Two consecutive droughts in 2014 and 2015 have re-emphasized the risks of monsoon-

dependent agriculture in India, bringing into focus the discourse on the crisis in Indian
agriculture, observed since the early 1990s. Two symptoms of this crisis are non-serviceable
debt and increasing incidence of farmers’ suicides. These symptoms point out the adverse
implications on the livelihood of people dependent on agriculture—the agrarian crisis. The
crisis is also associated with stagnation in the growth of production and productivity—the
agricultural crisis. The latter is intertwined with the former. There seems to have been some
revival in agricultural growth in the recent past, which we elaborate on in the next section in
our analysis of Indian agriculture’s performance. While appreciating this turnaround and
hoping that it should continue, one does agree that it faces important policy challenges. What
is more, despite these improvements, the incidences of farmers’ suicides continue to remain a
matter of concern and it is premature to visualize a positive outcome in the livelihood of
those dependent on agriculture. A true measure of success should be the implications on
smallholders who constitute more than four-fifths of the cultivating households. To address
these, as the last section of the chapter suggests, it is particularly important to leverage new
technologies, build institutions, and emphasize on low external input sustainable agriculture
(LEISA) so as to help improve incomes and reduce risks without compromising on yield.

Performance of Indian Agriculture

Recent discourses have pointed out relatively lower growth in agriculture post the 1990s than
prior to that (Desai et al. 2011; Dev and Pandey 2012; Mishra 2012; and Mishra and Reddy
2011, among others). Some of them do point to a reversal after 2004/5. Keeping this is mind,
this chapter proposes to calculate growth rates by using triennium ending (TE) time series
data, a standard practice to smoothen out fluctuations in agricultural production, to separate
the experiences of the recent years (TE 2004/5 to TE 2010/11) with that of the immediate
post-reforms period (TE 1993/4 to TE 2004/5) while contrasting the experience of the latter
with the pre-reforms period (TE 1981/2 to TE 1993/4). The choice of TE 1981/2 as a start
year is a standard practice in the analysis of Indian agriculture; the years TE 1993/4 and TE
2004/5 have been chosen as one observed some changes in broad trends around these years.
Our calculations are based on a double-kinked exponential curve following Boyce (1986).1

Growth in Agricultural Gross Domestic Product

An analysis of agricultural gross domestic product (GDP) shows a significant decline in the
growth rate of agriculture and allied sector GDP from 3.29 per cent in the pre-reforms period
to 2.72 per cent in the immediate post-reforms period—a matter of concern because the
overall economy was going very strong during this period. Thus, the measures taken under
the rubric of economic reforms during 1991/2 were not of much help to agriculture (Bhalla
2002; Kumar 2002; Chand 2004). However, the agriculture sector, specifically the crop and
livestock sub-sector, showed some signs of revival during 2004/5 to 2010/11 (Table 11.1A).
Agricultural GDP from crop and livestock improved to 3.08 per cent in TE 2004/5–2010/11
from 2.68 per cent during TE 1993/4–2004/5, but the improvement in growth rate was not
statistically significant.

Table 11.1AOpen in new tab Growth rate of agricultural gross domestic product
Items TE 1981/2–1993/4 TE 1993/4–2004/5 TE 2004/5–2010/11
Agriculture and allied sectors

3.29**

2.72**†
2.95**

Agriculture (crop and livestock)

3.36**

2.68**†

3.08**

Forestry sector

0.06**

1.72**†

1.93**†

Fishing and aquaculture

6.29**

4.27**†

3.54**†

Source: CSO (2012a & b).

**
Notes: indicates significant at 1 per cent level (or 99 per cent confidence interval),

†
indicates significantly different from the first period at 95 per cent confidence interval. TE is
triennium ending. Growth rates have been computed using double-kinked exponential curve.
All data are at 2004/5 prices.

