India is considered as one of the fastest growing economies in the world. Agriculture is the mother of any economy, whether it is rich or poor. Much of its influence is on the other sectors of economy - industry and service. India is the second largest in farm output. Hence, India’s economic security continues to be predicated upon the agriculture sector, and the situation is not likely to change in the near future. Even today, the share of agriculture in employment is about 49% of the population, as against around 75% at the time of independence. In the same period, the contribution of agriculture and allied sector to the Gross Domestic Product (GDP) has fallen from 61% to 17% in 2015-16. Around 51% of India’s geographical area is already under cultivation as compared to 11% of the world average. China with lesser cultivable land produces double the food grains, i.e. 607 million tons in 2015 -16 as compared with India’s 252 million tons in 2015-16. The present cropping intensity of 136% has registered an increase of only 25% since independence. Further, rain fed dry lands constitute 65% of the total net sown area. There is also an unprecedented degradation of land (107 million ha) and groundwater resource, and also fall in the rate of growth of total factor productivity. This deceleration needs to be arrested and agricultural productivity has to be doubled to meet growing demands of the population by 2050. Natural resource base of agriculture, which provides for sustainable production, is shrinking and degrading, and is adversely affecting production capacity of the ecosystem. However, demand for agriculture is rising rapidly with increase in population and per capita income and growing demand from industry sector. There is, thus, an urgent need to identify severity of problem confronting agriculture sector to restore its vitality and put it back on higher growth trajectory. The problems, however, are surmountable, particularly when new tools of science and technology have started offering tremendous opportunities for application in agriculture. However, the country recorded impressive achievements in agriculture during three decades since the onset of green revolution in late sixties. This enabled the country to overcome widespread hunger and starvation; achieve self-sufficiency in food; reduce poverty and bring economic transformation in millions of rural families. The situation, however, started turning adverse for the sector around mid-nineties, with slowdown in growth rate of output, which then resulted in stagnation or even decline in farmers’ income leading to agrarian distress, which is spreading and turning more and more serious. This Paper attempts to focus attention on Issues, Challenges and Government policies of Indian Agriculture in the context of Globalization.

1. Dr. S. Vijay Kumar
Head & Professor (Associate) Retd., Bharat Jyoti Awardee (Glory Of India)
Department of Economics
Kakatiya Government (UG&PG) College (NAAC “A” Grade)
Ex - Member of Board of Studies
Kakatiya University, Warangal – 506 009
Telangana State
INDIAN AGRICULTURE IN THE CONTEXT OF GLOBALIZATION:
ISSUES, CHALLENGES AND GOVERNMENT POLICIES

2. Introduction
India is considered as one of the fastest growing economies in the world.
Agriculture is the mother of any economy, whether it is rich or poor.
Much of its influence is economic security continues to be predicated
upon the agriculture sector, and the situation is not likely to change in
the near future. Even today, the share of agriculture in employment is
about 49% of the population, as against around 75% at the time of
independence. In the same period, the contribution of agriculture and
allied sector to the Gross Domestic Product (GDP) has fallen from 61% to
17% in 2015-16. Around 51% of India’s geographical area is already under
cultivation as compared to 11% of the world average. China with lesser
cultivable land produces double the food grains, i.e. 607 million tons in
2015 -16 as compared with India’s 252 million tons in 2015-16.
The present cropping intensity of 136% has registered an increase of only
25% since independence. Further, rain fed dry lands constitute 65% of
the total net sown area. There is also an unprecedented degradation of
land (107 million ha) and groundwater resource, and also fall in the rate
of growth of total factor productivity. This deceleration needs to be
arrested and agricultural productivity has to be doubled to meet growing
demands of the population by 2050.

3. Objectives & Methodology
 Indian Agriculture in the Pre & Post – Globalization
Period – Average GDP Growth Rates—Overall &
Agriculture.
 Indian Agricultural Trade in the Post – Globalization.
 Impact of Globalization on Indian Agriculture - Cost of
Cultivation, Farmers’ Suicides.
 Issues & Challenges of Indian Agriculture.
 Remedial Measures, Challenges, Government Policies,
Future of Agriculture in India.
Methodology: The Study is on the basis of empirical
data accessed from different source like Central
Statistical Organization (CSO), Economic Surveys,
Planning Commission of India, GOI Websites and other
relevant Websites. Research Journals, National and
International Reports.

