Indian Agriculture after the Green Revolution

Changes and Challenges

Binoy Goswami, Madhurjya Prasad Bezbaruah, Raju Mandal

• Publisher: Taylor & Francis
• Year: 2017
• Print ISBN: 9781138286290
• eBook ISBN: 9781351976329
• Edition: 1
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

From a country plagued with chronic food shortage, the Green Revolution turned India into a food-grain self-sufficient nation within the decade of 1968-1978. By contrast, the decade of 1995-2005 witnessed a spate in suicides among farmers in many parts of the country. These tragic incidents were symptomatic of the severe stress and strain that the agriculture sector had meanwhile accumulated. The book recounts how the high achievements of the Green Revolution had overgrown to a state of this 'agrarian crisis'. In the process, it also brings to fore the underlying resilience and innovativeness in the sector which enabled it not just to survive through the crisis but to evolve and revive out of it. The need of the hour is to create an environment that will enable the sector to acquire the robustness to contend with the challenges of lifting levels of farm income and coping with Climate Change. To this end, a multi-pronged intervention strategy has been suggested. Reviving public investment in irrigation, tuning agrarian institutions to the changed context, strengthening of market institution for better farm-market linkage and financial access of farmers, and preparing the ground for ushering in technological innovations should form the major components of this policy paradigm.

1 Introduction

Binoy Goswami

Indian agriculture has traversed a long distance since the time the country became independent. The agriculture sector at the time of independence was characterized by acute food shortages resulting at times in crippling famines. To feed her people, India had to depend overwhelming on imports of food grains during that time. Thanks to the Green Revolution (GR) introduced in the mid-1960s, India became food self-sufficient in the mid-‘70s and reached a stage by the mid-‘90s when it had an unmanageable stock of food grains. The coming of age of Indian agriculture in terms of food grains production is reflected in the increase of its production over the past few decades. The production of food grains increased from a mere 51 million tonnes in 1950–51 to a mammoth 264 million tonnes in 2014–15. Similar trends could be observed in the cases of many non-food grain crops also (Narayanamoorthy, 2017). Today, India is not only self-sufficient in food grains, it is an exporter of food grains to many countries as well.

Notwithstanding the occasional hiccups, the increase in agricultural production has been largely steady. The sector itself, however, has undergone many changes over time. For instance, yield-improving technology was the primary contributor to agricultural growth in 1980s. In the 1990s, however, diversification from low to high-value crops (resulting in considerable changes in the cropping pattern) was as important a contributor to growth of the sector as technology was. In fact, the importance of technology as a determinant of growth in 1990s declined relative to the 1980s. In the subsequent decade from 2000–01 to 2009–10, the relative importance of area, yield, price and crop diversification as determinants of agricultural production and growth were further altered (Birthal et al., 2013). Meanwhile, formal and informal institutions governing agricultural production, especially factor markets such as the water market and rental markets for land and agricultural capital goods, have evolved considerably, arguably to the benefit of small and marginal farmers.

Significant changes have occurred in the sphere of infrastructure as well, especially in the cases of agricultural markets and irrigation. The unfolding of globalization, changes in the consumption basket due to increases in income and growing urbanization, speedy improvement and diffusion of information and communication technology, and changing roles of the state and private sector have altered the landscape of agricultural marketing in recent time in India (Rao et al., 2017). Irrigation, which is a crucial component of infrastructure, has undergone changes as well. Not only the nature and forms of irrigation, but also its management have changed over the years (Mukherji, 2016).

Not all the changes, however, have been positive. The agriculture sector itself and the people engaged therein have confronted certain challenges. Though the GR helped the country to overcome shortages of food, it also created income disparities between large and small farmers and production imbalances between regions and among crops. However, by the time the benefits of green revolution became more widespread, the unintended consequences of the technology, including falling groundwater table and increasing salinity of soil, among other effects, became perceptible. Moreover, the technology that had driven the growth of the sector in the 1980s started showing signs of fatigue by the early 1990s, and productivity of the GR crops, especially rice, stagnated. Meanwhile, the Government of India adopted a structural reform programme in 1991 which forced the government to exercise fiscal restraints. Following these economic and financial reforms, the state’s support of agriculture was also reoriented and indeed reduced in some areas. Subsidies on several inputs were withdrawn, though gradually and partially. Falling yields, rising private costs of cultivation due to withdrawal of subsidies and some other factors reduced returns from cultivation. The financial condition of the farmers worsened and their indebtedness increased. A sizable number of them were even pushed to the edge and ended their lives by killing themselves (Reddy and Misra, 2009). Until the late 1990s, however, farmers’ suicides did not receive adequate attention. Scholars and policy makers started taking note of the agrarian stress and farmers’ distress only in recent years, when the suicides began again (Narayanamoorthy, 2017).