This growth could be attributed to different initiatives taken by the government since late
2005, due to which the ratio of gross fixed capital formation in agriculture to agricultural
GDP improved from 13 per cent in 2004/5 to 20 per cent in 2010/11 (Ministry of Agriculture
[hereafter MoA] 2012). Total investments, especially public investments, firmed up (Table
11.2) and public expenditure in agricultural research and extension was boosted (Table 11.3).
However, it may be noted that public investment in agriculture mostly relates to medium and
major irrigation projects where substantial resources are put without much critical scrutiny
(Government of India 2011; Vaidyanathan 2010). There is also a lag effect of public
investments in agriculture growth. Therefore, impacts from these will be felt more in the long
run and will depend on the nature and composition of the investment. Besides, since the mid-
2000s, private investments by individual farmers as well as by other entities that develop
infrastructure from an agri-business perspective have increased significantly, which can also
have positive implications.2 It may also be noted that the private sector’s share in the total
agricultural investment is 70 to 75 per cent (MoA 2012). There is a complementarity between
public and private investments. The terms of trade for agriculture, based on GDP-implicit
price deflators, seem to have improved considerably during the recent period; they increased
from 100 in 2004/5 to 126 in 2009/10 (Dev and Pandey 2012).

Table 11.2Open in new tab Investment in agriculture

Items TE 1981/2–1993/4 TE 1993/4–2004/5 TE 2004/5–2010/11
Investment, agriculture

2.23**

6.43**†

8.52**†

Public investment, agriculture

–4.46**

2.25**†

12.50**†‡

Source: CSO (2012a & b).

**
Notes: indicates significant at 1 per cent level (or 99 per cent confidence interval),

†
indicates significantly different from the first period at 95 per cent confidence interval,

‡
indicates significantly different from the second period at 95 per cent confidence interval. TE
is triennium ending. Growth rates have been computed using double-kinked exponential
curve. All data are at 2004/5 prices.

Table 11.3Open in new tab Growth of real government expenditure on agricultural research,
education, and extension in India (2004/5 prices)
Items TE 1981/2–1992/3 TE 1993/4–2004/5 TE 2005/6–2009/10
Research and education

4.25

6.28

9.00

Extension

6.15

0.93
5.14

Total

4.68

5.14

9.75

Source: CSO (2012a & b).

Note: The estimates for this have been provided by Suresh Pal and Alka Singh from the
Indian Agricultural Research Institute, New Delhi, through a personal communication.

A closer look at the annual growth rates from 2011/12 to 2017/18 demonstrates much
volatility in agriculture and allied sectors, mostly owing to the crop sub-sector. In 2012/13,
agriculture and allied sectors had a year-over-year growth rate of 1.5 per cent that jumped to
5.6 per cent in 2013/14. But over the two subsequent years, growth rates were quite
disappointing (–0.2 per cent and 0.7 per cent in 2014/15 and 2015/16 respectively). The
annual growth of agriculture and allied sectors picked up in the year 2016–17 with a 4.9 per
cent growth rate. The annual growth rate of the crop sub-sector was 5.4 per cent in 2013/14
but dipped to –3.8 per cent in 2014/15 and to –2.2 per cent in 2015/16, perhaps due to the
drought in the year 2014 and 2015 (Table 11.1B).

Table 11.1BOpen in new tab Year over year growth rates of gross value added by agriculture
at constant 2011/12 prices
Items 2012/13 2013/14 2014/15 2015/16 2016/17# 2017/18*
Agriculture and allied sectors

1.5

5.6

–0.2

0.7

4.9

2.1

Crop

0.2

5.4

–3.8

–2.2
–

Livestock

5.2

5.6

7.4

6.5

Forestry and logging

0.2

5.9

2.6

1.7

Fishing and aquaculture

4.9

7.2

7.5

6.7

Source: CSO (2017) and CSO press note on First Advance Estimates of National Income
2017–18. Available at:
http://www.mospi.gov.in/sites/default/files/press_release/PRESS_NOTE-Q3_2017-18.pdf.
Last accessed on 11 June 2019.
Notes: Provisional estimates;

First advance estimate.

The forestry sector has shown a gradual improvement in the growth rate, whereas the fishing
and aquaculture sector has registered a gradual decline over the three periods (Table 11.1A).
However, in the recent years, year-over-year growth rates have shown noteworthy
improvement in the fishing and aquaculture sector (Table 11.1B). Now, we take up a crop-
wise analysis of growth in value of output and also in area, production, and yield.

