Agriculture – Characteristics of Indian agriculture

Agriculture in India plays a pivotal role in providing livelihood, ensuring food security, reducing poverty and sustaining growth.

Overview of agriculture sector in India

  • Agriculture & GVA: India is witnessing a general decline in share of agriculture in Gross Value Added (GVA). However, growth rate of agriculture & allied sectors have been fluctuating at 1.5% in 2012-13 to (-)0.2% in 2014-15 to 4.9% in 2016-17 primarily due to fact that more than 50% of agriculture in India is rainfall dependent and private investment has declined.


  • Crop Production: There is an overall increase in food production on account of good rainfall during 2016-17 and policy initiatives taken by government.



  • Structural changes in sector: A gradual shift can be seen in Indian Agriculture sector, where the share of livestock in GVA has increased and share of Crop sector has declined.This also coincided with the change in sources of income of farm households.


  • Feminisation of Agriculture: Role of women as cultivators, entrepreneurs, and labourers has increased with growing rural to urban migration by men. According to Census 2011, out of total female main workers, 55% were agricultural labourers and 24% were cultivators. However, there is a gender disparity in ownership of landholding in agriculture (only 12.8% owned by women) along with concentration of operational holdings (25.7 per cent) by women in the marginal and small holdings categories.



  • Cropping pattern: India has highest net cropland area (NCA) with 179.8 Mha (9.6% of global NCA). However, according to Index of Crop Diversification, there is a declining inter-temporal behavior in crop diversification among most of States (exception being Himachal Pradesh & Jharkhand). This monoculture practices has been the reason for declining productivity, lower response to fertilizer, degradation of soil health and declining profitability of cultivation.

Input Management in Agriculture:

  • A sustainable use of inputs like irrigation, seeds, fertilizer, credit, machines, extension services etc. helps in improving the productivity without losing soil fertility and causing environmental damages. However, lack of educational level of farmers had impacted their capacity to adopt and inculcate new methods of cultivation and input management.

Irrigation: Only 34.5% of total cropped area is irrigated in India. To improve irrigation facility Pradhan Mantri Krishi Sinchayee Yojana was launched by government.

Agriculture Mechanization: As 50% of Indian population would be urban by the year 2050 (World Bank), It is estimated that percentage of agricultural workers of total work force would drop to 25.7% by 2050 from 58.2% in 2001. Thus, there is a need to cater the increasing food security need by enhancing the level of farm mechanization in the country which has the potential to increase productivity up to 30% and reduce the cost of cultivation up to 20%.


Crop Insurance and crop loss:

  • According to the NSSO Report (July 2012 – June 2013), very small share of agricultural households engaged in crop production activities was insuring their crops. Government initiated PMFBY which provides comprehensive coverage of risks from pre-sowing to post harvest against natural nonpreventable risks.

Agriculture credit and marketing Initiatives

  • Credit is a critical input in achieving high productivity and overall production in the agricultural sector. Institutional Credit helps in delinking the farmers from noninstitutional sources of credit, and increases financial inclusion.
  • Marketing reform has been undertaken to benefit farmers from remunerative prices for their produce in the market like electronic National Agriculture Market (e-NAM).

 Agriculture Research and Development

  • It is the main source of innovation, which is needed to sustain agricultural productivity growth in the long-term.
  • There has been an increasing allocation for it which is manifested in development of a total 209 new varieties/hybrids for Cereals, Pulses, Oilseeds, Commercial and Forage crops, tolerant to various biotic and abiotic stresses with enhanced quality.




  • It replaced all other existing insurance schemes except the Restructured Weather-Based Crop Insurance Scheme (uses weather parameters as proxy for crop yield in compensating the cultivators for deemed crop loses)
  • A uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops.
  • In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%.
  • There is no upper limit on Government subsidy so farmers will get claim against full sum insured without any reduction.
  • The difference between the premium paid by farmers and the actuarial premium charged was paid by the Centre and state government in the ratio of 50:50.
  • It is compulsory for loanee farmers availing crop loans for notified crops in notified areas and voluntary for nonloanee farmers.
  • Yield Losses: due to non-preventable risks, such as Natural Fire and Lightning, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado. Risks due to Flood, Inundation and Landslide, Drought, Dry spells, Pests/ Diseases also will be covered.
  • Post-harvest losses are also covered.
  • Mandatory use of technology: Smart phones, drones etc., will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. Remote sensing will be used to reduce the number of crop cutting experiments.