4. Indian Agriculture in the Pre – Globalization Period (1951-1991)
Compared With Other Sectors
 Table – 1. In the early days of independence (1950-51), it is clear
that the share of Agricultural Sector in GDP is higher (53.1%)
when compared to other sectors – Industrial Sector (16.6%) and
Service Sector (30.3). So all so, the share of distribution of working
population in Agriculture Sector (72.1) is higher when compared
to other sectors – Industrial Sector (10.6%) and Service Sector
(17.3). This means, in the early years of independence, both the
share of Agriculture as well as working population are higher
when compared with other sectors – Industry and Services. But
later (1990-91), the share of Agriculture in GDP declined (29.6)
when compared to
 Service Sector (42.7), but moderately higher than Industrial Sector
(27.6). But, the the share of distribution of working population is
still higher in Agriculture Sector (66.9) when compared to other
sectors – Industrial Sector (12.7%) and Service Sector (20.4). It is
clearly evident from this, even after 44 years of independence
(1947-1991), agriculture is the prime sector when compared to
Industry and Service Sectors.

5. Indian Agriculture in the Post – Globalization (1991 Onwards)
Compared With Other Sectors
Table - 2. In the Post – Globalization period 1991 onwards,
gradually both the share of agriculture in GDP and the share of
distribution of working population are declining. The share of
agriculture in GD P is 28.54% in 1991 and 16.1% in 2016, while that
of distribution of working population in agriculture is 67.5% in
1991 and 49% in 2016. One important thing to be noted in the
post reforms period is, though the share of agriculture in
GDP is declining when compared to industry and service
sectors, but it still bears the higher share of distribution of
working population than that of industry and service
sectors. This is not a welcome sign, because when GDP from
a sector (Agriculture) declines the working population also
should decrease in proportionate with other sectors.

6. Average GDP Growth Rates—Overall and in Agriculture in India
It is interesting to note that the growth rates of agriculture in India’s
GDP had been growing during early periods, but in the last few years, it
is constantly declining. This is evident from the table- 3, which
presents the long-term growth rates of agriculture in comparison with
the whole economy. The growth performance of agriculture has been
always lower than that of the total economy, since the early
independence period say pre-green revolution era (1951-52 to1967-68).
The difference is the highest during the Tenth Plan Period where the
total economy was growing at 7.77 per cent, the agriculture and allied
sector was witnessing a growth of 2.47 during the tenth Plan Period. As
evident from the table above, this sector has shown a remarkable average
growth rate, i.e., 4.1 per cent during the eleventh plan period, may be
due to a better monsoon in some of the years. In the 12th Plan, GDP of
the total economy is growing at 7.9, but that of agriculture is only 1.6
during the first four years of the current Five Year Plan (2012-17) less
than the expected target of 4% per annum. But, recently, CSO revised
over all GDP growth rate to 7.1% from 7.6% (actual forecast was
6.5% only for Q4 of FY 2016-17) due to demonetization. But, however
due to good monsoon the agricultural growth rate increased to 4.1% in
Q4 of FY 2016-17 from 1.2% of FY 2015-16.

7. India’s Agricultural Trade in the Post – Globalization (Post Reforms Period: 1990-91 to
2008-09) - Share of Agriculture in India’s Exports &Imports:
Table – 3 & 4. The share of agriculture in India’s total exports has been
decreased from 18.49% in 1990-91 to 10.23% in 2008-09. The average share of
agriculture exports in the same period was 15.24%. The share of agriculture in
India’s total imports has been slightly decreased from 2.79% in 1990-91 to 2.74%
in 2008-09. The average share of agriculture imports in the same period was
4.85%. Thus, the average share of India’s agriculture exports(15.24%) was more
than the average share of agriculture imports (4.85%) from 1990-91 to 2008-09.
This is a good sign, but the decrease of agriculture exports is not good for
the economy.
India’s Agricultural Trade (2009-10 to 2016-17): According to Economic
Survey 2015-16, agricultural exports as a percentage of agricultural GDP
increased from 7.95 per cent in 2009-10 to 12.08 per cent in 2014-15.
Agricultural Sector in India contributes 16% of GDP & 10% of export
earnings. GDP of agriculture and allied sectors in India was recorded at
US$ 244.74 billion in FY2016-17. Agricultural export constitutes 10 per cent
of the country’s exports and is the fourth-largest exported principal
commodity. The agro industry in India is divided into several sub segments
such as canned, dairy, processed, frozen food to fisheries, meat, poultry, and
food grains. As per the 3rd Advance Estimates, India's food grain
production has increased marginally to 252.23 million tonnes (MT) in the
2015-16 crop year.

