The Agricultural Sector In India
More than half of India’s population relies on rural incomes, with a significant portion residing in rural areas. The nation’s food security, crucial for its vast and rapidly expanding population with rising disposable incomes, depends heavily on the cultivation of cereals, fruits, vegetables, and milk.
As India’s population, already one of the largest globally, continues to grow, it will soon surpass all other nations, leading to an enormous demand for food. With decreasing agricultural land, meeting this demand will require either a boost in agricultural productivity or an increase in food imports.
India remains a predominantly agrarian society with agriculture playing a central role in its economy. Despite agriculture’s contribution to GDP decreasing to around 15%, nearly half of the population remains employed in this sector. India, home to the second-largest area of arable land globally, is a leading producer of numerous agricultural products, including being the world’s top producer of milk and a significant producer of pulses.
However, the agricultural sector faces persistent challenges. The growth in agricultural output has been steady, fulfilling the needs of the growing population, yet many issues remain unresolved. Despite achieving self-sufficiency in grain production, the country still grapples with widespread hunger and malnutrition. According to the Global Nutrition Report (2021), India is off track in achieving seven out of thirteen global nutrition targets, showing little progress on critical issues like anemia and childhood wasting.
Adding to these challenges are the resource-intensive and cereal-centric farming practices, regional imbalances, and sustainability concerns. The sector is also under pressure from water scarcity, Agriculture employs about 60% of the nation’s workforce and contributes around 17% to its GDP. Yet, productivity remains a significant hurdle, with rural poverty and malnutrition still alarmingly high. Smallholder farmers, who make up the majority, often need help with water shortages, climate change, and fragmented land holdings, which hinder their ability to sustain their families and achieve profitable yields.
Given agriculture’s critical role in India’s economic and social framework, it is essential to prioritize policies and strategies that promote productivity, competitiveness, diversification, and sustainability.
10 Years of Revolutionizing Agriculture Development in India
The government’s emphasis on agriculture is reflected in a nearly fivefold budget increase, from ₹1.37 lakh crore in 2007-14 to ₹7.27 lakh crore for 2014-25.
- The Pradhan Mantri Fasal Bima Yojana (PMFBY) has become the world’s largest crop insurance scheme by enrolment.
- Significant investments include ₹35,262 crore for over 48,000 farm infrastructure projects under the Agriculture Infrastructure Fund.
- A historic MSP hike now ensures minimum prices for 22 crops at least 50% above production costs.
- The distribution of 23.58 crore soil health cards, increased urea production, support for organic farming, and promotion of agricultural mechanization further bolster the sector.
- Initiatives like e-NAM and Kisan Rail enhance market access for farmers.
Also Read – Role of Modern Technology in Agriculture
Challenges facing the agriculture sector
(With solutions)
India’s overall development and the improved welfare of its rural, poor hinge on addressing three critical challenges in the agricultural sector:
1. Increasing agricultural yield per unit of land: Limited availability of cultivable land and water resources calls for raising productivity per unit of land. The need is urgent to increase yields, diversify to value-added crops; and reduce costs, wastages, and pilferage.
Solution: To enhance agricultural productivity, India must focus on modernizing farming techniques and adopting precision agriculture, which uses technology like GPS and data analytics to optimize field-level management. Embracing sustainable practices, such as conservation agriculture, can improve soil health and water efficiency. Investment in research and development is crucial to create high-yield, climate-resilient crop varieties. Additionally, improving access to quality seeds, fertilizers, and credit for small farmers can significantly boost output. Collaborative efforts with private sectors to innovate and introduce new technologies will also be key.
2. Poverty alleviation: Tackling rural poverty is key to make agriculture as well as non-farm employment accessible to rural masses and thereby reduce the dependence and over-employment in the sector. Although poverty has decreased from nearly 40% in the early 1990s to below 30% by the mid-2000s, progress needs to accelerate. Poverty alleviation remains a central focus of government and World Bank efforts.
