Challenges loom, but farm sector is resilient

India’s agricultural sector has grown 5.23% annually over the past decade, demonstrating “remarkable resilience” in recent years, marked by consistent growth rates which can be largely attributed to various initiatives to enhance productivity and crop diversification, the Economic Survey 2024-25 has stated.

The survey, released a day before the Union Budget is to be presented in Parliament, highlighted that in the second quarter of FY25, the agriculture sector grew by 3.5%, reinforcing its critical role in the Indian economy.

The survey said the sector contributes to approximately 16% of the country’s GDP for FY24 at current prices and supports about 46.1% of the population. “Not only does its performance directly impact food security, but it also influences other sectors, sustaining livelihoods and supporting economic growth,” the survey said. 

The survey, however, said the sector is not without challenges. “Issues like climate change and water scarcity present significant obstacles that require focused and targeted interventions. Promoting agricultural production patterns and practices that align with the specific agro-climatic conditions and natural resource availabilities of different regions across the country is vital,” it said.

“Agricultural extension is vital in disseminating knowledge; the government is implementing the Sub-Mission on Agricultural Extension (SMAE) and its various components to enhance productivity and promote sustainable agricultural practices,” the survey by Chief Economic Adviser (CEA) V Anantha Nageswaran said.

Recognising the importance of financial support, the survey emphasised the role of the Kisan Credit Card (KCC) scheme, which has significantly enhanced farmers’ access to institutional credit. As of March 2024, 77.5 million KCC accounts were operational, with an outstanding loan amount of ?9.81 trillion.

Additionally, government initiatives such as the Modified Interest Subvention Scheme (MISS) and the Kisan Rin Portal (KRP) are improving credit flow and ensuring timely loan disbursal, the survey said.

Nearly half the population still depends on a farm-based livelihood, underscoring the agriculture sector’s importance in overall growth.

The survey stressed the need for better market infrastructure and price stability. The e-National Agriculture Market (e-NAM) platform has expanded digital trading, giving farmers direct access to competitive pricing and reducing intermediaries.

The survey projected Kharif foodgrain production for 2024 at 164.705 million metric tonnes (LMT), reflecting an increase from the previous year. However, it emphasised the need for sustained efforts in irrigation, soil health improvement, and post-harvest storage to minimise losses and enhance efficiency.

It saidthat the National Mission on Sustainable Agriculture (NMSA) is playing a crucial role in promoting climate-resilient farming, and programmes under the Per Drop More Crop (PDMC) initiative are expanding micro-irrigation coverage, ensuring better water management amid growing climate concerns.

The survey acknowledged the food processing sector as a key contributor to economic growth, with agri-food exports reaching $46.44 billion in FY24, accounting for 11.7 per cent of India’s total exports.

To further strengthen this sector, the government is implementing schemes such as the Pradhan Mantri Kisan Sampada Yojana (PMKSY), aimed at modernising food processing infrastructure. The Production Linked Incentive Scheme for Food Processing (PLISFPI) is also driving global competitiveness and attracting investment in value-added agri-products, it said.

But the survey cautioned that climate variability and water scarcity remain critical concerns for the agriculture sector. The government is prioritising climate-resistant crop research, expanding microirrigation, and promoting digital solutions to enhance farm resilience.

Farmer Producer Organizations (FPOs) are being encouraged to boost market access, reduce costs, and strengthen collective bargaining power, ensuring that small and marginal farmers benefit from economies of the survey said.

Experts said the resilience of the farm sector must be viewed in the context of expanding mechanisation, irrigation and credit availability. “However, the challenges are also increasing. Mitigation of extreme-weather events and climate impacts are the biggest threats to the sector’s resilience,” said RK Mani, former agronomist at the Tamil Nadu Agricultural University.