Economic Survey Highlights Agriculture as India's Potential Growth Engine

High-value produce key to bolstering farm incomes: Economic Survey

For growth and employment, policymakers may have to increasingly look to the farm sector, which still employs nearly 45% of the workforce, according to the survey. A switch from farm to non-farm employment and high-wage industrialisation, the typical path countries take to develop, may no longer hold true, it said. The "dual-sector model" of Nobel prize winning economist Arthur Lewis precisely showed how, in countries with large populations, shifting surplus labour out of agriculture to factories could raise wages and growth. "Earlier development models featured economies migrating from farm beginnings to industrialisation to value-added services in their development journey. Technological advancements and geopolitics are challenging this conventional wisdom," the survey said. Hoarding of resources, protectionism excess capacity and dumping, de-globalisation and onshoring of production, and artificial intelligence are limiting the room to "squeeze out" growth from manufacturing and services, the budget-eve document stated. "Smallholder farmers' incomes cannot be increased by producing rice, wheat, or even millets, pulses and oilseeds," the survey said, calling for a shift to high-value crops. "That is what happened in China between 1978 and 1984 when the real incomes of farmers doubled in just six years. India is well-placed to emulate this." Food prices were adversely affected by extreme weather conditions in the last two years, creating inflationary pressures, the survey said, adding that the production vegetables and pulses were particularly impacted. The increase in tomato prices in July 2023 was caused by seasonal changes in crop production, crop diseases such as white fly infestation, and the early arrival of monsoon rains in northern India, according to the survey. There were also logistics disruptions in isolated areas due to heavy rains, it said. The spike in onion prices was due to several factors, including rainfall during the last harvesting season affecting the quality of rabi onions, delays in sowing during the kharif season, prolonged dry spells impacting kharif production, and trade-related measures taken by other countries, the survey's analysis showed. Myriad farm policies, some of the Centre and other of state governments, have worked at cross-purposes with each other, hurting farmers' interests, destroying soil fertility and depleting groundwater, the document said, calling for a rationalization.

Economic Survey highlights how agriculture can be India's growth engine amid trade protectionism & AI

'Return to roots' in farming practices can generate higher value addition, improve farmers' income and create opportunities for food processing and exports, it says.With artificial intelligence (AI), trade protectionism, resource-hoarding, excess capacity and dumping, and onshoring production are restricting the potential of countries to squeeze out growth from manufacturing and services; so the agriculture sector can be a growth engine for India and the world, the Economic Survey 2024 said. "A return to roots, as it were, in terms of farming practices and policymaking, can generate higher value addition from agriculture, boost farmers' income, create opportunities for food processing and exports and make the farm sector both fashionable and productive for India's urban youth," noted the survey Finance Minister Nirmala Sitharaman tabled in the Lok Sabha on Monday. "When resolved, the problem areas mentioned above that the current policy configuration has created over the years can become sources of India's strength and a model for the rest of the world -- developing and developed." The survey acknowledged that the agriculture sector is one area ripe for, and in need of, a pan-India dialogue on these lines. Agriculture and farmers matter for a nation, and governments in India spend enough resources to look after the farmers well, it noted. "Yet, a case can be made that they can be served better with some re-orientation of existing and new policies. A panoply of policies -- by national and sub-national governments -- working at cross purposes with each other is hurting farmers' interests, destroying soil fertility, depleting groundwater, polluting rivers and the environment with nitrous oxide emissions, starving the crops of nutrients and undermining people's health with a diet rich in sugar and carbohydrates rather than fibre and protein," the document noted. The payoff will be immense if these knots are untied, added the survey, an annual document that provides a comprehensive review of the country's economic performance over the past year.

Economic Survey: The agri strategy for India that can turn problem areas into sources of strength

The Economic Survey 2023-24, released on July 22, marked out the agriculture sector as one area ripe for and in need of a country-wide dialogue. The survey pointed out that agriculture and farmers are crucial to a nation, and India is no exception. India provides substantial support: free or nearly free water and electricity, untaxed incomes, and subsidies for fertilisers, it said. As per govt data, farmers receive a minimum support price (MSP) for 23 commodities, monthly cash through the PM-KISAN scheme, and frequent loan write-offs by national and sub-national governments. Indian governments allocate significant resources to support farmers, the survey said. However, there is an argument to be made that farmers could benefit more from a re-orientation of existing and new policies. Agriculture sector provides livelihood support to about 42.3% of the population of India and has a share of 18.2 per cent in the country's GDP at current prices. As a sector, it has been buoyant, which is made evident by the average annual growth rate of 4.18% at constant prices over the last five years. It, however, can't be denied that there are a host of difficult, entrenched issues, which have kept the sector from reaching the next level, where it can be among the economy's saviours. A range of policies by national and sub-national governments, often working at cross-purposes, is harming farmers' interests, damaging soil fertility, depleting groundwater, polluting rivers with nitrous oxide emissions, and undermining public health with diets rich in sugar and carbohydrates instead of fiber and protein, the survey observed. These conflicting policies also starve crops of essential nutrients, it pointed out. The survey noted that untangling these policy issues will yield immense benefits, restoring faith in the state's ability to guide the nation toward a better future. Beyond socio-economic advantages, it will enhance the self-confidence and capabilities of the state, leading to more effective governance in the agricultural sector. The survey underlined how traditional development models saw economies transition from agriculture to industrialisation and then to value-added services. Currently, at a time when technological advancements and geopolitics are challenging this progression, trade protectionism, resource hoarding, overcapacity and dumping, onshoring production, and the rise of AI are limiting the opportunities for countries to drive growth through manufacturing and services, it highlighted. This new situation has challenged policymakers to rethink conventional wisdom, the survey said. To turn agricultural sector into the big solution, going back to traditional farming practices and reorienting policies could "increase value addition in agriculture, boost farmers' incomes, and create opportunities for food processing and exports," the survey noted. Such a strategy can make the farming sector both appealing and productive for India's urban youth, the survey said. By addressing the issues caused by current policies, these problem areas could become sources of strength for India and serve as a model for both developing and developed nations, it noted.