UPSC Economics Indian Economy Agriculture


Category : UPSC







Agriculture has always been one of the most important sectors of Indian economy, be it pre- independence or post- independence periods. This is further proved by the large number of Indians whose livelihood depends on griculture. Indian agriculture has a fairly successful history. It is now first in the world in the production of milk, pulses, jute and many fruits; second in rice, wheat, susarcane, cotton, etc. and a leading producer of spices, plantation crop, livestock, fishes and poultry.




Features of Indian Agriculture


·                     Agriculture is the primary occupation in India. Over 58.7% rural households depend on agriculture as their principal means of livelihood. In India, 75% of below the poverty line (BPL) population lives in rural areas, and is directly or indirectly dependent on agriculture.

·                     Agriculture contributes to more than 17.4% (2016) of GDP, as compared to 18.3% in 2013-14. In developed countries, like the UK and USA, the share of agriculture in GDP is only around 2%.

·                     India accounts for 7.68 % of total global agricultural output. India is the second largest producer of agricultural products in the world.

·                 Agriculture contributes to around 10% of the total value of India?s commodity exports. Thirteen major commodities including tea, coffee, tobacco, cashew, spices, raw cotton and sugar are the primary agricultural exports in India.

Almost 30% of tea and 50% of coffee and jute produced in the country are exported. In addition to this, credit must be given to export of manufactured goods using agricultural raw materials, which further accounts for another 15% of India?s exports.

·                     Indian agriculture has been able to improve its per capita net availability of food-grains to 491.2 grams (2016) from 395 grams in 1950s.

·                     Indian agriculture is still largely dependent on the uncertainties of monsoon for its irrigational requirements.

However, India?s water resources, if fully harnessed, can irrigate more than 50% of our cultivated area.




·                     Kharif 2015-16 also experienced poor monsoon with rainfall being 14% less than LPA. As a results the 1st advanced estimate for 2015-16 (Kharif) are lower than the estimates for 2014-15. A comparative position of production of Food grains, Oilseeds, Sugarcane and Cotton during Kharif 2015-16 vis-a-vis Kharif 2014-15 is given below:


Average Yield Crops (2014-15) Yield (kg/ha)


All-India average





Coarse Cereals




Food grains


Oil seeds








Source: Directorate of Economics & Statistics,

Departments of Agriculture & Cooperation


Kharif Production in 2014-15 and 2015-16 Million Tonnes



2014-15 (4th Advance Est)

2015-16 (1st Advance Est.)

Absolute Difference

% Increase/ Decrease

Food grains





Oil seeds
















·                     As per 1st advance estimate for 2015-16, production of Kharif Rice, estimated at 90.61 million tonnes is marginally lower than the last year's production, but higher than the five year average production of 86.68 million tonnes.

·                     The estimated production of Coarse Cereals is lower by 1.95 million tonnes than its production during last 2014-15. Production of Kharif Pulses is also lower by 0.06 million tonnes than the production of 5.62 million tonnes achieved during 2014-15.

·             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 die sector?s growth. Furthermore, the growing use of genetically modified crops will likely improve the yield for Indian farmers.

·                     According to the National Institution for Transforming India Aayog (NITI Aayog), India?s agriculture sector is expected to grow 6 per cent in FY 2016-17 in case of normal monsoon during the June-September period. The 12th Five-Year Plan estimates the food grains storage capacity to expand to 35 MT. Also, a 4 per cent growth would help restructure the agriculture sector in India in the next few


Agriculture in five year Plans


Five year Plan

Major Features

1st  (1951-56)

·                 Launch of the Community development Programme, abolition of Zamindari system, campaigns for growth in food and other related areas like fisheries, forestry, animal husbandry, soil conservation, etc. were the major features.

·                 Growth in agriculture was 2, 71 %. .

2nd (1956-61)

·                 Agricultural Expenditure was only 20% of the actual plan expenditure.

·                 The agricultural growth, however, was high at 3.15%.

3rd (1961-66)

·                 Achieving self- sufficiency in food grains and increase in agricultural production was one of the main aims of this plan. Higher priority was given to agricultural and allied areas as compared to industrial development. However, the plan did not achieve its goals and agricultural growth fell to 0.73%. Land reforms, land ceiling and Green Revolution were some of the major initiatives in this plan.

Annual Plans (1966-69)

·                 Priority was given to minor irrigation projects and High Yielding Variety of seeds was preferred so as to increase agricultural productivity. Agricultural growth was high at 4.16%.

4th (1969-74)

·                 The results of the introduction of Green revolution and HYV seeds were good. Expenditure on agriculture was 22% of annual expenditure. Agricultural growth was 2.57%.

5th  (1974-79)

·                 Emphasis was laid on spread of HYV seeds, use of fertilizers, pesticides and insecticides to increase production. Expenditure on agriculture was around 21 % of annual expenditure. Agricultural growth was 3.28%.

6th  (1980-85)

·                 It was realised by this plan that growth of Indian economy depends on rural and agricultural development. The growth rate in agricultural production was a high 4.3% against a target of 3.8%. Overall growth in agricultural sector was 2.52%.

7th (1985-90)

·                 Expenditure on agriculture was 22% of annual expenditure. Growth in agriculture was 3.47%

8th  (1992-97)

·                 The growth target was 4.1% but the agricultural sector showcased an impressive growth of 4.68%.