Crop-wise Analysis
The performance of different segments of agriculture show that growth rates in the value of
output of crops and livestock declined in the immediate post-reforms period (Table 11.4). But
the growth rates were relatively higher in more recent years. Growth rates for most of the
individual crops except for fruits and vegetables are similar. They declined in the immediate
post-reforms period as compared to the pre-reforms period and are showing improvements in
the recent years. During the recent period of TE 2004/5 to 2010/11, a significantly higher
growth was observed for cotton, maize, pulses, and oilseeds. Cereals also registered some
improvement over the post-reforms period growth rates.3 The significantly higher growth of
cotton coincides with the introduction of Bacillus thuringiensis (Bt) cotton towards the end of
our second period and its spread in usage during the same period is worth noticing. However,
one should be cautious in attributing reasons for this entirely to the introduction of this
genetic modification because of the absence of appropriate counterfactuals that separate out
the impacts on account of new hybrid varieties and the lower incidence of specific pest
attacks (see Gaurav and Mishra 2015a).

Table 11.4Open in new tab Value of output from different crops and livestock
Items TE 1981/2–1993/4 TE 1993/4–2004/5 TE 2004/5–2010/11
Crops

2.74*

2.32*

2.68*

Cereals

3.28*

0.98*†

1.90*†

Paddy

3.77*
0.80*†

1.71*†

Wheat

4.02*

1.67*†

1.75*†

Maize

2.49*

3.31*

5.98*†‡

Pulses

1.53*

–0.03†

2.48*†‡

Oilseeds

6.07*

0.46†

4.79*†

Sugarcane

3.52*

1.70*

1.83§

Cotton

4.08*

1.02†
13.69*†‡

Fruits and vegetables

2.84*

4.79*†

2.88*†

Livestock

4.42*

3.39*

4.11*

Milk group

4.96*

3.73*†

3.45*†

Meat group

5.15*

2.92*†

5.50*†

Eggs

6.25*

3.61*†

6.48*†

Source: CSO (2012a & b).

*
Notes: indicates significant at 5 per cent,

§
indicates significant at 15 per cent,
†
indicates significantly different from the first period at 95 per cent confidence interval,

‡
indicates significantly different from the second period at 95 per cent confidence interval. TE
is triennium ending. Growth rates have been computed using double-kinked exponential
curve. All data are at 2004/5 prices.

Indian agriculture has been witnessing diversification over time. Though the growth rate for
value of output from fruits and vegetables has declined in the recent years (Table 11.4), its
share in total value of output has increased from 19 per cent in 1981/2 to 27 per cent in
2010/11, whereas the share of cereals has declined from 34 per cent to 29 per cent in the
same period (Central Statistical Organisation [hereafter CSO] 2012). Change in cropping
pattern is also evident. There has been a decline in the area under other cereals and a decline
in the growth rate of areas for rice and sugarcane. However, the area under pulses and
oilseeds that had declined in the post-reforms period has revived in the recent years and there
has been significant improvement in its growth rate too (Table 11.5). The increase in the
production of other cereals is attributable to yield growth only. In case of pulses, oilseeds,
and cotton, both area and yield growth are responsible for increase in the growth rate of
production in recent years. These improvements can be attributed to various initiatives
including the National Food Security Mission (NFSM) launched in the year 2007/8, a
favourable monsoon in almost all the years except for 2009/10, and a price or terms of trade
that favoured agriculture. It would be worthwhile to take up an analysis across states.

Table 11.5Open in new tab Growth in area, production, and yield

Items Area Production Yield
TE 1981/2–1993/4 TE 1993/4–2004/5 TE 2004/5–2010/11 TE 1981/2–1993/4 TE 1993/4–
2004/5 TE 2004/5–2010/11 TE 1981/2–1993/4 TE 1993/4–2004/5 TE 2004/5–2010/11
Food Grains

–0.27*

–0.27*†

0.46*†‡

3.05*

1.00*

2.18*

3.31*

1.27*

1.72*

Rice
0.65*

0.18§†

0.02

3.79*

0.92*†

1.87*†

3.15*

0.73*†

1.88*†‡

Wheat

0.76*

0.72*

0.95*

4.04*

1.67*†

1.75*†

3.28*

0.95*†

0.80*†

Other Cereals

–2.05*

–1.55*

–0.28†‡

0.52*

0.31
3.60*†‡

2.57*

1.84*

3.93*†

Total Pulses

–0.13

–0.45*

1.50*†‡

1.51*

–0.40§†

3.04*†

1.64*

0.03†

1.58*†

Oilseeds

3.16*

–0.46†

1.72*†

5.83*

0.57†

4.93*†

2.69*

1.01†

3.25*†

Cotton
1.09*

0.61*

3.98*†‡

3.67*

2.84*

14.27*†‡

2.59*

2.22*

10.24*†‡

Sugarcane

2.17*

1.39*

1.31*

4.01*

1.15*†

1.79*

1.84*

–0.26†

0.48*†

Source: Ministry of Agriculture (2012).