8. Impact of Globalization on Indian Agriculture
 One of the excluded sectors during reform period was agriculture which
showed low growth and experienced more farmers’ suicides due to fake and
terminal seeds, low prices and inadequate agricultural policies. The post-
reform growth was led by services.
 Commodity sector growth (agriculture and industry) has not been higher in
the post reform period as compared to that of 1980s. Particular worry is
agriculture sector which showed lower than 4% per annum target in the last
Plans, including 12th Plan. There is disconnection between employment
growth and GDP growth. In other words, employment is not generated in
industry services where growth is high. On the other hand, GDP growth is
low in agriculture where majority are employed. Today, even after 69 years of
independence agriculture sector bears about 50% of population with low
earnings, while industry and services together bears 50% with high incomes.
Thus, there has been lopsided approach to development in India in the last
two and half decades.
 Post reform period, agricultural growth is recording a fall mainly is in food
grains in the first phase of reform but growth during this period sustained
due to rise growth rate of commercial crops such as horticulture and
oilseeds, cotton and allied sectors like livestock. But after globalization
agriculture as a whole declined drastically while non agriculture sector is
growing fast, this poor performance of agriculture particularly food grains
has become a serious concern for the policy makers as there is a chance of
facing the problem of food security.

9. Impact of Globalization on Indian Agriculture
 Cost of Cultivation: A study by Sen and Bhatia (2004) based on cost of
cultivation data indicates in the growth of farm business income (FBI)
over time. This study shows that the all India rate of growth of real
(deflated by Consumer Price Index for Agricultural Laborers) FBI per
hectare declined sharply from 3.21% per annum during the 1980s to only
1.02% per annum during 1990s. However, farmer is interested in farm
income rather than price-cost or FBI per hectare. Estimates of FBI per
cultivator using growth of cultivators and cropped area revealed that the
growth rate was 1.78% per annum in the 1980s but decelerated to 0.03%
per annum in the 1990s- indicating almost stagnant FBI per cultivator in
the later period.
 Farmers’ Suicides: As per the latest data, by 2016, April 116 farmers have
committed suicide due to agrarian reasons, with maximum cases
reported in Maharashtra, followed by Punjab and Telangana. More than
2,000 farmers’ suicide cases were reported due to agrarian reasons in 2015
with highest number of 1,841 cases in Maharashtra alone. Most of the
suicides in India are attributed to debt trap, crops failures, failure of
continuous monsoons and drought. Telangana is mostly dependent on
dry land farming. Most of the agriculture in Telangana is dependent on
monsoon, tanks, dug wells and bore wells. Due to scarcity of water,
farmers are going for bore wells by taking loans. But, due to ground
water depletion, most of the bore wells failed. There are many farmers
dug up to 12 bore wells for search of water. In the the event of failure of
all bore wells, they committed suicides for non-payment of loans.

10. Issues/Causes for Indian Agricultural Crisis
There are two reasons to be concerned that Indian agriculture may indeed be
facing a wider, deeper crisis: (1) The long term growth trend in production
and productivity of agriculture, considerably less than required to
sustain the high overall growth rates in the coming decade and (2) the
growing economic and social disparities between agriculture and the
rest of the economy and between rural and urban sectors. Apart from
these other important issues/causes observed are as follows:
 Shifting in Cropping Pattern, Increasing Landlessness and Inequality in
Landholdings: India shifted its cropping pattern from less-remunerative food
grains to high-value and export-oriented cash crops and concentration of land
through purchase or leasing in by big landowners in the name of private firms
(Ramachandran and Ramakumar 2000; Athreya 2003). That is why during the
post reform period there has been an increase in the inequality of
distribution of land owned.
 Declining Productivity in Agriculture and Increasing Marginalization of
Peasantry: Per unit area productivity of Indian agriculture is much lower
than other major crop producing countries. During the post-reform phase
the sectoral distribution of Gross Domestic Product (GDP) in India has seen a
consistent declining share of agriculture. (Table-2). However, the shifting of
associated labour force from agriculture has been much less than
proportionate compared to other sectors.