9th  (1997-2002)

·                 This plan was a failure in the agricultural sector and it registered an agricultural growth rate of 2.44%.

10th  (2002-07)

·                 Against a target of 4%, the average agricultural growth rate was only 2.3%.

11th (2007-12)

·                 The major emphasis was on increasing agricultural productivity and profitability by making available affordable institutional credit, farm mechanisation, biotechnology, cold storages, and marketing. Growth in agriculture was 3.5%.

12th (2012-17)

·                 This plan, like its predecessors, has a target of 4% agricultural growth rate, with growth in food-grains at 2% and non- food grains at 5.6%. The plan puts an emphasis on improvement in technology, use of public- private partnership, greater road connectivity, development of horticulture, dairying, and other related agricultural fields.


Annual Report 2015-16


Sl. No.


Area Coverage (in ha.) 2014-15

Cumulative Area Coverage (in ha.)

Production (in MT)

Area Coverage target (in ha) 2015-16




Andhra Pradesh





















Tamil Nadu






































































Andaman & Nicobar







Arunachal Pradesh






















National Agricultural Policy


The National Agriculture Policy aims to realise the vast untapped potential for growth in Indian agriculture, developing rural infrastructure, promote value addition, accelerate the growth of agro business, create employment in rural areas, secure a fair standard of living for the farmers and agricultural workers and then-families, discourage migration to urban areas and face the challenges arising out of economic liberalization and globalisation. The major features of the new agricultural policy are:

1.             Over 4 % annual growth rate aimed over next two decades.

2.             Greater private sector participation through contract farming.

3.             Price protection for farmers.

4.             National agricultural insurance scheme to be launched.

5.             Dismantling of restrictions on movement of agricultural commodities throughout the country.

6.             Rational utilisation of country's water resources for optimum use of irrigation potential.

7.             High priority to development of animal husbandry, poultry, dairy and aqiiaculture.

8.             Capital inflow and assured markets for crop production.

9.             Exemption from payment of capital gains tax. on

a compulsory acquisition of agricultural land.

10.          Minimise fluctuations in commodity prices.

11.          Continuous monitoring of international prices.

12.          Plant varieties to be protected through a legislation.

13.          Adequate and timely supply of quality inputs to farmers.

14.          High priority to rural electrification.

15.          Setting up of agro-processing units and creation of off-farm employment in rural areas.



Production of Major Crops during 2015-2016


The 4th Advance Estimates of production of Major crops for 2015-16 have been released by the Department of Agriculture, cooperation and farmers welfare here today.

The estimated production of major crops during 2015-16 is as under:


·                     Food grains

252.22 million tonnes

·                     Rice

104.32 million tonnes

·                     Wheat

93.50 million tonnes

·                     Coarse Cereals

37.94 million tonnes

·                     Pulses

16.47 million tonnes

·                     Qilsecds

25.3 million tonnes

·                     Sugarcane

352.163 million tonnes

·                     Cotton

30.147 million Bales.


·                     Total food grains production during 2015-16, estimated at 252.22 million tonnes, has been higher by 0.20 million tonnes over the production of 252.02 million tonnes during 2014-15.


Major Agriculture Programmes


The Central government supplements the efforts of the state governments through centrally sponsored schemes. Some of these major schemes are as follows:


National Food Security Mission (NFSM)


NFSM was launched in 2007-08 to increase the production of rice, wheat and pulses by 10, 8 and 2 million tonnes respectively, by the end of 11th plan through productivity enhancement and area enhancement, enhancing farm level economy and creating employment opportunities. This has been extended to the 12th plan too with additional production targets.

The National Food Security Mission (NFSM) during the 12th Five Year Plan will have five components - (i) NFSM - Rice, (ii) NFSM - wheat (iii) NFSM - Pulses (iv) NFSM ? Coarse cereals (v) NFSM - Commercial crop New target of additional 25 million tons of food grains comprising of 10 million tons of rice, 8 million tons of wheat, 4 million tons of pulses, and 3 million tons of coarse cereals.





National Food Security Act (NFSA). 2013


  •           As passed by the Parliament, Government has notified the National Food Security Act, 2013 on 10th September, 2013 with the objective to provide for food and nutritional security in human life cycle approach, by ensuring access to adequate quantity of quality food at affordable prices to people to live a life with dignity. The Act provides for coverage of upto 75% of the rural population and upto 50% of the urban population for receiving subsidized food grains under Targeted Public Distribution System (TPDS), thus covering about two-thirds of the population.

The eligible persons will be entitled to receive 5 Kgs of food grains per person per month at Subsidised prices of Rs.3/2/1 per Kg for rice/wheat/coarse grains. The existing Antyodaya Anna Yojana (AAY) households, which constitute the poorest of the poor, will continue to receive 35 Kgs of food grains per household per month.


  •            The Act also has a special focus on the nutritional support to Women and children. Besides meal to pregnant women and lactating mothers during pregnancy and six months after the child birth, Such Women will also be entitled to receive maternity benefit of not less than Rs. 6,000.

Children upto 14 years of age will be entitled to nutritious meals as per the prescribed nutritional standards. In case of non-supply of entitled food grains or meals, the beneficiaries will receive food security allowance. The Act also contains provisions for setting up of grievance redressal mechanism at the District and State levels.