Notes: ** indicates significant at 1 per cent level (or 99 per cent confidence interval),

indicates significant at 5 per cent,

§
indicates significant at 15 per cent,

†
indicates significantly different from the first period at 95 per cent confidence interval,
‡
indicates significantly different from the second period at 95 per cent confidence interval. TE
is triennium ending. Growth rates have been computed using double-kinked exponential
curve.

Analysis Across States

An analysis of the agricultural gross state domestic product (GSDP) shows that it increased in
11 of the 15 major states during the TE 2004/5 to 2010/11, as against the post-reforms period
of TE 1993/4 to 2004/5; the increase was significant in seven of these states (Table 11.6).
States such as Kerala, Uttar Pradesh, and West Bengal recorded a decline in the agricultural
GSDP, but the decline was significant in Kerala alone. Some states recorded a gradual
improvement in the agricultural GSDP over the three periods; the improvements were
significant in Andhra Pradesh and Odisha. In recent years, the highest growth rate for
agricultural GSDP was recorded by Andhra Pradesh, followed by that in Maharashtra and
then Madhya Pradesh.

Table 11.6Open in new tab Growth of agricultural gross state domestic product
States TE 1981/2–1993/4 TE 1993/4–2004/5 TE 2004/5–2010/11
Andhra Pradesh

2.44*

3.34*

6.22*†‡

Bihar

1.69*

3.60*†

3.85*

Gujarat

1.85*

3.80*

4.57

Haryana

4.25*

1.83*†

3.84*†
Himachal Pradesh

0.12*

0.10*

0.06

Karnataka

3.99*

0.55†

4.71*†

Kerala

4.40*

1.36*†

–0.42†‡

Madhya Pradesh

3.78*

1.40*†

5.34*†

Maharashtra

5.12*

3.48*†

5.91*†

Odisha

–0.26

0.63

4.99*†‡

Punjab
4.15*

1.84*†

2.20*†

Rajasthan

4.12*

2.57*

3.77*

Tamil Nadu

4.53*

0.58*†

4.13*†

Uttar Pradesh

3.35*

2.11*†

2.01*†

West Bengal

5.44*

2.71*†

1.36*†

Source: CSO (1999, 2007, 2010, 2012c).

*
Notes: indicates significant at 5 per cent,

†
indicates significantly different from the first period at 95 per cent confidence interval,

‡
indicates significantly different from the second period at 95 per cent confidence interval. TE
is triennium ending. Growth rates have been computed using double-kinked exponential
curve.
These growth rates suggest an overall improvement in agricultural performance with respect
to agricultural GSDP during recent years (TE 2004/5 to 2010/11) when compared with the
post-reforms period (TE 1993/4 to 2004/5). It is therefore important to understand from an
equity point of view whether instability in agricultural has increased or decreased and if the
states are converging towards the national average or diverging from it. Table 11.7 shows that
volatility has reduced from 6.28 per cent during the post-reforms period to 3.03 per cent in
recent years at the all-India level for net domestic produce from agriculture. Even in the case
of states, it was observed that for almost all the states fluctuations in the net state domestic
produce had reduced in recent years, as against the post-reforms period, except for Himachal
Pradesh and Maharashtra. An analysis of β-convergence, based on the linear regression of
growth rates for net state domestic produce from agriculture (NSDPA) per hectare on their
respective initial NSDPA per hectare, shows an overall convergence during 1980/1 to
2009/10. Despite this positive note on reductions in volatility and an increase in convergence
across states, it should be borne in mind that more than half the workforce and their
dependents still rely on agriculture for their livelihood and a large majority of them are small
and marginal farmers. It is therefore imperative that we take up a discussion from their
perspective.