Solution: To reduce rural poverty through inclusive growth, expanding access to education and vocational training is essential to empower marginalized groups, including women and landless laborers, with new skills for both agricultural and non-farm employment. Developing rural infrastructure, such as roads, electricity, and internet connectivity, can create new economic opportunities. Strengthening microfinance and cooperative societies will help provide financial resources to the rural poor. Targeted social safety nets and direct benefit transfers can also ensure that the most vulnerable populations receive adequate support.
3. Emphasis on aligning agriculture to food security needs: The Green Revolution and agricultural intensification led to self-sufficiency in food-grains, declining food prices, and reduction in rural poverty. However, the pace of agricultural growth has slowed down considerably, and yields have plateaued. This leave the sector vulnerable to external shocks and requires a concerted effort on all fronts to adopt methods to increase yield and achieve growth.
Solution: To align agricultural growth with food security, India must focus on increasing crop diversification to reduce dependency on cereals and promote nutrient-rich crops like pulses, fruits, and vegetables. Implementing sustainable farming practices can enhance long-term productivity while conserving natural resources. Strengthening supply chains and storage infrastructure will reduce post-harvest losses and ensure food availability. Enhancing public-private partnerships can drive innovation in agriculture, and policies should be tailored to incentivize smallholder farmers to adopt modern technologies that boost yields and ensure food security.
Policymakers must implement and refine strategies to transition from outdated policies and institutions to a more productive, competitive, and diversified agricultural sector that can better meet the country’s food security needs.
How to boost agricultural development in India?
1. Adopt new technologies: This depends on various factors such as socioeconomic conditions, geographical conditions, crop variety, and irrigation facilities, etc. The role of technology in agriculture can have various applications by way of use of modern farming machines, improved seed varieties, application of fertilizer/ pesticides, genetic engineering, etc. This will result in increased productivity by preventing soil degradation, using water efficiently, and reducing the use of chemicals. These factors will create a direct benefit in enhanced quality, quantity, and cost reduction.
2. Enhancing Soil Quality: With indiscriminate use of fertilizers, pesticides, and herbicides, this endemic problem plagues agriculture. The goal to enhance the productive potential of soil through emphasis on its physics and micro-biology will include the design of chemical interventions (macro and micronutrients). Particular emphasis is needed in arid areas.
3. Irrigation Augmentation and Management: The agriculture sector is the largest consumer of water in India. But limited water availability leads to increasing competition between industry, domestic use, and agriculture. An immediate need is to plan and manage water in river basins to achieve a synergy in consumption on a multi-sectoral basis. This calls for augmenting supply through rainwater harvesting, recharging aquifers, and renovation of existing wells and ponds. Demand management should receive priority through improved irrigation practices, including sprinkler and drip irrigation. This will require a water literacy movement and regulation for the use of groundwater to achieve a conjunctive use of rain, river, ground, sea, and treated sewage water.
4. Agri-Credit and Crop Insurance: Reform in this area is key to enhancing small farm productivity. Easy and affordable credit must be made available through official channels for farmers that typically rely on private moneylenders. Risk mitigation by way of crop insurance requires immediate reform. The speed and the mechanism of this process requires policymakers to create innovative solutions that balance the financial system with farmers’ needs.
5. Efficient Markets: The importance of opportunities for assured and remunerative sale of produce will ultimately determine the economic well-being and sustainability of the farming sector. Market reform is a corollary of demand and supply and must be linked to production planning and not merely with government-led support interventions. The link between consumption and commerce chains is key to long-term survival and growth of the farming community.
Also Read – Sustainable Agricultural Water Management: The need of the hour
How can Budget 2024 boost agricultural development in India
The Gross Value Added (GVA) by the Indian agriculture and allied sectors in FY23 is estimated at approximately US$ 275 billion, making up 15% of the nation’s total GVA. The sector achieved a compound annual growth rate (CAGR) of around 4% over the five-year period ending FY23.
In FY24, the Government allocated roughly 1.9% of the Union Budget to agriculture and allied activities, with 1.3% specifically aimed at supporting small and marginal farmers through the PM KISAN Yojana. Additionally, about 8.3% of the budget was allocated to major subsidies, including those for food, fertilizers, and petroleum.