Separate provisions have also been made in the Act for ensuring transparency and accountability.

Source: (Ministry of consumer Affairs, Food & Public

Distribution, Government of India)


Rashtriya Krishi Vikas Yojana (RKVY)

RKVY was launched in 2007-08 for the 11th plan to incentivize states to enhance investment in agriculture and allied sectors to achieve 4% growth rate. The government has approved continuation of the RKVY scheme in the 12"' plan whereby the funding will be routed into three components-

(i) Production growth,

(ii) Infrastructure and assets, and

(iii) Sub-schemes and flexi-fund.


National Horticulture Mission (NHM)

NHM was launched in 2005-06 for promotion of holistic growth of horticulture sector, including fruits, vegetables, root and tuber crops, mushroom, spices, flowers, aromatic plants, cashew and cocoa. Central share would be 85%, while the states will contribute 15% of the share. From 2014-15, the Mission for Integrated Development in Horticulture (MIDH) has been started by bringing all ongoing schemes related to horticulture under a single umbrella scheme.

MIDH comprises of two sub-schemes - (i) National Horticulture Mission, and (ii) Horticulture Mission for North East and Himalyan States.


Integrated Scheme for Oilseeds, Pulses, Oil

Palm and Maize (Isopom)

ISOPOM provides flexibility to states in implementation based on a regionally differentiated approach for promoting crop diversification and providing a focus to the programme. This scheme is under implementation in the country for increasing area, production and yield of these crops from 2004-05. The pulses component was merged with NFSM w.e.f. April 2010.


National Mission for Sustainable Agriculture (NMSA)

NMSA is one of the eight missions outlined under National

Action Plan for Climate Change. It seeks to address issues related to ?sustainable agriculture? in the context of risks associated with climate change. It hopes to achieve its aims by preparing appropriate adaptation and mitigation strategies for enhancing livelihood opportunities, ensuring food security and contributing to economic stability.

Its components include -(i) Rainfed Area Development (ii) Soil Heath Management


Rainfed area Development Programme (RADP):

RADP was launched by the government as a pilot scheme under RKVY, focusing on small and marginal farmers and farming systems. It targets integrated farming, on-farm water management, storage, marketing and value addition of farm produce in order to enhance farmers' income in rain-fed areas.


National e-Governance Plan in Agriculture


This aims to achieve rapid development of agriculture in

India through ICT enabled multiple delivery channels such

As Internet, Government Offices, Touch Screen Kiosks, Krishi Vigyan Kendras, Kisan Call Centres, Agri-Clinics, Common Service Centres, Mobile Phones for ensuring timely access to agriculture related information for the farmers of the country.

This includes information on pesticides, fertilizers, seeds, soil health, weather forecast, fishery inputs, drought relief and management, etc.


National Mission on Food Processing (NMFP)

NMFP was launched in 2012. It is a centrally sponsored scheme for giving greater role to states/UTs, decentralized administration, better outreach and effective supervision and monitoring. The NMFP would also provide flexibility to states/UTs in the selection of beneficiaries, location of projects, etc.

For development of food processing industry in India.

It was started as a centrally sponsored scheme, but since the financial year 2015-16. it has been delinked from central Government support. State Governments may decide to continue (or not) NMFP scheme out of their increased resources from recommendation of 14th Finance Commission.


Major Achievements in Agriculture during 2014-16



Soil Health Card

Information on balanced usage of fertilizers.


4.15 Crore Soil Health Cards have been distributed to the farmers.


Reduction in the cost of cultivation for doubling the farmers income.


Amount released Rs. 216.37


Soil Health Card Scheme was launched in February 2015.


460 Soil Testing Laboratori Sanctioned.


The Cards will be issued every 2 years for all land holdings in the country


Farmers   can   get   crop   wise recommendations of macro nutrient secondary nutrients and fertilizer with the help of SHC.





Emphasis on Organic Farming


·                     Funds released to 8 states of North Eastern Region aims at development of certified organic production in a value chain made to link growers with consumers.

·                     Mission Organic Value Chain Development (MOVCD) Scheme was started for 3 years.

·                     Government of India has made it mandatory for manufacturers to produce 100% Neem coated Urea from May 2015. Every granule has a coating of Neem Oil, which slows down the rate of dissolution of Urea in Soil and thus increases the availability of nitrogen for crops.


National Agriculture Market

·                     Electronic National Agriculture Market (e-NAM)

Scheme was launched on the 125th Birth Anniversary of Baba Saheb Dr. Bhimrao Ambedkar (14th April 2016) in 21 markets of 8 states to link 585 wholesale APMC (Agricultural Produce Market Committee) mandis across the country through a common e-platform.

·                     250 mandis of 10 states have been integrated with e-NAM so for.

·                     During 2016-17 funds allocated to PMKSY?PER DROP MORE CROP (Pradhan Mantri Krishi Sinchayee Yojana) is Rs. 2340 crore and 8 lakh areas has been targeted under micro irrigation ? 1512.65 crore has been released to the states upto Dec. 2016.

·                     Rs. 500 crore special package announced towards restoration of damaged horticulture areas and development of horticulture in J&K.

·                     India became first in coconut production and productivity in the world.