Table 11.7Open in new tab Instability in net domestic produce and net state domestic produce
from agriculture using Ray’s instability index
States TE 1981/2–1992/3 TE 1993/4–2004/5 TE 2005/6–2009/10
All India

6.39

6.28

3.03

Andhra Pradesh

8.93

13.19

6.03

Bihar

14.51

14.10

12.13

Gujarat

45.38

26.69
13.75

Haryana

13.09

6.03

5.76

Himachal Pradesh

13.11

9.13

14.22

Karnataka

9.36

12.58

7.84

Kerala

7.19

9.31

7.60

Madhya Pradesh

11.16

20.44

6.58

Maharashtra

18.62

9.75

14.47
Odisha

20.51

15.69

4.40

Punjab

4.61

3.97

1.16

Rajasthan

25.02

29.68

14.96

Tamil Nadu

13.21

13.46

9.34

Uttar Pradesh

3.70

4.22

1.65

West Bengal

7.43

5.06

3.98
Source: CSO (1999, 2007, 2010, 2012a, b & c).
Note: Ray instability index: Standard Deviation of Ln {(Yt + 1)/(Yt)}, where Yt is net
domestic produce or net state domestic produce from agriculture.

Small and Marginal Farmers: Roles, Challenges, and Opportunities

The objective of this section is to examine the role and challenges of agricultural
smallholdings in achieving agricultural growth, food security, and livelihoods in India. It may
be noted that Indian agriculture is the home of small and marginal farmers. Therefore, the
future of sustainable agriculture growth and food security in India depends on the
performance of these farmers. Agricultural census data shows that there were about 138
million agricultural holdings in India in 2010/11. There were around 117 million small and
marginal farmers. The average size of farm holdings has declined from 2.3 hectares (ha) in
1970/1 to 1.15 ha in 2010/11. Small and marginal farmers account for more than 85 per cent
of the total farm households, but their share in the operated area is around 45 per cent (MoA
2017). Thus, there are significant land inequalities in India.

The role of small farms in development and poverty reduction is well recognized (Lipton
2006). The global experience of growth and poverty reduction shows that GDP growth
originating in agriculture is at least twice as effective in reducing poverty as GDP growth
originating outside agriculture (The World Bank 2008). Small holdings play an important
role in agricultural development and poverty reduction.

Farm Size, Output, and Productivity

There has been debate in India on the relationship between farm size and productivity. The
results of the situation assessment survey (SAS) of farmers, of the 59th National Sample
Survey (2003), empirically established that for the agricultural year 2002/3, small farms
continued to produce more in value terms per hectare than medium and large farms. The
value of output per hectare was INR 14,754 for marginal farmers, INR 13,001 for small
farmers, INR 10,655 for medium farmers, and INR 8,783 for large farmers. It shows that
from the efficiency point of view, small holdings are equal to or better than large holdings.

It has been observed statistically that small holdings have higher productivity than medium
and large farms. But it is not enough to compensate for the disadvantage of the small area of
holdings. The cost of cultivation per hectare is also high on small and marginal farms as
compared to medium and large farms.4 At the all-India level, net farm income per hectare for
small holdings was higher than large holdings. Across 20 major states, the results were
similar to the all-India pattern in 11 of these states. But in the remaining nine, the reverse was
true—net farm income per hectare was high in large holdings than in small holdings.

The monthly income and consumption figures across different size-class of landholdings
show that marginal and small farmers had dis-savings (expenditure higher than income)
compared to medium and large farmers. According to SAS (2003), the monthly consumption
of marginal farmers was INR 2,482 and the monthly income was INR 1,659 (Figure 11.1). It
shows that they have dis-savings of INR 823. The dis-savings for small farmers were INR
655. For large farmers, the monthly income and consumption were INR 9,667 and INR 6,418
respectively with a saving of INR 3,249. However, as per the NSSO survey of the situation of
agricultural households (SAH) (2013), some improvement has been reported for small
farmers, as their monthly income exceeds their monthly consumption (Figure 11.2) with a
saving of INR 891 per month. However, this saving is very meagre in comparison to that of
the medium and large farmers (INR 9,533 and INR 26,941 respectively). Thus, the farmers
with small landholdings generally have to borrow to meet their demand. National
Commission for Enterprises in the Unorganized Sector (NCEUS) (2008) has indicated that
the poverty for smallholding farmers is much higher than other farmers. The need for
increase in the productivity and incomes of smallholdings and the promotion of non-farm
activities for these farmers is obvious. Access to Inputs and Markets
There are many issues and challenges for smallholding agriculture in India. They face several
challenges in their access to inputs and marketing. They need a level playing field with large
farms in terms of accessing land, water, inputs, credit, technology, and markets.
Smallholdings also face new challenges on integration with value chains, liberalization and
globalization effects, market volatility, other risks and vulnerabilities, and adaptation of
climate change (Thapa and Gaiha 2011).

