Why can't India's agricultural sector keep up with the rest of its economy?

India has the world’s second largest amount of agricultural land within its borders and the country possesses an excellent agricultural environment with diverse agro-climatic regions. The country boasts of being among the largest producers of tea, milk, cashew, jute, wheat, fruits and vegetables.

However, the Indian agricultural sector is on the brink of failure as it is plagued with crop failures and farmer suicides. 

Successive governments have failed to reduce poverty and ensure income security for the massive portion of the Indian population employed in farming. Depending on which figures you read anywhere from 50 to 70 percent of the Indian workforce is directly or indirectly employed in the agricultural sector.

When India gained independence from the British, one of India’s primary concerns was to achieve food security. Consequently, by the 1960s the government took part in what is known as the Green Revolution, which was an attempt to increase agricultural productivity by using high yielding seeds and chemicals. Although the Green Revolution was successful in the short-term, the agricultural sector has not achieved sustainable long-term growth.  

The government’s response to the woes of its agriculture sector has been inefficient and negligent over the years. The short-sighted and under-researched policies to tackle monsoon failures and drought; inefficient credit and loan facilities; and the liberalisation of the economy as a way to expand the industrial and services sector have caused the decline of the agricultural sector. The result has been increasing poverty and inequality, farmer suicides and mass migration to cities – which in turn creates further complexities to the ever-expanding urban populace of the country.

The agricultural scientist M.S. Swaminathan, a prominent figure of the Green Revolution of the 1960s, in his 2006 report Swaminathan Committee on Farmers investigated the increasing farmer suicides in the country and has called for urgent reforms.

The report highlighted the “unfinished agenda in land reform, quantity and quality of water, technology fatigue, access, adequacy and timeliness of institutional credit, and opportunities for assured and remunerative marketing,” which have contributed to the long-term agrarian crisis as well as farmer suicides.

In 1960, the agriculture sector made up 44 percent of India’s total economic output, but at present, the agricultural sector contributes less than 20 percent. The shrinking agricultural sector has caused thousands to leave behind agriculture as a way to make a living, and has forced many of them to migrate to urban centres in search of employment. Declining employment size of the agrarian sector has resulted in almost 15 million fewer farmers in the country today than in 1991.

With the economic liberalisation of the 1990s, the agricultural sector has been approached as a market-oriented sector, which largely profits agricultural corporates and elite merchants. These policies have resulted in an increase in the exports of India’s staple food export – as exemplified when India became the largest global exporter of rice in 2012. However, the irony in this is that millions of households have been starving, as they cannot afford the increase in price of everyday commodities including rice.

The government budget presented by Finance Minister Arun Jaitley in January 2018 claimed an “emphasis on higher income for farmers.” However, one would be sceptical about this offer after the current government’s damaging economic policy of demonetisation that severely affected the cash based rural agrarian economy and farming communities.

Demonetisation has been a blow to the agricultural sector when farmers in many parts of India expected a profitable return from a good monsoon after facing drought for more than two years. However, the shortage of cash has resulted in farmers selling their products for lower prices due to a collapse in demand in wholesale markets.  

In 2017 farmers protested against demonetisation and the long-term negligence in several states such as Madhya Pradesh, Maharashtra, Uttar Pradesh, Haryana, Telangana, Punjab, Andhra Pradesh, Gujarat and Maharashtra. In many states, the slogan was, kisan ki loot (loot of the farmer) as farmers were not ensured the minimum support price.

Additionally, loan waivers were an important issue during last year’s protests as 52 percent of farming households in India are reportedly in debt, mainly due to years of agricultural policy failures.

While the current government has waived debt and provided loans to multinational corporations, it has largely failed to assist Indian farmers struggling under high levels of debt claiming that any such help would lead to bankruptcy of the banks that provided the loans.

There has been a steady increase in the number of farmer suicides over the last two decades with more than 300,000 farmers committing suicide between 1995 and 2015 according to India's National Crime Records Bureau.

However, as thousands of farmers are taking their life and are trapped in the cycle of debt and poverty, corporate “friendly” government policies have provided tax concessions of around $75 million between 2015-2016.

India has maintained around a 7 percent economic growth in recent years and is recognised as one of the fastest growing economies among the G20 countries. Nonetheless, this growing economy has failed to lift more people above the poverty line of $1.90 per day.

India’s population is expected to surpass China’s population in 2024 and become the largest country in the world – the UN estimates that India’s population will reach 1.6 billion by 2050. One of the country’s greatest challenges will be feeding its own population – when currently 360 million out of 1.28 billion people live below the poverty line – and more specifically how to provide income security to its millions of farmers, so that they do not have to resort to taking their own lives.