·                     A dedicated scheme ?Sub-Mission on Agro forestry? is launched with aim ?HAR MEDH PAR PED?.

·                     Cut of Rs. 1700.00 crore under National Food Security Mission (NFSM, Rs. 1100.00 crore was allotted to Pulses during 2016-17 which is more than 60% of total allocation.

·                     Kisan Suvidha App was launched that provides

·                     information to farmers in respect of weather, Plant Protection, Agriculture Advisories, Mandi Prices and Input Dealers etc.

·                     Focus on Development and conservation of indigenous Breeds in a scientific and holistic manner with manifold increase in budget allocation.

·                     First time in the country for development and conservation of indigenous breeds 14 Gokul grams are being established.

·                     On the occasion of National Milk Day, first time in the country, e-pashuhat portal was launched.

·                     45 Integrated Farming System (IFS) Models developed for different agro-ecological regions of the country.

·                     Declared 3?1 December as National Agricultures Education Day in the memory of First Food and Agriculture Minister Dr. Rajendra Prasad.

·                     On the occasion of birthday of former Prime Ministers Shri Chaudhary Charan Singh Ji and Shri Atal Bihari Vajpayee Ji, the Jai-Kisan-Jai Vigyan week is being celebrated in the whole country since 2015.

·                     2016: The International Year of Pulses? Establishment of 150 'Seed' - Hubs on Pulses for augmenting the supply of quality seeds of pulses.

·                     M-kisan Portal ? 90 Eakh farmers are being provided advisory by the Krishi Vigyan Kendra.


Source: Ministry of Agriculture and Farmers Welfare, Gol. http: //agriculture. gov. in


Major Agricultural Revolutions


Agricultural Revolution in a nutshell







Food grain production






Oil seeds






Meat and Tomato








Black/ Brown Sources

Non-conventional & Energy









Green Revolution Introduction


The world's worst recorded disaster the Bengal famine, which hit India in year 1943 claimed approximately 4 million lives.

It was, therefore, first priority of the government to ensure food security for all. This led to various measures taken by government to increase production of food grain in the country.

The green Revolution which began in year 1967/68 focused on expansion of farming areas and use of high yield variety seeds along with adoption of double cropping in the existing farmland.

It included a technology package. Comprising use of HYV of two staple cereals (rice and wheat), improved irrigation, proper utilisation of fertilizer and pesticides and associate management skills. M.S. Swaminathan is considered father of Green Revolution in India.


Objectives of the Green Revolution

·                     To ensure food security by increasing production of main crops like wheat, rice, etc.

·                     To increase agriculture productivity.

·                     To enhance modernisation of farm practices.


Impact of Green Revolution

·                     The Green Revolution has resulted in phenomenal increase in the production of 'wheat' gain maximum benefit from green Revolution.

·                     This revolution led to prosperity of farmers, especially those who were having more than 10 hectares of land.

·                     Increased production of food grains resulted in

·                     Reduction in imports. Also, sometimes India exported food grains.

·                     This revolution increased farmer's income and farmer's invested surplus income to increase agriculture      productivity.

The phenomenon of Green Revolution in India led to an increase in yields due to improved agronomic technology.

The first phase of green revolution included introduction of high-yielding varieties of crops and application of modern agricultural techniques. This led to an increase in production needed to make India self-sufficient in food grains. The production of wheat produced the best results in fuelling self-sufficiency of India. Other positive effects of this phenomenon were reduction in imports of food grains, prosperity of farmers, development of industries, overall growth of economy and many more.


Second Green Revolution

Post green revolution, due to the rise in use of chemical pesticides and fertilizers, there were negative effects on the soil and the land such as land degradation, thereby becoming ecologically untenable. Other challenges also became apparent. India achieved an increase in production of food grains so much so as to have an overflowing buffer stock, but the economic access to food was a huge problem. We had to export excess food which was not consumed by Indians due to lack of economic power.

To counter these and other such problems, a Second Green Revolution is visualised and it will largely depend on Indo-US collaboration.

The Second Green Revolution seeks to minimise post-harvest wastage, improve storage and help Indian farmers meet the phyto-sanitary conditions so that they can participate productively in the global agricultural trade. The first Green Revolution was assisted by research undertaken by public institutions such as Universities. However, the Second Green Revolution (appropriately also called Gene Revolution, because of the predominance of Biotechnology) will be directed by proprietary research and governed by Intellectual Property Rights.

Moreover, the research so far has been confined to crops of high value meant solely for the market. No public or private sector has invested significantly in new genetic technologies for the so-called orphan crops such as cowpea, millet, sorghum, etc. which are critical for the food supply and livelihoods of the world?s poorest people. The Second Green Revolution on the other hand seeks to focus on such crops and increases their productivity too.


White Revolution

It occurred in India in 1970, when the National Daily

Development Board (NDDB) was established to organise the dairy development through the co-operative societies.

Prof. Verghese Kuerin was the father of White Revolution in India. White revolution helped India become not only self-sufficient but also the largest dairy producer of the world.

It works through a network of co-operative societies which are owned and managed by the milk producers. The co- operative societies were most successful in the Anand District of Gujarat. The main objectives of the co-operative society are the procurement, transportation, storage of milk at the chilling plants. These co-operatives, apart from providing financial help, also provide consultancy. The increase in milk production has also been termed as Operation Flood.


