Global Economics

Individual Project
AGRICULTURE AND ALLIED INDUSTRIES
IMPACT ON ECONOMY
Submitted by : ADESH SINGH
Roll No. : 19PGDM004
Section : A

Submitted To : Dr Amiya Mohapatra

 AGRICULTURE AND ALLIED INDUSTRIES

Global standing
 India is the largest producer of spices, pulses, milk, tea, cashew and jute;
and the second largest producer of wheat, rice, fruits and vegetables,
sugarcane, cotton and oilseeds.
 India is currently the world’s fourth largest producer of agrochemicals.
 India has the largest livestock population of around 512 million.
Favourable conditions
 India has the 10th largest arable land resources in the world. With 20
Agri-climatic regions, all 15 major climates in the world exist in India.
The country also possesses 46 of the 60 soil types in the world. Growth in
Gross Value Added (GVA) by agriculture and allied sectors grew at 2
per cent in Q1 2019-20.
 Strategic geographic location and proximity to food importing nations
favour India in terms of exporting processed foods.
Increasing farm mechanisation
 India is one of the largest manufacturers of farm equipment such as
tractors, harvesters and tillers. India accounts for nearly one-third of the
overall tractor production, globally.
Tractor sales in the country are expected to increase 11-13 per cent in FY19,
while the tractor industry is expected grow at 8-10 per cent between FY17-22.
Rising consumption expenditure
 Consumer spending in in India is likely to reach US$ 3.6 trillion by 2020.
 Private final consumption expenditure (at constant prices) increased by
6.1 per cent in 2017-18 and 8.6 per cent in April-June quarter of 2018-19.
Record production of food grains
 During 2017-18 crop year, food grain production is estimated at record
285.01 million tonnes. In 2018-19, Government of India is targeting food
grain production of 283.37million tonnes.

ADVANTAGE IN INDAI
MARKET OVERVIEW- Gross Value Added by Agriculture and Allied sectors (US$
Visakhapatnam port traffic (million tonnes)
billion) at Constant 2011-12 prices
AGRICULTURE
CAGR 3.07%
 Agriculture is the primary
source of livelihood for
about 58 per cent of India’s 300.00
population.
 Gross Value Added by 250.00
agriculture, forestry and
fishing is estimated at Rs 200.00

18.55 trillion (US$ 265.51

billion) in FY2019. 150.00

 Agriculture and allied

100.00
sector’s GVA at constant
2011-12 prices grew a
50.00
CAGR of 3.07 per cent
between FY12-19.
0.00
 As per Union Budget 2019-
20, allocation of Rs
140,763.97 crore (US$ 1.95
trillion) was made for the Ministry of Agriculture.
 Agriculture, Forestry and Fishing’ sector grew by 2.0 percent in Q1 2019-20 as
compared to the growth of 5.1 percent in Q1 2018-19.

MAJOR SEASONS: KHARIF AND RABI

 There are two major agricultural seasons in India: Kharif and Rabi.
 Kharif season lasts from April to September (summer); rice (paddy) is the
season’s main crop.
 Rabi season lasts from October to March (winter); wheat is the season’s main
crop.
 India’s wheat production estimated to 100.0 million metric tons in FY20.
 As of October2018, total area sown with kharif crops in India reached 105.24
million hectares.

INCREASING PRODUCTION

 Since 2010, production as well as yield of both major crops - rice and wheat has
increased significantly. As per fourth advance estimates, production of rice is
 estimated at record 112.76 million tonnes while production of wheat is
estimated at 99.87 million tonnes in 2017-18 crop year.
 India ranks second in global production of fruits and vegetables and is a leading
exporter of mangoes and bananas.
 Production of horticulture crops in India is estimated at record 313.9 million
metric tonne (MMT) in 2018-19*, implying a CAGR of 3.67 per cent between
FY08-19.
 India's wheat production may surpass record 102.20 million tonnes (MT) in 2018-
19 crop year.

GROWTH DRIVERS

GROWING AREA UNDER IRRIGATION

 Gross irrigated area under food grains is estimated to have grown to 68.4 million
hectares in FY2018.
 Of the wide variety of crops in India, rice and wheat are the most irrigated.
 With growing investments in irrigation, the dependence on monsoons has
declined considerably over the years.
 As per Union Budget 2019-20, Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)
will be implemented in the country for which Rs 3,949.93 crore (US$ 565.16
million) has been allocated.
 A long-term irrigation fund has been set up in NABARD. In Union Budget 2017-
18, addition of US$ 3.10 billion to this corpus was announced. Also, a dedicated
micro irrigation fund will be set up in NABARD to achieve the goal , ‘per drop
more crop’. The initial corpus of the fund will be US$ 775.67 million.
 Around 285 new irrigation projects will be undertaken in 2018 to provide
irrigation for 18.8 million hectare of land.

Visakhapatnam
Gross irrigated
port
area
traffic
(million
(million
hectares)
tonnes)

80

70

60

50

40

30

20

10

0
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY18*

INSTITUTIONAL CREDIT AND INVESTMENTS ON A RISE

 Agricultural credit disbursal target of Rs 10 trillion (155.16 billion) was met for
2017-18.
 In FY19, credit of Rs 11.11 trillion (US$ 159 billion) was deployed to agriculture
and allied activities in India.
 Agrifood start-ups in India received funding of US$ 1,66 billion between 2013-17
in 558 deals. In December 2018, Ninjacart received funding of US$ 35 million, making
it the biggest investment round in India’s agritech sector.