11. Issues/Causes for Indian Agricultural Crisis
 Diminishing Profitability of Agriculture:
 Declining Growth Rates of Agriculture: Declining growth rate of agriculture in the
early reform period (1991-92 to 1996-97) from 3.66% to 1.2% per annum in 2015-16
(Table-3).
 Slowdown of Exports and Increased Uncertainty vis-à-vis Cultivation: (Tables:
(5&6). The Reduction of Input Subsidies: Any reduction in the subsidies
adversely affect farmers because they have to pay more for inputs. India offers
less subsidies to farmers when compared with other countries (Table – 6).
 Decline in Public Investment in Agricultural Research and Extension and
Irrigation: Liberalization led to a drastic decline in the growth rate of public
spending on agricultural research and extension. The growth rate of public
spending on agricultural research and extension during 1980s to 1990-2005 has
fallen from 6.3 and 7 per cent to 4.8 and 2 per cent respectively.
 Low level of Income of Small Farmers: Price is income for any producer.
Industrialists can the fix the prices of their products. But, unfortunately in our
country, it is pitiable that the farmers cannot fix the prices of their crops.
Another concern is widening economic disparities between agricultural and non-
agricultural sectors and between rural and urban areas. Rural-urban disparities
in basic social amenities have also increased in quality though not in quantity.
All these have led to resentment among the rural population that the benefits of
development have gone to the urban areas. India's economic liberalization in the
early 1990s resulted in high rates of growth, whether it reduced the numbers of
poor or benefit only increasingly wealthy urban elite is a question.

12. Issues/Causes for Indian Agricultural Crisis
Lack of Easy and Cheap Loan to Agriculture: The National Commission for
Agriculture, headed by Dr M.S. Swaminathan, also pointed out that removal of
the lending facilities and concessions of banks during the post-reform period
have accelerated the crisis in agriculture. Studies show that most of the
farmers’ suicides were due to the debt trap.
Small and Fragmented Land-Holdings is one of the main causes of our low
agricultural productivity and backward state of our agriculture.
Shortage of Quality Seeds: Unfortunately, good quality seeds are out of reach of
the majority of farmers, especially small and marginal farmers mainly because
of exorbitant prices of better seeds. Some of the multi- national and other
companies selling fake and terminal seeds causing farmers’ suicides. In the
olden days farmers used to prepare their own seeds for future crops. But, today
most of the farmers are dependent on seed companies. Due to this, MNCs and
other seed companies are exploiting our farmers.
Inadequate Irrigation Facilities: India cannot achieve sustained progress in
agriculture unless and until more than half of the cropped area is brought
under assured irrigation.
Lack of Mechanization, Lack sufficient no. of Regulated Markets, Inadequate
storage facilities, Inadequate transport, Scarcity of Capital, Reduction in Food
Crops, Unemployment in the Agricultural Sector and Farmers’ Suicides etc.

13. Remedial Measures
 Pro-active and Prompt Responses: Agriculture in India is
largely rain fed and therefore, heavily relies on nature.
Factors like excessive monsoon or deficient rainfall,
extremely hot and dry weather. Droughts have direct effect
on the performance of the agriculture. While these risks can
never be entirely eliminated, they can be reasonably
addressed through pro-active and prompt responses.
Consolidation of Holdings, Use of Manures and
Fertilizers, Extending Irrigation Facilities,
Mechanization of Agriculture, Measures for Soil
Erosion, Regulated Markets, Scientific Storage Facilities
 (In Telangana, farmers are encouraged to use solar cold
storage facilities), Approach Roads, Credit facilities,
Increase in investment & Expenditure in Agriculture
Sector by Government, Support Price, Revise SEZ Policy,
Implementation of Land Reforms, Crop Insurance etc.

14. Remedial Measures
 Revival of agriculture: To achieve 4% growth and equity in agriculture, the supply and
demand side constraints have to be removed. The support systems have to be tuned to
improve productivity and incomes of farmers with emphasis on small and marginal
farmers and dry land areas.
 Subsidies: Developed countries, while they offer subsidies to their farmers and
reluctant to cut them. At the same, they argue to cut subsidies to farmers in developing
countries like us. Hence, India should stress on the implementation of Uruguay round
agreements to reduce subsidies and other distortions caused by policies pursued by
developed counties.
 Demand Side Issues: (a) Adequate insurance is needed for those carrying out
diversification with in agriculture or from agriculture to non- agriculture. (b) Social
security should be provided for the unorganized workers also.
 Direct Cash Transfer- We should reorient food and fertilizer subsidies by moving to
cash transfers to identified beneficiaries. This will help in reducing leakages and will also
help in curbing corruption and will make process more transparent.
 Open Markets - Farmers must have the freedom to sell their produce to anyone,
anywhere. Taxes, levies and commissions on agricultural commodities across states need
to be rationalized to less than 4 per cent, currently it is ranging from less than 2 per cent
in Gujarat to about 14.5 per cent in Punjab. It is advised to encourage the farmers to
sell their produce in the similar way like “Rythu Bazars” i.e. to say all the medium
and small farmers should sell their produce by establishing cooperative markets
themselves in order to eliminate “middle men”.
 Special Agriculture Zones (SAZs) - SAZs should be designed to conserve prime farm
land so that we do not revert to a ship-to-mouth existence.