Blue Revolution

This is very similar to green revolution, but the focus here is on aquaculture and water preservation. It has been used in India for several years to increase the number of fresh water fishes.


Evergreen Revolution

The emphasis in this revolution is on sustainable agriculture by means of organic and green agriculture. Dr. MS Swaminathan gave this concept. It includes the use of integrated pest management, nutrient supply and resource management.


Yellow Revolution

Yellow Revolution refers to a marked increase in the production of oilseeds in India. It started in year 1986-87 and within a decade India became a leading producer of oilseeds by the years 1996-97.

This revolution can be attributed to governmental support especially the setting up of the Technology mission on oilseeds in 1986. Factors that played an important role in bringing yellow Revolution are:

·                     Institution support and linkages.

·                     Provision of extension and training in oilseeds technology.

·                     a   Governments support price policy.

·                     Use of hybrid and improved varieties of seeds.

·                     Provision of plant genetic resources.


Land Reforms


Land reforms may be defined as institutional changes that aim at changing the land relations favorable to the actual tillers of land and increasing the average farm-size of the cultivators.

Factors like the size of holdings, the pattern of ownership, the method of inheritance and security of tenure have a definite impact on investment in agriculture. In pre-Independent India the following three types of land tenure system existed:

·                     The Zamindari System It prevailed in Bengal, Bihar, Orissa and North Madras. It was introduced by the East India Company and under it a class of revenue collectors, called zamindars, was created. These zamindars acted as intermediaries between the cultivators and the government. Revenue was ?settled? by the government with zamindars, either permanently or temporarily. As long as the zamindar assured the remittance of the settled revenue to the government he was free to fix and extort any revenue from the tenant. This led to gross abuses and exploitation and spread of rural poverty in Bengal and Bihar.

·                     Mahalwari System It was introduced in North India in terms of which the village community was jointly responsible for payment of rent.

·                     Ryotwari System It was prevalent in parts of Madras, Bombay province and Assam. Under this system, the cultivator paid the revenues directly to the state without an intermediary.



The purpose of land reforms was to achieve the following three objectives:

·                   to increase production by ensuring security of tenure to the cultivator;

·                   to increase the purchasing power of the rural population and thereby boost the demand for industrial products; and

·                   to achieve social justice along with economic growth through a single set of measures rather than through different, and sometimes contradictory, measures.


Major Land Reform Measures Taken after Independence

Several important land reform measures were brought about by the government after Independence, like.

·                     Abolition of intermediaries like zamindars, jagirdars, etc. It resulted led in several states promulgating laws for putting an end to 'absentee landlordism'.  As a result, about 30 lakh tenants acquired land ownership over an area of 62 lakh acres throughout the country.

·                     Imposition of ceiling laws It laid down the maximum land that can be owned by a land holder (which was subsequently amended to 'holding' by a family with effect from 1972). The excess land was to be surrendered to the government.

·                     Consolidation of holding It was introduced as a measure of improving farming efficiency. It made considerable progress in Punjab, Haryana and Western U.P. However, it did not have much effect in the southern and eastern states.

The land reforms are included in the Ninth Schedule of the

Constitution, thereby making these laws immune to judicial challenge. However, implementation of these laws requires far stronger political will than is required in including them in the Ninth Schedule.


Land Acquisition Bill 2013


·                     ?The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2013? is the historic legislation that would provide just and fair compensation to farmers while ensuring that no land could be acquired forcibly. The new law replaced a 119 year old legislation, the land Acquisition Act 1894.

·                     The new law stipulates mandatory consent of at least 70% for acquiring land for public private partnership projects and 80% for acquiring land for private companies.

·                     This is the first National/Central law on the subject of Rehabilitation and Resettlement (R & R) of families affected and displaced as a result of land acquisition Monitoring committees at the national and state levels to ensure that R & R obligations are met have also been established. The Law also ensures that all rights guaranteed under such legislation as the PESA Act 1996 and the forest Rights Act 2006 are taken care of. The law provides that no one shall be dispossessed until and unless all payments are made and alternative sites for resettlement and rehabilitation (with infrastructural amenities) have been prepared.

·                     The U.S. government intervened by using USD 700 billion to purchase troubled mortgage-related assets and propping up large floundering Corporations in order to stabilize the financial system. It also introduced a stimulus package worth USD 831 billion to be spent across the following 10 years to boost the economy.

·                     (The economy has received support through expansionary monetary policies.) This includes not only holding interest rates at the lower bound, but also the unconventional practice of the government buying huge amounts of financial assets to increase the money supply and hold down long term interest rates-a practice known as

?quantitative easing?.


Amendment Bill, 2015


The Right to Fair Compensation and Transparency in

Land Acquisition, Rehabilitation and Resettlement (Second Amendment) Bill, 2015


Highlights of the Bill

·                     This Bill amends the principal Act passed in 2013.

·                     The Bill enables the government to exempt five categories of projects from the requirements of: (i) social impact assessment, (ii) restrictions on acquisition of multi-cropped land, and (iii) consent for private projects and public private partnerships (PPPs) projects.

·                The five categories of projects are: (i) defence, (ii) rural infrastructure, (iii) affordable housing, (iv) industrial corridors, and (v) infrastructure including PPPs where government owns the land.

