth of 11.7 per cent, with Chhattisgarh trailing slightly at 9.4 per cent growth. According to research by the International Food Policy Research Institute (IFPRI), the key drivers for Gujarat’s performance have been technology development and diffusion, increased access to water (critical in a drought-prone state), investment in roads, rejuvenation of research in agriculture and innovative extension systems; in effect public investment in infrastructure and institutions have been vital for the high growth in the state. In Chhattisgarh, an intensive crop diversification strategy and increase in double-cropped areas have yielded results. Rajasthan, Maharashtra, Andhra Pradesh, Madhya Pradesh and Sikkim have reported growth of more than five per cent a year over this period, while at the other end are Kerala, Goa and Assam with less than one per cent annual growth. Jharkhand stands out as the only large state with negative growth in agricultural gross state domestic product (GSDP) — a result of acute shortage of irrigation water, shrinking watershed areas and contamination of surface and ground water. In Punjab, where agriculture contributes to more than 30 per cent of the state income, the rate of growth has slowed considerably, causing concern in the “grain bowl” of India. Then there is Bihar – which has the largest share of population engaged in agriculture – where agricultural income grew at a low 1.5 per cent a year during this period.(Click here for graph)

It is evident that in the era of economic planning, agricultural income growth in India has not been in consonance with the high proportion of population engaged in agriculture. For a pro-people development, high growth in the agriculture sector and an increase in incomes of farmers are as crucial as enabling the transition of the workforce towards non-agricultural occupations.

Indian States Development Scorecard is a weekly feature by Indicus Analytics that focuses on the progress in India and the states across various socio-economic parameters 

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