  • Decentralized State level planning and projectised execution’ structure, in order to allow States to draw up a District Irrigation Plan (DIP) and a State Irrigation Plan (SIP). These plans need to be prepared in order to access PMKSY fund.


  • It will be supervised and monitored by Inter-Ministerial National Steering Committee (NSC) under PM with Union Ministers of all concerned Ministries. A National Executive Committee (NEC) is to be constituted under the Chairmanship of the Vice Chairman, NITI Aayog to oversee programme implementation.
  • PMKSY has been formulated amalgamating ongoing schemes viz. Accelerated Irrigation Benefit Programme (AIBP); Integrated Watershed Management Programme (IWMP); and On Farm Water Management (OFWM) component of National Mission on Sustainable Agriculture (NMSA).


  • Water budgeting is done for all sectors namely, household, agriculture and industries.
  • Investments will happen at farm level. So, farmers know what is happening and can provide valuable feedback.
  • Recently, Long Term Irrigation Fund has been instituted under PMKSY in NABARD for funding and fast tracking the implementation of incomplete major and medium irrigation projects.


  • India is the fifth largest seed market across the globe.
  • It is expected to grow at more than 15% during 2017–2022, and can reach a value of more than US$ 7 Billion by 2022.
  • The seed market is majorly contributed by non-vegetable seeds such as corn, cotton, paddy, wheat, sorghum, sunflower and millets.
  • Direct contribution of quality seed to the total production can be raised up to 45% with efficient management of other inputs.

Silk industry (Sericulture) in India

  • India is the second largest producer of silk in the world. It provides employment to over 8.25million people in the country.
  • There are four major types of silk produced in India: Mulberry, Tasar, Muga, Eri of which Mulberry accounts for 70% of total raw silk production.
  • India currently produces all four variety of silk – mulberry, eri, muga and tassar. The silk production is mostly prevalent in Karnataka, Assam, West Bengal, Tamil Nadu, Andhra Pradesh and Jammu and Kashmir.
  • Major Export destination of Indian Silk exports are USA and UAE followed by UK, France, Italy and Germany. Mostly natural silk yarns, fabrics, made-ups, readymade garments, silk carpets and silk waste are exported.
  • For growth and development of the silk industry Indian Silk Export Promotion Council has also been set up. It organises trade shows and fairs across the world to promote trade with different countries. The council also facilitates meetings between exporters and potential customers.
  • India’s north eastern region has the unique distinction of producing all these commercial varieties of silk contributes about 21% of the total silk production in the country

Sugar Industry in India

  • The money would be credited directly into the bank accounts of farmers, who haven’t received the “fair and remunerative price” (FRP) for sugarcane fixed by the Centre.
  • The Centre’s Sugarcane (Control) Order mandates mills to pay the FRP within 14 days of cane purchase from farmers, failing which 15% annual interest is charged on the due amount for the period of delay. Considering the large cane price arrear dues to farmers the mills say they cannot pay farmers beyond 75% of their realisations from sugar and thus the amount sanctioned by government is grossly inadequate.
  • The populist increases in SAP recent years has resulted in excessive production of sugarcane, estimated at 295.07 lakh tone thus triggering a glut of supply of sugar which reached an all-time high of 29.98 million tonne.
  • Further considering the high cost of production of sugar (partly due to high cane prices in India) in other countries the export prices of sugar are much lower than from domestic sales.

Role of agriculture in Indian economic development-interrelationship between agriculture, industry and service sectors

Role of agriculture in Indian economic development

Contribution to National Income

From the very beginning, agriculture is contributing a major portion to our national income. In 1950-51, agriculture and allied activities contributed about 59 per cent of the total national income. Although the share of agriculture has been declining gradually with the growth of other sectors but the share still remained very high as compared to that of the developed countries of the world. For example, the share of agriculture has declined to 54 per cent in 1960-61, 48 per cent in 1970-71, 40 per cent in 1980-81 and then to 18.0 per cent in 2008-09, whereas in U.K. and U.S.A. agriculture contributes only 3 per cent to the national income of these countries.

