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AGRICULTURE
Indian Agriculture: Current Status [Economic Survey 2022-23)
With its solid forward linkages, the agriculture and allied activities sector significantly
contributed to the country's overall growth and development by ensuring food security.
Growth
• The Indian agriculture sector has been growing at an average annual growth rate
of 4.6 per cent during the last six years.
• It grew by 3.0 per cent in 2021-22 compared to 3.3 per cent in 2020-21.
Figure VIII.1: Despite Covid-19 shock agriculture and allied sector shows resilient growth
8.0 6.8

6.0

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21
4.0 3.0

i 2.0
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2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021~
-2.0

Source: MoSPI's Annual and Qua11erly Estimates of GDP at constant plices. 2011-12 selies.

Agricultural Exports
In recent years, India has also rapidly emerged as the net exporter of agricultural
products.
In 2020-21, exports of agriculture and allied products from India grew by 18 per cent
over the previous year.
During 2021-22, agricultural exports reached an all-time high of US$ 50.2 billion.
Reasons behind this period of buoyant performance
Measures taken by the Government to promote farmer-producer organisations,
encourage crop diversification, and improve productivity in agriculture through support
provided for mechanisation and the creation of the Agriculture Infrastructure Fund.
Thus, enabling the country, in the spirit ofVasudhaiva Kutumbakam, to provide
necessary and essential support to other countries for the losses faced during Covid-19.
Further, income support to farmers through the Pradhan Mantri Kisan Samman Nidhi
(PM-KISAN) and the promotion of allied activities has led to diversification in sources of
farmers' income, improving their resilience to weather shocks.
The interventions of the Government have been in line with the recommendations of the
Committee on Doubling Farmers' Income, which had identified improvement in crop and
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livestock productivity, diversification towards higher value crops, better resource
efficiency, enhanced cropping intensity, improvement in real prices received by farmers
and shift from farm to nonfarm occupations as being significant sources of growth.
Several policy measures, such as the Minimum Support Price (MSP) to secure the price
at one and half times the all-India weighted average cost of production, schemes and
price measures to focus on high-value added crops such as oilseed, incentives for crop
diversification through price policy measures, improvements in agricultural marketing
and by enhancing resource use efficiency etc. have been adopted.
While Indian agriculture has performed well, the sector needs re-orientation in the
backdrop of certain challenges like adverse impacts of climate change, fragmented
landholdings, sub-optimal farm mechanisation, low productivity, disguised
unemployment, rising input costs, etc.

MSP: Basics
Minimum Support Price (MSP) in Indian Agriculture: Minimum Support Price (MSP)
in Indian agriculture is a crucial concept that serves as a safety net for farmers,
protecting them from market uncertainties. The MSP is the minimum price set by the
government for specific agricultural products, ensuring that farmers receive a fair price
for their produce. Here are key points to understand about MSP:
• Purpose: MSP aims to safeguard farmers from sharp declines in market prices and
prevent losses by ensuring a minimum price for their goods.
• Government Intervention: When market prices fall below the MSP, the
government steps in to purchase the entire quantity from farmers at the MSP.
• Setting MSP: The government sets MSP twice a year for 24 commodities based on
recommendations from the Commission for Agricultural Costs and Prices (CACP).
• Factors Considered: The CACP considers various factors like cost of production,
changes in input prices, demand and supply, and international price situations
when determining MSP.
• Benefits: MSP encourages farmers to adopt improved farming methods and
supports the public distribution system by procuring food grains for distribution.
• Challenges: Despite its benefits, challenges exist such as limited procurement
beyond rice and wheat, reliance on middlemen, and the need for reforms to
strengthen MSP and procurement processes.
• Reforms Needed: Reforms are necessary to enhance MSP efficiency, reduce
government burden, strengthen procurement mechanisms, and empower farmers
with legal rights to demand MSP.
• Future Outlook: Moving forward, MSP should not only act as a safety net but also
incentivize farmers to grow crops essential for nutritional security. Balancing MSP
with other agricultural policies and local market forces is crucial for sustainable
agricultural development in India.
The concept of Minimum Support Price plays a vital role in ensuring fair returns for
farmers and supporting India's agricultural landscape.
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CALCULATION
The Minimum Support Price (MSP) in Indian agriculture is determined by considering
various factors to ensure fair returns for farmers. Here is how MSP is calculated:
• Calculation Process: The MSP is calculated by the Commission for Agricultural
Costs and Prices (CACP) based on the cost of production, market trends, demand-
supply dynamics, and other relevant factors.
• Cost Components: The CACP considers three types of production costs: A2,
A2+FL, and C2. A2 covers direct costs like seeds, fertilizers, labor, etc. A2+FL
includes actual costs and the value of family labor. C2 is a comprehensive cost
that includes A2+ FL along with fixed capital assets and rent paid by farmers.
• Recommendations: After calculating these costs, the CACP recommends the MSP
to the government. The Cabinet Committee on Economic Affairs (CCEA), chaired
by the Prime Minister, makes the final decision on MSP levels.
• Objective: MSP aims to provide income security to farmers, stabilize prices,
encourage production, and ensure food security by procuring food grains for
public distribution.
Current Issue
The MSP plays a crucial role in protecting farmers from market uncertainties and
ensuring a minimum income for their produce.
• The primary demand in the farmers' 12-point agenda is for legislation ensuring
Minimum Support Price (MSP) for all crops, based on the recommendations of
the Dr M S Swaminathan Commission's report.
• The Swaminathan Commission Report advocates increasing MSP to at least 50%
more than the weighted average cost of production, known as the C2+ 50%
formula.
• This formula considers the imputed cost of capital and land rent (referred to as
'C2') to guarantee farmers a 50% profit margin.
• Imputed cost accounts for the opportunity cost of using resources such as land,
labor, and capital.
• The imputed cost of capital reflects the interest or returns that could have been
earned if the capital invested in farming were utilized elsewhere.