The SAS (2003) brought out many issues relating to small and marginal farmers. Based on
this survey, NCEUS (2008: 7) mentions:

Some of the general issues that confront marginal-small farmers as agriculturalists are:
imperfect markets for inputs/product leading to smaller value realizations; absence of access
to credit markets or imperfect credit markets leading to sub-optimal investment decisions or
input applications; poor human resource base; smaller access to suitable extension services
restricting suitable decisions regarding cultivation practices and technological know-how;
poorer access to ‘public goods’ such as public irrigation, command area development,
electricity grids; greater negative externalities from poor quality land and water management,
etc.

Increasing globalization has added to the problems faced by the smallholding agriculture. The
policies of huge subsidies and protection by developed countries have negative effects on
small holding farmers in developing countries. If support is not given to small farms,
globalization may become advantageous solely for large farms.

Credit and Indebtedness

Smallholdings need credit for both consumption and investment purposes. As discussed in
Mishra (2012), we reiterate some of the recent policy discourses. A report by a working
group, Reserve Bank of India (RBI) (2006), pointed out the relevance of both credit and non-
credit factors. But some important observations are that agriculturists continue to be bothered
with inadequate amount, untimely loan and other hassles while borrowing credit from formal
sources; failure of the system to differentiate between wilful and non-wilful defaulters; and
the absence of any credit guarantees to facilitate the non-wilful defaulter.

The report of the expert group on agricultural indebtedness indicates that farmers are
increasingly depending on informal sources of credit; share of debt of farmer households
from formal sources shows a secular increase from 7.3 per cent in 1951 to 66.3 per cent in
1991, but then it declined to 61.1 per cent in 2002 (Government of India 2007). Dependence
on informal sources is higher for marginal and small farmers (Figure 11.2), that too at a
higher interest burden because 73 per cent of the debt borne by farmer households from non-
institutional sources has an interest rate of more than 20 per cent, of which more than half
(overall 38 per cent) have an interest rate of more than 30 per cent per annum.

Shetty (2009) further observes that (a) there has been a decline in the number of rural bank
branches from 32,981 in 1996 to 31,967 in 2005, (b) there has been a decline in the number
of agricultural borrowal accounts from 277 lakh in March 1992 to 198 lakh in March 2001,
and (c) there has been a decline in agricultural credit as per cent of net bank credit from 18
per cent in the 1980s, which is the statutory requirement, to 11 per cent in 2004.6

The ratio of the share of credit disbursed to the share of area operated and the ratio of the
share of the number of borrowal accounts to the share of the number of operational holdings
indicate that both had been declining for marginal holdings (those with less than one hectare)
till 2002/3 (Table 11.8). For smallholdings, both the ratios increased in the 1980s but in the
1990s, it is only the ratio of borrowal accounts to operational holdings that increased,
whereas the ratio of credit disbursed to area operated decreased. For other categories of
holdings, the ratio of credit disbursed to area operated showed a slight decline in the 1980s,
but both the ratios increased in the 1990s. In other words, there was a shift in favour of
smallholders in the 1980s, which seems to have reversed in favour of the other (medium and
large) holdings in the 1990s.

Table 11.8Open in new tab Ratio of the share of credit disbursed to the share of area operated
and the ratio of the share of the number of borrowal accounts to the share of the number of
operational holdings
Year Ratio of the share of credit disbursed to the share of area operated Ratio of the share of
the number of borrowal accounts to the share of the number of operational holdings
Marginal Small Others Marginal Small Others
1981–2

2.41

1.24

0.72

0.90

1.28

1.00

1991–2

1.85

1.33

0.71

0.72

1.77

1.19

2002–3
0.98

1.22

0.93

0.56

1.85

2.21

2010–11

1.08

1.38

0.82

0.55

2.17

1.61

Source: Mishra (2012), based on Government of India (2007).

Notes: Marginal, small, and others+ refer to <1 hectare, 1–2 hectares, and >2 hectares for
area operated and operational holdings and are superimposed on <2.5 acres, 2.5–5.0 acres,
and >5 acres for credit and borrowal accounts. The land-based information is based on the
National Sample Survey rounds (1981–2, 1991–2, and 2003) and the Agriculture Census
(2010–11) from MoA is used for the 2010–11 data. The credit information is based on the
Handbook of Statistics on the Indian Economy published by the Reserve Bank of India.