Source of Livelihood

In India 50% of our working population are engaged directly on agriculture and also similarly depend for their livelihood. According to an estimate, about 66 per cent of our working population is engaged in agriculture at present in comparison to that of 2 to 3 per cent in U.K. and U.S.A., 6 per cent in France and 7 per cent in Australia. Thus the employment pattern of our country is very much common to other under-developed countries of the world.

Source of Food Supply

Agriculture is the only major source of food supply as it is providing regular supply of food to such a huge size of population of our country. It has been estimated that about 60 per cent of household consumption is met by agricultural products.

Role of Agriculture for Industrial Development

Agriculture in India has been the major source of supply of raw materials to various important industries of our country. Cotton and jute textiles, sugar, vanaspati, edible oil plantation industries (viz. tea, coffee, rubber) and agro-based cottage industries are also regularly collecting their raw materials directly from agriculture.  About 50 per cent of income generated in the manufacturing sector comes from all these agro-based industries in India. Moreover, agriculture can provide a market for industrial products as increase in the level of agricultural income may lead to expansion of market for industrial products.

Commercial Importance

Indian Agriculture is playing a very important role both in the internal and external trade of the country. Agricultural products like tea, coffee, sugar, tobacco, spices, cashew-nuts etc. are the main items of our exports and constitute about 50 per cent of our total exports. Besides manufactured jute, cotton textiles and sugar also contribute another 20 per cent of the total exports of the country. Thus nearly 70 per cent of India’s exports are originated from agricultural sector. Further, agriculture is helping the country in earning precious foreign exchange to meet the required import bill of the country.

Role of Agriculture in Economic Planning

The prospect of planning in India also depends much on agricultural sector. A good crop always provides impetus towards a planned economic development of the country by creating a better business climate for the transport system, manufacturing industries, internal trade etc.  A good crop also brings a good amount of finance to the Government for meeting its planned expenditure. Similarly, a bad crop lead to a total depression in business of the country, which ultimately lead to a failure of economic planning. Thus the agricultural sector is playing a very important role in a country like India and the prosperity of the Indian economy still largely depends on agricultural sector. Thus from the foregoing analysis it is observed that agricultural development is the basic precondition of sectoral diversification and development of the economy.

Source of Government Revenue

Agriculture is one of the major sources of revenue to both the Central and State Governments of the country. The Government is getting a substantial income from rising land revenue. Some other sectors like railway, roadways are also deriving a good part of their income from the movement of agricultural goods.

Interrelationship between agriculture, industry and service sectors

Industry is not the substitute of agriculture, rather they are complementary to one another. Both these sectors are so attached with each other that it is not possible to increase the growth of one sector sector without the improvement of the other sector. If agriculture is considered as the ‘heart’ of the country, then obviously industry must be consider as the ‘brain’.

Impact of Agriculture on Industry

  • It regularly supplies raw materials like sugarcane , jute cotton, oilseeds, tea, spices, wheat; paddy etc. to the consumer goods industries.
  • It supplies cereals, vegetables and other food items to the industrial labourer and fodders for the domestic animals in the dairy industries on a regular basis.
  • Farmer-households used to save their money in the bank and other financial institutions which ultimately is used by the industry owners in the form of investment.
  • Both for consumer and capital goods Industries agriculture sector gives a ready market for the finished products.

Impact of Industry on Agriculture

  • It regularly supplies scientific tools and equipment’s like tractors, harvesters, pump-sets chemical fertilizers etc. to agriculture increase the per hectare production.
  • To increase the market for finished agricultural goods some infrastructural development like roads, railway, storage etc. are very essential. In this connection industry plays a vital role.
  • Industries provide huge employment opportunities and therefore help to absorb all the surplus labour in our agriculture. This lea to more industrial development.
  • Agricultural sector itself is a huge market for the different finished products of Industries. Farmers buy several industrial products like bi-cycle, torch, radio etc. All these flourishment of industries.



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