Agricultural Growth in Indian States: The Case of Orissa

The Planning Commission of India foresees a growth rate in the range of 8 to 9 per cent during 2007–8 to 2011–12, the period of the 11th Five-Year Plan. To achieve this growth rate, one of the major challenges that has been identified is the reversal of the deceleration in agricultural1 growth seen after 1996–7. The meagre agricultural growth of 2 per cent per annum recorded over 1997–8 to 2001–2 has further declined to 1 per cent in the subsequent three years. The deceleration of agricultural growth has been a policy concern for several reasons. First, the agriculture sector not only meets the food grain requirement of the entire economy but also helps to sustain the growth momentum of the non-agricultural sectors by contributing to the demand for their products. Second, agriculture contributes a quarter of the GDP and absorbs the maximum number of the workforce in India. As such, low agricultural growth would have an adverse impact on the living conditions of the majority of the population. Third, experience suggests that periods of substantial poverty reduction in India have come about only when agriculture has grown at a faster rate. Low agricultural growth does not augur well from the welfare perspective. The welfare implications of agricultural growth are further borne out by the fact that higher agricultural growth has an equalizing impact on the distribution of income. Thus it becomes imperative that agriculture attains a high growth rate. Recognizing its strategic importance, the Planning Commission has envisaged a 4 per cent per annum growth target for agriculture during the 11th Five-Year Plan.2