Sector expectations and recommendations
1. Advancing India’s Food Processing Sector for Sustainable Growth
With the Indian food processing market anticipated to hit US$ 535 billion by 2025-26, growing at a CAGR of over 15%, there is a strong need to fortify the food processing value chain. Initiatives like the Pradhan Mantri Kisan Sampada Yojana (PMKSY) and the Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (PMFME) are steps in the right direction. Moving forward, emphasis should be placed on promoting cluster development and supporting micro-processing units. Encouraging public-private partnerships and facilitating access to broader markets, particularly through FPOs (Farmer Producer Organizations), will enhance farmers’ income and market positioning.
2. Reducing Post-Harvest Losses by Upgrading Infrastructure
Significant post-harvest losses, particularly for perishables, remain a challenge in India’s agricultural value chain. Enhancing storage and grading facilities, and upgrading transportation networks are key. Leveraging programs like the Agriculture Infrastructure Fund (AIF) and Mission on Integrated Development of Horticulture (MIDH) can help. Establishing multi-commodity cooling and grading centers, solar-powered micro-cooling units, and cooling facilities at strategic locations like airports and ports will mitigate food losses. These improvements will lower transportation costs and boost farmers’ earnings by preventing distress selling.
3. Promoting Agri-Tech Adoption
The agribusiness sector anticipates a rise in digital technology adoption, with the Agri-tech market expected to reach US$ 13.5 billion by 2023. Government initiatives, including the Digital Public Agriculture Infrastructure and Digital Agriculture Mission, aim to drive Agri-tech growth. Emphasizing AI-driven precision farming, IoT-based real-time data systems, and drone technology will enhance productivity and profitability. Expanding Agristack, which provides comprehensive farmer data such as soil conditions and crop specifics, will facilitate better decision-making and agricultural innovation.
4. Enhancing Agricultural Exports
India’s agricultural exports have seen a 6.6% CAGR from FY18 to FY23, reaching US$ 52.5 billion in FY23. To build on this growth, the focus should be on developing a more robust export ecosystem. Key strategies include aligning production with market demand, improving post-harvest infrastructure with digital supply chain solutions, adhering to international quality standards, and incentivizing export promotion.
To Conclude
Boosting agricultural development in India requires major reform and a strengthening of India’s agricultural research and extension systems. A diverse and large country such as India has huge variations in agro-climatic and economic conditions. A single strategy cannot be adopted across geographies to achieve agri-development, which requires a major thrust in reform of agricultural research and extension. These services are key in carrying the government vision to boost agricultural development. Diversification of livelihoods through allied sectors, such as animal husbandry, forestry, and fisheries, will help build resilience and lead to a productive tomorrow.
A single strategy cannot be adopted across geographies to achieve agricultural development in India. A major thrust in reform of agricultural research and extension is required.
Contributions of S M Sehgal Foundation for Rural India’s Agriculture Development
A sustainable rural development NGO in India, S M Sehgal Foundation, has been working since 1999 to enhance the lives of the rural communities in India. Established as a public, charitable trust, S M Sehgal Foundation has a team of trained and dedicated professionals who create sustainable programs to address the most pressing needs of rural India.
S M Sehgal Foundation’s Agriculture Development Program promotes the development of a sustainable farming sector in India by building the capacities of farmers, including women farmers, on improved agricultural practices and modern technologies that conserve water, improve soil fertility, and therefore increase crop yields. The Agricultural Development Program works with marginal farmers in irrigated areas to facilitate adoption of sustainable agricultural practices that include soil health management, water-efficient irrigation implementations, climate-smart interventions, input-use efficiency, horticultural development, small farm mechanization, livestock management, crop production management, and the application of information and communication technology in agriculture.
With the help of donors and partners around the world, S M Sehgal Foundation’s grassroots programs and development interventions have reached three million people across India, already empowering communities in need to escalate and enhance their own development.