·                     The Act would apply retrospectively, if an award had been made five years earlier and compensation had not been paid or possession not taken. The Bill exempts any period when a court has given a stay on the acquisition while computing the five year period.

·                     The Act deemed the head of a government department guilty for an offence by the department. The Bill removes this, and adds the requirement of prior sanction to prosecute a government employee.


Co-operative Farming

Co-operative farming had been advocated by Mahatma Gandhi as far back as in 1942. Complete benefits of agriculture can be acquired through co-operative farming. Co-operative farming can take the form of:

·                     Co-operative tenant farming, where the society holds the land and leases it to individual members;

·                     Co-operative collective farming, where land is irrevocably surrendered to the collective;

·                     Co-operative joint farming, where the farmers pool their land and reap the economies of scale, although the ownership continues to remain with the individual farmer.

It is the last type of farming which was sought to be encouraged in the five-year plans. However, no breakthrough could be made due to:

·                     the farmer?s reluctance to alienate his land which is usually the only inheritance he has;

·                     unscrupulous elements using the co-operative farming concept to circumvent land ceiling;

·                     Lack of political and administrative will.


Rural Credit and Extension Services


Three types of loans are provided to Indian farmers to meet their financial requirements -


(i)         Short term loans

These are provided for a period of less than 15 months to meet out expenses of routine farming and domestic consumptions. This type of loan is demanded by farmers for purchasing seeds, fertilizers and for meeting family requirements.


(ii)        Medium term loans

These are provided for a period of 75 months to 5 years to purchase agricultural equipments, animals and for land improvements.


(iii)       Long term loans

These are provided for a period of more than 5 years.

This type of loan is taken by farmers to purchase land and expensive agricultural equipments and for repayment of old loans.

During 2004-05 (up to December 2004) commercial banks accounted for 61 % of the total institutional credit to agriculture, RRBs for 11 % and co-operatives for 28 %.

Five major sources of rural credit in India are

(i) Co-operative credit societies

(ii) Land Development Banks

(iii) Commercial Banks

(iv) Regional Rural Banks

(v) The Government.


Co-operative Credit Societies (CCS)

These are the most important source of rural credit. More than 88,000 primary agricultural credit societies provided short-term loans of Rs. 34,520 crores during 2000-01.

Co-operatives are organised on a three-tier system. Each state has a State Co-operative Bank (SCB) and Central Co-operative Banks (CCBs) in each district with the Primary Agricultural Credit Societies (PACS) as the lower tier. NABARD funding to PACS is routed only through state co-operative banks.

·                     In addition to the above, Land Development Banks (LDBs) provide long-term rural credit for land improvement, soil conservation and other investments of a capital nature. LDBs have now been renamed as State Co-operative Agricultural and Rural Development Banks (SCARDBs). They raise their funds through long-term debentures offering state government guarantee, and refinancing from NABARD.



National Bank for Agriculture and Rural

Development (NABARD)

NABARD is the apex institution for providing credit facility to agricultural and rural areas. It came into existence on July 12, 1982 and took over the functions of the erstwhile Agricultural Credit Development (ACD), Rural Planning and Credit Cell (RPCC) of RBI and the Agricultural Refinance Development Corporation (ARDC).

NABARD is associated with policy, planning, operation and even monitoring levels for providing agricultural credit. It has been jointly set up by the government and the Reserve Bank of India.


Objectives of NABARD

·                     To provide refinance to banks and other credit institution in rural areas.

·                     To promote institutional development.

·                     To evaluate, monitor and inspect client banks.

·                     To act as a coordinator of rural credit institution.

·                     To act as a regulator for cooperative banks and RRBs.

·                     To maintain close link with RBI.

Most of the functions of RBI in the area of agricultural credit have been taken over by NABARD.


Functions of NABARD

·                     It frames policies and guidelines for rural financial institutions.

·                     It provides credit facilities to issuing organisation and monitors flow of ground level rural credit.

·                     It helps RRBs to prepare development action plans.

·                     It provides financial support for the training institutes of co-operative banks, commercial banks and RRBs.

·                     It undertakes inspection of RRBs, Co-operative banks, rural development banks and apex credit co-operative societies.


Kisan Credit Card

NABARD formulated a model scheme for issue of Kisan

Credit Cards (KCCs) to farmers so that they may use them to readily purchase agricultural inputs such as seeds, fertilizers, pesticides, etc. These are operated by commercial banks, RRBs and co-operative banks.

The scheme, introduced in 1998-99, has made rapid progress with the banking system. The scheme has helped in augmenting the flow of short-term crop loans for seasonal agricultural operations of farmers.

From January 31, 2006, the scheme has been extended to all types of loan requirements of borrowers of State Co-operative Agriculture Rural Development Banks (SCARDBs). It covers

·                     short-term/medium-term credit and long-term credit for agriculture and allied activities and a reasonable component of consumption credit within the overall limit sanctioned to the borrowers.


Commercial Banks

·                     The CBs finance rural credit directly through Regional Rural Banks (RRBs).

·                     Direct financing is mainly through crop loans and term loans for equipment and machinery.

