India's Agriculture and Trade

India is agro based country and India ranks second worldwide in farm output. The economic contribution of agriculture to India’s GDP is steadily declining with the country’s broad-based economic growth approximately 54% of Indian population work in agriculture sector and it is only source of livelihood that means it is most important sector. Agriculture, along with fisheries and forestry, is one of the largest contributors to the Gross Domestic Product (GDP). As per the estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry, and fishery) is expected to be 17.3 percent of the Gross Value Added (GVA) during 2016-17 at 2011-12 prices

The Department of Agriculture and Cooperation under the Ministry of Agriculture is responsible for the development of the agriculture sector in India. It manages several other bodies, such as the National Dairy Development Board (NDDB), to develop other allied agricultural sectors. Horticultural crops occupy 10% of the gross cropped area and producing 160.75 m tones. The total production of fruits is 49.36 m tones and vegetables are at 93 m tones.?

Animal husbandry output constitutes about 32% of the country’s agricultural output. The contribution of this sector to the total GDP during 2006-07 was 5.26%.India is the highest producer of milk and the second highest producer of fruits and vegetables .India accounts for 57% of the world’s buffalo population and 14% of cattle population. India holds 6th place with 7% world’s market share in medicinal and aromatic plants.

Agriculture production in india

Although India has attained self-sufficiency in food staples, the productivity of its farms is below that of Brazil, the United States, France, and other nations. Indian wheat farms, for example, produce about a third of the wheat per hectare per year compared to farms in France.Rice productivity in India was less than half that of China. Other staple’s productivity in India is similarly low.Indian total factor productivity growth remains below 2% per annum; in contrast, China’s total factor productivity growth is about 6% per annum, even though China also has smallholding farmers.Several studies suggest India could eradicate its hunger and malnutrition and be a major source of food for the world by achieving productivity comparable with other countries.

Poor infrastructure,old technology and lack of proper market

Food processing units need to have strong backward linkages with the farmers, farmer producer organizations, self-help groups, farmer groups, etc. Further, to be able to sell its processed food, it needs to develop strong forward linkages with wholesalers, retailers, exporters, etc.
India has poor rural roads affecting the timely supply of inputs and timely transfer of outputs from farms. In other areas regional floods, poor seed quality and inefficient farming practices, lack of cold storage, and harvest spoilage cause over 30% of farmer’s produce going to waste, lack of organized retail, and competing buyers thereby limiting Indian farmer’s ability to sell the surplus and commercial crops.

Agriculture Price Policy

The agricultural price policy in India has succeeded in establishing certainty and confidence in respect of the prices of agricultural commodities through the fixation of minimum support prices by the Commission for Agricultural Costs and Prices.But due to the variations in the degree of enforcement of procurement in different years, some degree of uncertainty and instability in prices were experienced by the Indian farmers.Again raising the minimum support prices and procurement prices offered incentives to the producers to increase their production but these benefits were mostly restricted to large farmers. Moreover, the public distribution system in India is also subjected to various limitations such as its restricted operation in wheat and rice only, insufficient coverage of rural areas, inadequate coverage of the people lying below the poverty line, and it’s too much expensiveness due to lack of targeting.As argued by several economists, a continuous increase in procurement prices has resulted in inflationary pressures in the economy. This increase in the price of food grains has also resulted in huge hardships to the rural poor consisting of marginal farmers and landless labourers who constitute the bulk of the rural population.

Farmer Suicides

In 2012, the National Crime Records Bureau of India reported 13,754 farmer suicides. Farmer suicides account for 11.2% of all suicides in India. Activists and scholars have offered several conflicting reasons for farmer suicides, such as

• Natural:-Monsoon failure, frequent El-Nino events, and draught have decreased production substantially
• Economic:-Less fund at their disposal, higher interest rate since many buy from local zamindars and landholders often result in the burgeoning effect of actual and interest money which in adverse cases sometimes take away their land and hence their livelihood.
• Social:-Farmers from rural areas have big families that are dependent on the small farmland which leads to economic burden. The dowry for daughters, farmers either offer their property or give away the land as dowry to the groom.
• Social:-Farmers from rural areas have big families that are dependent on the small farmland which leads to economic burden. The dowry for daughters, farmers either offer their property or give away the land as dowry to the groom.

Farming loan system

The farm credit system in Indian agriculture evolved over decades has been instrumental in enhancing the production and marketing of farm produce and stimulating capital formation in agriculture.
Credit for Indian agriculture has to expand at a faster rate than before because of the need to step-up agricultural growth to generate surplus for exports, and also because of change in the product mix towards animal husbandry, aquaculture, fish farming, horticulture and floriculture, medicinal plants, which will necessitate larger investments.

Why is it important?

Agriculture Growth has decreased since 2011-12 to around 1%
Input cost is increasing due to the rise in prices of seeds, fertilizers, etc.
Distress migrations- causing a burden on destinations.
rowth of unorganized credit sector- lack of access to organized sector lending, many farmers resort to the unorganized credit sector.The increasing attrition rate in agriculture

Concerns

Loan waivers provide some relief to farmers in such situations, but there are debates about the long-term effectiveness of the measure. Critics demand making agriculture sustainable by reducing inefficiencies, increasing income, reducing costs, and providing protection through insurance schemes.They point out that farm loan waivers are at best a temporary solution and entail a moral hazard even those who can afford to pay may not, in the expectation of a waiver. Such measures can erode credit discipline and may make banks wary of lending to farmers in the future.It also makes a sharp dent in the finances of the government that finances the write-off.A blanket waiver scheme is detrimental to the development of credit markets. Repeated debt-waiver programmes distort households’ incentive structures, away from productive investments and towards unproductive consumption and wilful defaults.These wilful defaults, in turn, are likely to disrupt the functioning of the entire credit system.

The economic cost of farm loan

• The loan waiver for small and marginal farmers will push up states’ fiscal deficit to 2.71% (Budgeted: 1.53%) in FY’18 of gross state domestic product (GSDP).
• The unintended outcome of this could be reduced availability of credit to the farmers from banks, forcing them to resort to the unorganized lending sector.
• It affects credit discipline and demand for debt waiver may also come in from other states as well