There have been some policy initiatives that followed this, such as the doubling of
agricultural credit in the three years starting from 2004/5 to 2006/7, which was achieved but
this did not increase the proportion of agricultural credit as a per cent of adjusted net bank
credit (ANBC) that stood at 16.1 per cent in March 2011.7 An Agricultural Debt Waiver and
Debt Relief Scheme (ADWDRS) was proposed in 2008, which helped the banks’ books by
reducing their non-performing assets. However, as a study by the National Bank for
Agriculture and Rural Development (NABARD) indicates, this did not automatically
improve the access to credit for all farmers because 50 per cent of active farmers were not
likely to have a kissan credit card (Samantara 2010). Some other initiatives involved the
introduction of no-frills accounts and the use of business correspondents to improve access to
banking services. Some of these initiatives might have led to an increase in the ratio of the
share of credit disbursed to the share of area operated for marginal landholders in 2010/11
and an increase in both the ratios for smallholders in 2010/11. Both these ratios declined for
other categories of landholders in the year 2010/11 (Table 11.8).
A recent report on credit-related issues of farmers (Government of India 2009; also see
Mehrotra 2011) refers to regional inequalities—the eastern region’s share in credit disbursed
was much lower than its share in the gross cropped area, the southern region with a history of
good branch banking had a higher share of credit and the amount was spread across a large
number of borrowal accounts with the average amount disbursed per borrowal account at
INR 41,331 in June 2008 being lower than the eastern region (INR 66,812), the western
region (INR 113,387), and the northern region (INR 176,179). This raises issues of inclusion
or rather exclusion in the latter areas. The report also points to a seasonal anomaly with
nearly one-fourth of the credit being disbursed during March and another 10–20 per cent
being disbursed during January and February, when even rabi activities are by and large over,
raising questions on the timeliness and the ‘purpose’ behind these disbursals. All these do
raise concerns on the livelihoods and opportunities for agriculture in general and that of the
small and marginal farmers in particular. We now take up some further discussion on
technological and institutional innovations for agriculture.

Opportunities: Technological and Institutional Innovations

There are many opportunities in the form of technological and institutional innovations that
can enable marginal and small farmers to raise agricultural productivity and increase incomes
through diversification and high value agriculture. Research and extension should give
importance to cost reduction without reducing yields. Therefore, new technological
innovations with approaches focusing on LEISA that do not use chemical fertilizers,
pesticides or genetically modified organisms. It counters the argument of ‘there is no
alternative’ (TINA) by affirming that there are multiple alternatives that are situation specific,
but they are not mainstream practices because to promulgate them one needs the support of
appropriate knowledge, resources, and also appropriate leveraging with new advances in
marketing opportunities and information technology.

Information Technology
Changes in information technology will help in a big way to improve agri-business and
incomes of small farmers. Indian private companies and non-governmental organizations
(NGOs) are global leaders in providing information to farmers, as a spin-off from India’s
meteoric rise as a world leader in information and communications technology (ICT). E-
choupals have expanded access to internet in rural areas. Up to 6,400 internet kiosks were set
up between 2000 and 2007 by ITC Limited, one of the largest agricultural exporters. They
reached about 4 million farmers growing a range of crops—soybean, coffee, wheat, rice,
pulses, or shrimp—in over 40,000 villages. They get free information in their language about
local and global market prices, weather forecasts, farming practices, and crop insurance. They
serve as purchase centres, cutting marketing costs and allowing farmers to obtain a bigger
farm price.8 The M. S. Swaminathan Research Foundation established knowledge centres in
Puducherry in 1997. With the support of the Indian Space Research Organization (ISRO),
these centres in each village are connected by satellite to a hub at Villianur. Women self-help
groups use the centres’ computers to manage their business accounts and coordinate their
activities using video links with other villages. The declining costs of ICTs are giving small
farmers a far greater access to information. Mobile phone coverage in India is expanding and
has an important function of linking farmers to markets.