·                     In 1975, five RRBs were set up to provide direct loans to small and marginal farmers, rural artisans and agricultural labourers. The RRBs were co-sponsored by Central Government (50%), State Government (15%) and the sponsoring bank (35%). There were 196 RRBs covering 427 districts with a total of 14475 branches. With a view towards consolidating and strengthening RRBs, the Government of India initiated a process of amalgamation of RRBs, in a phased manner.


Land Development Banks

They provide long term loans to farmers against the mortgage of their lands at low rates of interest over a period of 15 to 20 years.



National Agricultural Co-operative Marketing federation of

India was established in 1958. It is the highest co-operative

organistaion at the national level. Its major functions are procurement, distribution, export and import of selected agricultural commodities.



The Tribal Co-operative Marketing Development Federation of India Limited came into existence in 1987. It is a national level apex organization functioning under the administrative control of Ministry of Tribal Affairs, Govt. of India.



National Cooperative Development Corporation was set up by an Act of Parliament in 1963 as a statutory Corporation under Ministry of Agriculture and Farmers Welfare. It aims to provide financial assistance to co-operatives for infrastructure and business development, for their economic upliftment, along with capacity building interventions.


Agricultural Insurance


Many crop insurance schemes are available in our country such as,



Agriculture Insurance Company of India Limited was incorporated in 2002 and is under the administrative control of Ministry of Finance, Government of India, and under the operational supervision of Ministry of Agriculture, Government of India. It seeks to provide insurance coverage and financial support to the farmers in the failure of any of the notified crop, to encourage the farmers to adopt progressive farming practices, high value in-puts and higher technology:

to help stabilize farm incomes, particularly in disaster years.



National Agricultural Insurance Scheme is a central sector, government sponsored crop insurance scheme, in operation since 1999. This scheme aims at tackling the issue of production risk faced by the agricultural sector. It provides financial support to the farmers in the failure of any of the crops. The AICIL is the implementing agency of this scheme.

NAIS has been further modified as MNAIS with the aim of further helping the farm sector.


Pradhan Mantri Fasal Bima Yojana

It was launched by the P.M. on 18th February 2016. It envisages a uniform premium of only 2% to be paid by farmers for kharif crops and 1.5% for Rabi crops.


Agricultural Marketing


Increase in agricultural production alone will not bring about prosperity for the farmers. It is essential that agricultural produce fetches a remunerative price too.

The Indian system of agricultural marketing suffers from a number of defects, as a consequence of which the Indian farmer is deprived of a fair price for his produce. The following are the primary defects in the system of agricultural marketing in India.


(i)         Inadequate Warehouses

Unscientific methods of storage lead to considerable wastage. The setting up of Central Warehousing Corporation and State Warehousing Corporations has improved the situation.


(ii)        Lack of grading and standardisation

Different varieties of agricultural produce are not graded properly and hence, do not meet official standardisation requirements fully.


(iii)       Inadequate transport facilities

Most of the roads are not cemented and therefore, are unfit for motor vehicles. Thus, the produce has to be carried on slow moving transport vehicles like bullock carts, and this is one of the reasons that farmers sell their products to the nearest mandis even if prices offered there are fairly low.


(iv)       Presence of a large number of middlemen 

The chain of middlemen in the agricultural marketing system is so prevalent that the share of farmers has reduced substantially.


(v)        Malpractices in unregulated markets

Even after so many years since the advent of technological changes in the Indian agricultural system, the number of unregulated markets in the country is substantially large.

Agents or brokers, taking advantage of the ignorance and illiteracy of farmers, use unfair means and cheat them.

Another malpractice in the mandis relates to the use of wrong weights and measures.


(vi)       Inadequate market information

Most of the farmers have virtually no contact with the mandis. As a result, they accept whatever price the trader offers to them. The government is using radio and television media to broadcast market prices regularly so as to tackle this very problem.


(vii)      Inadequate credit facilities

The Indian small and marginal farmers are poor and lack staying power. They try to sell off the produce immediately after the crop is harvested though prices at that time are very low.

Warehousing and marketing facilities are essential to ensure that these defects are overcome. The Government has come out with solutions such as agriculture price policy and maintaining buffer stocks so as to assist marketing of agricultural produce.



The electronic - National Agriculture Market is an electronic trading platform launched by the PM in April 2016. In the budget 2017 its coverage is proposed to expand from 250 to 585 markets. This platform allows farmers to sell their products to the highest bidders.


Model APMC Act 2003

It was enacted as a measure for reforming APMC in various states key areas of reforms included establishment of private market yards, direct purchase of agricultural produce form agriculturist, promote e-trading, establishment of farmers/consumers market, contract farming, single point level of market fee, single registration/licence for trade/transaction in more than one market.


Agriculture price policy


The main objectives of an agriculture price policy are:

·                     To ensure that the producer gets a minimum remunerative price.

·                     To maintain a reasonable terms of trade between agricultural sectors;

·                     To maintain the general price level and protect the non-producing consumer from violent fluctuations in price of food grains.

During the pre-green revolution period, due to the shortage in domestic production, the terms of trade were in favour of the agriculture sector. However, with the surplus of food grains in the years following the green revolution, the policy shifted towards protecting the farmers from the prospect of non- remunerative prices.