The Indian Economy - A Review I Agricultural sector [2024]

• Estimated to constitute 18% of India's Gross Value Added (GVA) in FY24
• Bedrock of the nation's economy
• Despite challenges from global health crisis and climate variability, sector
demonstrates resilience
• Significant contribution to India's economic recovery and development
• Growth:
o Higher average annual rate of 3.7% from FY15 to FY23
o Compared to 3.4% from FYOS to FY14
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• FY23 growth: 4.0% compared to previous year.

Status
• Total food grains production for FY23: 329.7 million tonnes
o Rise of 14.1 million tonnes compared to previous year
• Average food grain production per year:
o FY15 to FY23: 289 million tonnes
o FY0S to FY14: 233 million tonnes
• Record increases in production of:
o Rice, wheat, pulses, Nutri/ coarse cereals, and oilseeds
• India's global dominance in agricultural commodities:
o Largest producer of milk, pulses, and spices worldwide
o Second-largest producer of fruits, vegetables, tea, farmed fish, sugarcane,
wheat, rice, cotton, and sugar
• Substantial surge in agriculture exports in FY23:
o Reached t4.2 lakh crore
o Surpassed previous year's records
• India's farmers demonstrate capability to meet global food demand with
opportunities and appropriate policy setting.

Policies
Minimum Support Price
• Consistent increase in Minimum Support Prices (MSPs) for 22 Kharif and Rabi
crops
o Since agricultural year 2018-19
o Ensures minimum 50% margin over all-India weighted average cost of
production for each crop covered under MSP
• Price support aims to:
o Reduce import dependence
o Foster diversification towards pulses, oil, and commercial crops
• Highest increase in MSP approved for:
o Lentil (masur): N25 per quintal
o Rapeseed and mustard: ~200 per quintal in 2023-24.

Policy initiatives providing financial and income support to farmers:

• PM-KISAN:
o Launched in 2019
o Supplements financial needs of landholding farmers
o Transfers t6,000 per year in three equal four-monthly installments
o Over t2.8 lakh crore transferred to more than 11 crore beneficiaries as of
December 12, 2023
• PM-KMY:
o Provides pension benefits to 23 .4 lakh small and marginal farmers enrolled
• PMFBY:
o Offers simple and affordable crop insurance against non-preventable natural
causes
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o 55. 5 crore farmer applications insured since 2016-17
o n .5 lakh crore paid as claims.
Promotion of digital inclusion and mechanization for productivity in
agriculture sector
• Launch of e-NAM (National Agriculture Market) platform in 2016:
o Facilitates integration of Agriculture Produce Marketing Committees (APMC)
mandis
o Provides benefits to farmers, farmer-producer organisations (FPOs), buyers,
and traders
• Number of markets linked toe-NAM platform:
o Increased from 250 in 2016 to 1,389 in 2023
• Facilitates online trading of 209 agriculture and horticulture commodities
• Over 1.8 crore farmers and 2.5 lakh traders registered on the platform
• Promotes market opportunities through transparent price discovery system and
online payment facility
• Value of trade on platform:
o Increased from W.3 lakh crore in August 2017 to over ~3 lakh crore in
November 2023.
Govemment's Push for Technology Adoption
• Government's efforts to make drone technology affordable to farmers:
o Financial assistance at 100% of drone cost and contingent expenditure for
demonstrations on farmers' fields.
• Strengthening cooperative movement:
o Computerizing Primary Agricultural Credit Societies (PACS).
o Linkage of 62,318 functional PACS with NABARD through a single National
Software Network.
• Agristack:
o Federated architecture for effective planning, monitoring, policy-making,
strategy formulation, and implementation of schemes.
• Contributions:
o Enhancing farmers' access to quality inputs, timely information, credit,
insurance, and market opportunities.
o Lower costs and higher convenience for farmers.
Enhancement in post-harvest infrastructure investment:
o Agriculture Infrastructure Fund (AIF)
o Pradhan Mantri Kisan Sampada Yojana (PMKSY)
Adoption of sustainable agriculture practices:
o Per Drop More Crop Component of Pradhan Mantri Krishi Sinchayi Yojana
(PMKSY-PDMC)
o Promotion of Natural Farming
o Aim: Transforming agriculture to make it more resilient.

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• Timely and efficient procurement and distribution of food grains:
• Over 830 Lakh Metric Tons (LMT) of paddy procured for Central Pool up
to June 19, 2023, under MSP operations.
• Ongoing paddy procurement operations for Kharif Marketing Season of
2022-23 benefit over 1.2 crore farmers.
• MSP outflow of H.7 lakh crore directly transferred into their accounts.
• Wheat procurement in current season, up to June 19, 2023, surpassed last
year's total procurement by 74 LMT, reaching 262 LMT.
• Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) scheme:
• Introduced in 2018 to ensure remunerative prices to farmers for their
produce.
• Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY):

• Launched during Covid-19 outbreak to provide free food grains to about

81.4 crore beneficiaries (Antyodaya Anna Yojana households and Priority
Households beneficiaries).
• Extended for five years starting from January 1, 2024.
Conclusion
Continuous innovation in farming practices, crop variety improvements, and technology
adoption essential to meet growing demands for diversified and nutritious food.
Policy consistency and continuity necessary to:
• Expand market and production choices for farmers
• Consider larger environmental and ecological considerations
• Ensure availability and demand of natural resources in the country.
• Encourage farmers to adopt new technologies and practices.