15. Remedial Measures
 Mandatory Rainwater Harvesting in all farms for crop-life-saving irrigation
if there is a prolonged dry spell. Wherever farms are small, community
rainwater harvesting can be promoted.
 Seed Banks: In case there is a prolonged dry spell between rains, seedlings may
wither. Therefore, seed banks with alternative short-duration crops should
be built up and the choice of alternative crops could be according to both home
needs and market demand.
 Challenges/Goals:
 To achieve 4% growth in agriculture and raise incomes of the farmers.
 Ensuring that agricultural growth responds to food security needs
 sustainability of agriculture by focusing on environmental concerns.
 Raising agricultural productivity per unit of land
 Reducing rural poverty through a socially inclusive strategy that comprises both
agriculture as well as non-farm employment
 To fulfill these challenges/Goals, the following actions are required:
 (1). Price Policy; (2). Investment in infrastructure & Subsidies; (3) Land
and Water Management including land issues; (4) Inputs including
agricultural credit and technology; (5) Domestic and International trade
Reforms; (6) Diversification, marketing and rural non-farm sector; (7).
Sharing growth is also important. Ere one has to concentrate on small
and marginal farmers, lagging regions and women. Institutions are
needed in all these aspects.

16. Government Policies
 Last year budget 2016–17, planned several steps for the sustainable development
of agriculture. It proposed a slew of measures to improve agriculture and
increase farmers’ welfare such as 2.85 million hectares to be brought under
irrigation, Rs 287,000 crore grant in aid to be given to Gram Panchayats and
municipalities and 100 per cent village electrification targeted by May 01, 2018.
 The Government of India recognizes the importance of micro irrigation,
watershed development and Pradhan Mantri Krishi Sinchai Yojana’; thus, it
allocated a sum of Rs 5,300 crore for it. It urged the states to focus on this key
sector.
 The state governments are compelled to allocate adequate funds to develop the
agriculture sector, take measures to achieve the targeted agricultural growth
rate and address the problems of farmers.
 To improve soil fertility on a sustainable basis through the soil health card
scheme.
 Other steps include improved access to irrigation through ‘Pradhanmantri
Gram Sinchai Yojana’, enhanced water efficiency through `Per Drop More
Crop’.
 Continued support to MGNREGA
 The creation of a unified national agriculture market to boost the incomes of
farmers.
 To raise the existing norms of compensation by a 50 per cent. Existing
compensation amount is Rs 9,000 per hectare for irrigated crop, Rs 4,500 per ha
for un-irrigated crop and Rs 12,000 per ha for perennial crop.

17. Future of Agriculture in India & Conclusion
The prospects for Indian agriculture are good. The agriculture sector in
India is expected to generate better momentum in the next few years due
to increased investments in agricultural infrastructure such as irrigation
facilities, warehousing and cold storage. Factors such as reduced
transaction costs and time, improved port gate management and better
fiscal incentives would contribute to the sector’s growth. And also, the
growing use of genetically modified crops will likely improve the yield
for Indian farmers. Demand will grow fast and if we create the correct
incentive and organization systems the Indian farmer will not fail us as
he has responded well in the past when our policies were supportive.
 Conclusion: The next of stage of reforms in agriculture has to focus on
developing institutions for better delivery systems. Agriculture can be
ignored at our own peril. If we want inclusive growth, both Central
and State Governments have to focus on agriculture sector. Let us hope
that Government has the political will to implement the policies
effectively and help the farmers without testing their patience. The
words of Dr M.S. Swaminathan are relevant here: “In a country where 60
per cent of people depend on agriculture for their livelihood, it is better
to become an agricultural force based on food security rather than a
nuclear force.”

18. Thank You