Federation of Self-Help Groups

Beginning with 400 acres in 2004/5, the programme under NPM in Andhra Pradesh covered
18.15 lakh acres in 2009/10 and are likely to have scaled-up further since then. This has to be
understood under the institutional arrangement of federation of women SHGs that SERP had
built to improve the livelihood of poorer households. Interactions with SHGs and their
federations made SERP evaluate the livelihood problems associated with agriculture and the
need to reduce costs in cultivation led to NPM. The success in Andhra Pradesh has now been
extended to the national level under the National Rural Livelihoods Mission (NRLM) through
a programme called the Mahila Kissan Sashaktikaran Pariyojana (MKSP).13 The agricultural
intervention under also tried to involve NGOs such as PRADAN (Professional Assistance for
Development Action) who, as part of their livelihood facilitation, have independently been
forming federations of women SHGs in the poorer districts of the country for nearly two
decades.14

The institutional imperative articulated in the federation of SHGs and other successful
experiments, such as the Grameen Bank in Bangladesh and the People’s Participation
Programme of the Food and Agriculture Organization (FAO) in Sri Lanka, Thailand, and
Zambia (see Rouse 1996), give some lessons. These, as indicated in Mishra and Reddy
(2011), point to restricting the number of members to 20 or 25 per farmer group (or about 15
per SHG) and drawing members from homogenous groups to avoid conflicts. The focus
should be on local problems identified by the group and to limit the involvement of outside
promoters to only enabling or facilitating processes so that the members can take over as
soon as possible. Training and capacity building for four-to-five years, including hand-
holding for the initial stages, should be part of the long-term process of building sustainable
small-marginal federated farmer groups. A sound organizational structure should be built
right from its foundation with an insistence on female membership and participation from the
group level itself. Building institutions also requires developing democratic processes that are
sensitive to inequities at every level. Once these are put in place and capacities of individuals
and their institutions augmented, groups and their federated institutions become self-
sustaining and, over time, they could slowly graduate to address other requirements of the
community.

The analysis in this chapter has tried to contextualize our understanding of Indian agriculture
by an evaluation of its performance, the roles and challenges for smallholders, and some
opportunities. Its performance appraisal delineates the recent period (2004/5–2010/11) from
the immediate post-reforms period (1993/4–2004/5) and the pre-reforms period (1981/2–
1993/4). Our growth estimates, using a double-kinked exponential curve, reiterates a
turnaround in agriculture in the recent years. This is also because of some changes in public
investments in agriculture, as also an increased public expenditure in agricultural education,
research and extension, initiatives to improve the availability of credit from formal sources,
and a slew of normal monsoons in almost all but one of the recent years. However, public
investments in agriculture have a lag effect and mostly relate to medium and major irrigation
projects where substantial resources are invested without much critical scrutiny (Government
of India 2011; Vaidyanathan 2010). The turnaround is particularly evident for maize, pulses,
oilseeds, and cotton in terms of their growth in value of output, as also in production and
yield. There have also been significant yield increments in rice in the recent years. An
analysis of the agricultural GSDP across major states also shows significantly higher growth
for most of them in the recent years; there also seems to be a decline in volatility and
convergence across states.

A matter of concern is the implications on smallholders, particularly so when SAH 2013—a

nationally representative survey for the 2012/13 agricultural year—points to income being
less than expenditure for marginal farmer households with less than a hectare of land and
very meagre incomes for farmers with less than four hectares of land, that is, 95 per cent of
the operational holdings. What is worrying is that this difficulty in livelihood sustainability
remained in spite of the fact that per hectare returns were higher for them; there continues to
be an inverse relationship between size-class and returns. Nevertheless, smallholder farmers
have had to bear a greater risk burden because of higher per unit cost, limited access to credit
despite new initiatives, and a lower bargaining power in the input and produce markets,
among others. These problems get aggravated in bad years, such as 2014 and 2015, when the
monsoon plays truant, that too when nearly two-thirds of Indian agriculture is rain-fed.

To address some of these concerns, an identified opportunity is the effective use of

information technology, whether to know about monsoon patterns or to be informed about
new knowledge on agricultural production and management or on the prevailing prices in
different markets. The alternatives of RRAN and NPM through CMSA under SERP are
people-centred initiatives through the involvement of small and marginal farmers through
SHGs and field schools. Institutions that organize farmers offer another opportunity. They
aggregated farmers in groups of 20 to 25 and then federate them at village, sub-district, and
district level to articulate their interests and improve their bargaining power at various levels.
On the knowledge front, it is equally important that technologies that reduce costs—and
hence risks—while not compromising on production or yield and make use of locally
available resources are encouraged.