RISING INCOME AND GROWING MIDDLE CLASS TO DRIVE

DEMAND FOR PROCESSED FOOD

 Strong growth in per-capita income has resulted in greater demand for food
items
 Per capita GDP of India is expected to reach US$ 3,277 in 2024 from US$ 2,036
in 2018.
 Packaged food industry in India is expected to cross US$ 65 billion by 2020 and
become the third largest market for packaged food.
 Ministry of Food Processing has been allocated Rs 1196.60 crore (US$ 171.21
million) in Union Budget 2019-20.
 There has also been a shift in demand:
• From carbohydrates to meat products (in line with the various phases of
economic growth);
• To convenience foods, and organic and diet foods

COMPETITIVE ADVANTAGE
 India’s comparative advantage lies in its favourable climate, large agriculture
sector and livestock base, long coastline and inland water resources.
 India also has an edge in cost of production compared to its competitors in Asia
and the developed world.
 India’s comparative advantage lies in its favourable climate, large agriculture
sector and livestock base, long coastline and inland water resources.
 India also has an edge in cost of production compared to its competitors in Asia
and the developed world.
FAVOURABLE POLICIES ARE SUPPORTING THE SECTOR
GROWTH
Agriculture Export Policy, 2018
 New export policy cleared by Government of India in December 2018.
 Targets increasing India’s agricultural exports to over US$ 60 billion by 2022.
Pradhan Mantri Kisan Samman Nidhi Yojana (PMKisan)
 Prime Minister of India, launched the Pradhan Mantri Kisan Samman Nidhi
Yojana (PM-Kisan) and transferred Rs 2,021 crore (US$ 284.48 million) to the
bank accounts of more than 10 million beneficiaries on February 24, 2019.
 After the budget announcement of Pradhan Mantri Samman Nidhi Yojna,
eligible farmers will get Rs 6,000 (US$ 0.86 billions) in three instalments.
Pradhan Mantri Krishi Sinchai Yojana (PMKSY)
 The scheme ensures access to the means of irrigation to all agricultural farms in
the country to produce ‘per drop more crop’, thus bringing much desired rural
prosperity
 To increase agricultural production and productivity by increasing availability of
water and its efficient use.
 As per Ministry of Agriculture, during 2019-2020, Rs 1.50 crore (US$ 0.21
million) has been allocated to state of Andaman and Nicobar as a central share
for implementation of per drop more crop component of Pradhan Mantri Krishi
Sinchai Yojana (PMKSY).
Focus on R&D and modernisation
  Moreover, the government plans to launch a programme named as 'SAMPADA'
for food processing sector, with investments worth US$ 892.46 million to
integrate current with new schemes, with an aim to reduce waste and double
farmer's income.
 In September 2017, Nestle started India’s first food safety institute in Manesar.
 In October 2018, a world class food testing lab was announced in the state of
Goa to be set up by the Export Inspection Agency (EIA) and Quality Council of
India (QCI).

Agrarian crisis clear & present danger for

Indian economy

https://www.livemint.com/Money/qTyGharLfpnjuKbQ7SID0I/Agrarian-crisis-clear--
present-danger-for-Indian-economy.html

India’s gross domestic product (GDP) growth for the second quarter (Q2) has laid bare the
deepening distress in its villages. Farm incomes haven’t risen even though the government
has announced a hike in minimum support prices. The country’s agricultural output,
measured as gross value added, grew at a sedate pace of 2.8%, far slower than the 5.3% in
the June quarter. This was on top of a low base of 2.6% growth last year.
Economists said that the GDP deflator for agriculture is negative for the first time in many
years. In other words, farmers are earning less than what they were before. Indeed, if the
recent marches to New Delhi by thousands of farmers are any indication, the farm sector
has already sent up emergency flares.
For a government that will face the litmus test of its policies through a national election
within six months, the farm sector’s woes are unsettling. Although agriculture contributes
less than one-third of the output of the entire economy, rural centres are key demand
areas. Consumption demand from the rural economy also needs to hold up for the overall
growth rate to remain above 7%.
An extension of the troubles of the Indian economy has also been visible on the expenditure
side. Private final consumption expenditure grew by 7%, which was lower than the 8.6% in
the previous quarter. Consumption has been the strongest engine of growth and, incipient
signs of a slowdown that was followed by distress in the financial sector, will hurt the
economy.
Source:
https://www.livemint.com/Money/qTyGharLfpnjuKbQ7SID0I/Agrarian-crisis-clear--present-danger-
for-Indian-economy.html
India economic survey 2018: The Economic Survey 2017-18, which was released in
Parliament on Monday ahead of the Union Budget 2018, which is to be presented by
Finance Minister Arun Jaitley on February 1, had key implications for agriculture sector, a
space which employs more than 50 per cent of the total workforce in India and contributes
around 17-18 percent to the country’s GDP. Taking note of the condition of farmers in India,
Chief Economic Advisor Arvind Subramanian said ,”At present, Indian farmers are
adapting farm mechanization at a faster rate in comparison to recent past.

Objectives of the Study

1. To current Status.
2. Impact on the Economy

Conclusion
Change is happening in rural India but it has still a long way to go
Agriculture has benefited from improved farming techniques but the growth is not
equitable
Land use is changing in rural areas as farmers are getting good value for their holdings. The
effort should be to stop the migration to urban areas
Wholesale prices are primarily used to monitor the weekly price movements.
The number of essential commodities should be reduced to an absolute minimum,
especially the non-food crops.