India’s Agricultural Development under the New Economic Regime: Policy Perspective and Strategy for the 12th Five Year Plan

During the last two decades Indian agriculture has been facing major challenges like deceleration in growth rate, inter-sectoral and inter-regional equity, declining input efficiency, degradation of natural resources, etc. with consequent adverse effects on food and nutritional security, food inflation and poverty reduction. However, the 11th Plan had some success in reversing the deceleration of agricultural growth witnessed during the 9th and 10th Plan but food inflation still remains a major concern. The growth in agriculture in the 11th Plan is likely to be around 3.2 percent per year, which is higher than 10th Plan growth rate but lower than the target (4.0%) for 11th Plan. The 12th Plan growth target for agriculture sector has been set at 4 percent with foodgrains growth at about 2 percent and non-foodgrains sector (horticulture, livestock and fisheries) growing at about 5-6 percent. However, looking at the growth in agriculture sector in general and high-value agriculture, particularly, horticulture, fisheries, dairy and meat sector during the 11th Plan, there is a need to put additional efforts to achieve 4 percent growth in agriculture. The failure to achieve targeted growth in agriculture has resulted from the inadequacies of the provision of the critical public goods such as research and development, extension services, surface irrigation, rural infrastructure, etc. on which agricultural growth thrives as well as inappropriate policies. In order to achieve the targeted growth in 12th Plan, we need to address some of these inadequacies. The sector would require substantial increase in investment both by public and private sector in agriculture research and development including extension, rural infrastructure, post-harvest and market infrastructure including storage and processing, reforms in laws related to land markets and marketing of agricultural products, and appropriate price policy. The pricing of agricultural inputs such as irrigation, electricity for pumping water, fertilizer, etc. needs rationalization. The distributional aspects of agricultural credit including inter-regional and inter-class inequalities in access to credit, decline in rural branches, declining share of direct credit, etc. must be addressed. People’s participation, which will help in promoting the bottom up approach of planning process and also help in faster diffusion of the technologies and best practices among farmers, community based actions and participation of disadvantaged sections of the society in developmental process, needs to be strengthened.