The Commission for Agricultural Costs and Prices (CACP) 

formerly known as the Agricultural Prices Commission analyzes the input costs and recommends the minimum support prices for 24 major crops. MSP announced by the government is that price at which government is ready to purchase the crop from farmers directly if the crop prices become lower than MSP. As a result, market price of the crop never comes down from the level of MSP. The minimum price security gives incentives to farmers to increase their production. However, historically, the actual support prices are fixed far above the recommended prices due to intense lobbying by the interested parties. Procurement price and minimum support price are different from each other.

Procurement price (PP) is that price at which government purchases the crop after harvesting, while Minimum Support price (MSP) is the minimum price at which government declares it will buy the crop. Since 1968-69, the MSP is usually the procurement price.

Apart from fixing support prices, government action in holding the price consists of:

Buffer stocking, which is the practice of holding large stocks by government agencies like Food Corporation of

India (FCI) and releasing the stocks in the market to counter price rise. The buffer stock also helps to maintain the Public Distribution System (PDS).

Import of food grains incase shortage is apprehended. There has not been an occasion to resort to imports since 1996 largely because of the vast stock of food grain accumulated by the FCI.


WTO and Agricultural Subsidies


The WTO Agreement on Agriculture (AoA), 1995 permitted the developed countries to continue to provide farm subsidies, but under certain restrictions. In WTO terminology, agricultural subsidies have been segregated into various 'boxes':


Subsidy - Subsidy is a payment that a government makes to a producer to supplement the market price of a commodity.

Subsidies can keep consumer prices low while maintaining a higher income for domestic producers.


Green Box subsidies

It includes amounts spent on research, disease control, and infrastructure and food security. These also include direct payments made to farmers such as income support that do not stimulate production. These are not considered trade distorting and are encouraged.


Blue Box subsidies

It includes direct payments to farmers to limit production and certain government assistance to encourage agriculture and rural development in developing countries.

Blue Box subsidies are seen as being trade distorting.


Amber Box subsidies

It includes all agricultural subsidies that do not fall into either blue or green boxes. These include government policies of Minimum support Prices (MSP) for agricultural products or any help directly related to production quantities (e.g. power, fertiliser, seeds, pesticides, irrigation, etc.). These are subject to reduction commitment to the de-minimus level of agricultural outputs- to 5% for developed and 10% for developing countries.

India insisted that developed countries should first dismantle their agricultural subsidy structure before asking developing countries to open up their market for farm imports. Our emphasis has been on making farm trade fair before it is made free.


Food Corporation of India (FCI)


The Food Corporation of India (FCI) was set up under the food corporation?s Act 1964 as the public sector marketing agency responsible for implementing government price policy through procurement and public distribution operations. It was responsible for securing for the government a commanding position in the food-grain trade. By 1979, the Corporation was operating in all states as the sole agent of the Central Government in food-grain procurement. The Corporation uses the services of state government agencies and co-operatives in its operations.

FCI is the sole repository of food-grains reserved for the

Public Distribution System. Food-grains, primarily wheat and rice, account for between 60 and 75 % of the Corporation?s total annual purchases.

Objectives of FCI

·                     Effective price support operations for safeguarding the interests of the farmers.

·                     Distribution of food grains throughout the country under PDS.

·                     Maintaining satisfactory level of operational and buffer stocks of food grains to ensure National food security.


Public Distribution System


The food procured by the FCI is distributed through government regulated ration shops among the poorer section of the society. This is called the public distribution system (PDS).


Objectives of Public Distribution System

The objectives of "public distribution system" are as follows:

·                     To protect the low income groups by guaranteeing the supply of certain minimum quantity of food grains at affordable price.

·                     To ensure equitable distribution of food grains.

·                     To control price fluctuation of essential commodities in the open market.


Features of Public Distribution system are:

1.             PDS is a system of distribution of selected essential commodities through ?fair price shops?. Ration shops also known as Fair price shops.

2.             Items which are distributed through PDS are rice, wheat, sugar, edible oil and kerosene

3.             The purpose of PDS is to offer basic minimum quantity of essential commodities at lowest price to poorer sections of society.

4.             The required commodities are acquired by the government through procurement or import and a buffer stock is maintained.

Public Distribution System (PDS) was conceived as a primary social welfare and poverty alleviation programme of the government to ensure price stabilisation in the grain market.



Government?s objective of providing reasonable prices for basic food commodities like food grains, sugar, edible oil and kerosene is achieved through the Public Distribution System of India, the largest PDS of the world. Channelling basic food commodities through the PDS serves as a conduit for reaching the truly needy and as a system for keeping general consumer prices in check. More than 80 % of grain to the Public Distribution System is provided by the Punjab, Haryana and western Uttar Pradesh.



Targeted PDS (TPDS) means targeting the PDS to the poor.

This system started when the procurement and issue prices of PDS items saw a rise with the ushering in of economic reforms in the 1990s. Thus, while till 1992 any one could avail of the PDS, beginning from 1996-97, the TPDS targeted only poor households across all regions. The below poverty line (BPL) households were identified and were provided with food-grains at very low prices. From March 2000, the above poverty line (APL) cardholders had to pay a much increased price. The ?poorest of the poor? category was established by the ?Antyodaya? programme. Those under this category are entitled to avail rice and wheat at prices lower than those for BPL households.

















You need to login to perform this action.
You will be redirected in 3 sec spinner