Farmer’s contribution to India’s economic growth Agriculture and farmers role in India’s economic growth
Agriculture is the integral part of the Indian economy providing livelihood to 58% of the country’s population. Farmers are the most important players in the agriculture sector responsible for planting, harvesting and nurturing of different types of crops.
Agriculture is the integral part of the Indian economy providing livelihood to 58% of the country’s population. Farmers are the most important players in the agriculture sector responsible for planting, harvesting and nurturing of different types of crops. As India is an agrarian economy, we dive deeper into the role played by the farmers towards India’s economic growth. In 2020, when the covid-19 pandemic resulted in the massive economic slowdown. Agriculture was the only sector which was resilient. This was evident in the Economic Survey released on January 29, 2021 which stated that India’s gross domestic product (GDP) is likely to contract 7.7% in fiscal 2021 and gross value added (GVA) declined by 7.2%. Agriculture was the only sector offered the cushion the economy with the growth in GVA at a positive rate of 3.4% (first advance estimates); while Industry and services to contract by 9.6% and 8.8%, respectively. As seen in the chart below, growth in agriculture mostly remained positive since fiscal 2014 except for the fiscal 2015 when growth fell 0.2%.
Source: Economic survey
Economic development over the years have resulted in other sectors like industry and services contributing more to GDP. The share of the agriculture has declined from to 17.8% in 2019-20 from 18.2% in 2014-15. But still given the diversity of the soil, climate and geography has made India a ‘global agricultural powerhouse’ referred by World Bank. Rightly so, below are some of the key facts that shows why agriculture and farmers plays a vital in India’s development and going forward continue to be one of the major contributors as well along with other sectors in reviving the economy.
Source: IBEF, FICCI and Economic Survey
The aforementioned aspects along with the large population of India which drives the internal demand has resulted in agriculture sector ruled by farmers facilitating India’s growth. The external demand for the Indian goods has led to agriculture playing key role in boosting India’s exports. Exports aid in increasing the foreign exchange reserves, enhanced competitiveness, bring in greater integration with global markets among others. India’s forex reserves recently surpassed Russia’s to become the world’s fourth-largest. India’s foreign currency holdings stood at $580.3 billion as of March 5, 2021 according to RBI, edging out Russia’s $580.1 billion pile.
Indian agricultural exports increased to Rs 38.54 billion in fiscal 2019 compared to Rs 38.21 in fiscal 2018 and stood at 35.09 billion in fiscal 2020 according to IBEF. The country is among the 15 leading exporters of agricultural products in the world as per IBEF. Another statistic from World Trade Organisation (WTO), World Trade Statistical Review 2020 showed that India’s share in global agricultural exports increased from 1.1% in 2000 to 2.1% in 2019, valued at $37 billion. The US saw a decline in its share of global agricultural exports from 13% in 2000 to 9.3% ($165 billion) in 2019.
India has been key exporter of rice, pulses, spices, meat dairy products among others. In the past few years to tame inflation the government tried to ban exports of rice, wheat, sugar and onion. But with the Agriculture Export Policy, 2018 the government aims to increase India’s agricultural export to US$ 60 billion by 2022 and US$ 100 billion in the next few years with a stable trade policy regime. Besides, over the years better farm practises, infrastructure development, innovation and reform measures by the government have helped to enhance agriculture productivity.
The launch of Pradhan Mantri Fasal Bima Yojana in 2016 aim to protect the farmers who tend to suffer the most from the natural calamities like droughts and floods affecting their yield, provide them financial support and offer insurance protection for their losses. Electronic National Agriculture Market (e-NAM) was launched in April 2016 to create a unified national market for agricultural commodities by networking existing Agriculture Produce Marketing Committees (APMCs). The platform had 16.6 million farmers and 131,000 traders registered on its platform until May 2020 according to IBEF. In addition, government also announced 100% FDI in marketing of food products and in food product E-commerce under the automatic route, launched Pradhan Mantri Krishi Sinchai Yojana (PMKSY) with an investment of Rs. 50,000 crore for development of irrigation sources for providing a permanent solution from drought and also Make in India initiative which attempts to nurture agriculture sector and boost famers’ income.