A Project implemented by S M Sehgal Foundation to Boost Agri-Development.
In October 2021, a CSR development project was implemented by S M Sehgal Foundation in fifteen villages of Mathura district of Uttar Pradesh. These villages consist of smallholder and marginal farmers.
The aim of the community-led project was to disseminate sustainable solutions in agriculture, livelihood, and entrepreneurship development. The vision of the program was to enhance farmer income through entrepreneurship-oriented mechanization. Wheat harvesting by combine harvesters in this area is common due to the high cost of manual harvesting. However, the use of combine harvesters leads to the loss of wheat straw that could have been used as cattle fodder, and leaves crop residue in the field.
For the preparation of the field for the next crop, the farmers generally burn the crop residue, which results in environmental pollution. In order to overcome these challenges, the team proposed the adoption of a multi-crop harvester/reaper. A multi-crop reaper can harvest ten to twelve acres of farmland per day of crops such as wheat, paddy, mustard, pulses, sesame, soybean, barley, oat, and fodder. This reaper machine is suitable for all types of tractors, and the harvesting operations can be done in a much more-effectively than manually or through combine harvesters. Harvesting by these reapers is cost-effective, saves drudgery, and there is no loss of wheat straw for fodder. They are also environmentally friendly. The machine provides a new opportunity for entrepreneurship in agriculture.
In February 2022, one multi-crop reaper was provided to each of the villages of Husaini, Kajraut Bangar, and Undi, for demonstrations to the entire cluster of the fifteen project villages. The villages were selected on the basis of their potential for maximum coverage by the reaper, thereby providing benefit to the maximum number of farmers. The criteria for the selection of the reaper-entrepreneurs were: the farmer owning a tractor, the farmer was willing to use the machine in the land of fellow farmers as an enterprise, and the farmer was experienced and well-accepted by the community.
The reaper-entrepreneurs had to contribute a subsidized amount of INR 22,000 (total cost is INR 55,000) for this reaper. In March 2022, the multi-crop reaper was handed over and installed on the tractor of reaper-entrepreneurs. Within a very short period they got back the invested amount of INR 22,000, and the harvested quantity went up substantially. The performance of the machine was visible to all, and the other farmers, realizing the benefit, started to use this for harvesting. For this, the reaper entrepreneur charged INR 1,400 per acre, which was a substantial saving in comparison to INR 4,800 incurred in manual harvesting.
Through the project, S M Sehgal Foundation led the acceptance of technology by the farming community and helped them to achieve the dual benefit of pollution control and higher income.
FAQs
India is a predominantly agrarian country with a large agricultural sector. Despite the share of agriculture in India’s GDP dwindling to around 15 percent, almost half of India’s population is employed in the agri-sector. India is home to the second-largest area of cultivable land in the world and is a major producer of a large number of agricultural products.
- More than half of India’s population depend on rural incomes.
- More than half of India’s population is found in rural areas.
- Food security of the vast and fast-growing Indian population with rising disposable incomes depends on cultivation of cereals, fruits, vegetables, and milk.
The already large and rapidly growing population of India is slated to become the world’s largest in the not-so-distant future. This increase in the population will result in a huge demand for food. Given the dwindling acreages under agriculture, this demand can only be increased through higher agricultural productivity or by increasing food imports.
The need of the hour is to concentrate on policy and program-based actions that create a more productive, competitive, and diversified agricultural sector.
- Increase agricultural yield per unit of land.
- Alleviate poverty.
- Emphasize aligning agriculture to food security needs.
Some measures that will help boost agricultural development in India.
- Efficient markets
- Irrigation augmentation and management
- Agri-credit and crop insurance
- Adoption of new technologies
- Enhancement of soil quality
S M Sehgal Foundation has a skilled and dedicated team who create sustainable rural development programs to address rural India’s most pressing needs. With support from donors and partners around the world, they empower individuals and communities across India. Through the project Parivartan, S M Sehgal Foundation led the acceptance of technology by the farming community and helped them achieve the dual benefit of pollution control and higher income.
Contact us 
Sign up for