The stress on the farmers was compounded in the early 1990s due to the implementation of the Agreement on Agriculture (AoA) under the Uruguay round of General Agreement on Tariffs and Trade (GATT), which exposed the farmers to global competition. Among Indian farmers, oil seed and spice growers have been the hardest hit by globalization. Preparing farmers to adjust to the World Trade Organization (WTO) regime will continue to be a challenge for Indian policy makers. In the meantime, agriculture in India, as in the rest of the world, will have to deal with uncertainties accentuated by climate change. Scholars have already warned that a warmer India with erratic rainfall does not auger well for the yield of rice, which is the leading food grain in terms of area sown and output (Gupta et al., 2014). New technological breakthroughs may open up opportunities for the sector but are likely to pose new challenges too.

An in-depth analysis of the changes that Indian agriculture has undergone and the challenges the sector and the farmers have confronted since the introduction of GR, as well as a discussion of measures to be undertaken to overcome the challenges, are presented in this collection of 14 chapters.

Chapter 2 presents an overview of the performance of Indian agriculture in the post-GR period. The chapter covers six major aspects of the sector: (i) growth of agricultural gross domestic product (GDP) and changes in the share of agriculture in India’s GDP and employment generation over time; (ii) changes in the composition of the agriculture sector; (iii) changes in cropping pattern and crop diversification; (iv) capital formation or investment in agriculture; (v) costs and profitability in crops cultivation; and (vi) terms of trade between agriculture and non-agriculture sectors.

One significant change that Indian agriculture has witnessed over the last five decades is a change in the ownership of land holdings. While the share of marginal-size land holdings increased from 52.98 per cent in 1971–72 to 75.41 per cent in 2013, the shares of all other size categories declined. The shares of small, semi-medium, medium and large classes fell from 15.49 per cent, 11.89 per cent, 7.88 per cent and 2.12 per cent in 1971–72 to 10 per cent, 5.01 per cent, 1.93 per cent and 0.24 per cent in 2013, respectively. In terms of area owned, however, while the marginal, small and semi-medium categories gained over time, the medium and large size classes lost. The marginal, small and semi-medium categories improved their shares in owned area from 9.76 per cent, 14.68 per cent and 21.92 per cent in 1971–72 to 29.75 per cent, 23.53 per cent and 22.07 per cent in 2013 respectively. On the other hand, the share of medium size class declined from 30.73 per cent in 1971–72 to 18.83 per cent in 2013, and that of the large size class fell from 22.91 per cent to 5.81 per cent during the same time (Government of India, 2013). The improvement in the shares of the marginal and small size classes and the fall in the share of the large size class is noteworthy. Though farmers even within the same size class of operational holding across states may not be exactly comparable, Das (2015) has shown that the top 15 percentiles of holdings have lost shares and the bottom 50 percentiles have gained shares in operational landholdings over time. These developments suggest that despite all the land reforms measures not being implemented fully and effectively, there may not be enough land to redistribute and bring all units to a minimum threshold size. Redistribution may thus result in pulling down all rather than pulling up the marginal size class. Therefore, rather than redistribution, what assumes more significance in today’s context is improving farmers’ access to land through an efficiently functioning land rental market. Chapter 3, in this context, explores certain aspects of the agricultural land rental market in India. The chapter analyzes changes in the extent and pattern of the agricultural land lease market over time, determinants of leasing decisions of rural households and their implications for rural development. Some major changes in the extent and pattern of the leasing arrangements which took place in recent time have been reported. An analysis in this chapter, based on the 70th round of NSSO data, suggests that there will be more supply of land in the rental market in the future. Consequently, certain reforms in the existing tenancy laws have been suggested in order to ensure efficient and equitable use of these lands.

Besides the land rental market, two other emerging agricultural factor markets in the country are water market and rental market of capital goods. These factor markets are important mainly because they correct imbalances in resource endowments across rural households. Besides, factors of agricultural production being complementary, it is necessary that these markets develop simultaneously (Goswami, 2012). Chapter 4 discusses various issues related to the functioning of the water market and the rental market of capital goods. The discussion in the chapter shows that these markets, besides preforming the usual function of correcting imbalances in factor endowments, enhance the extent of mechanization of agriculture and encourage adoption of production- and productivity-enhancing practices. Further, it appears that by benefitting small and marginal farmers the most, these markets have replaced India’s long-pending agrarian reform in terms of consolidation of holdings. These markets are, however, not free from imperfection, and hence intervention for their regulation is desired.

While land, water, machinery and so on are important factors in agricultural production, credit and insurance play enabling roles. Agriculture being susceptible to the vagaries of nature in India, insurance is absolutely crucial. In fact, the importance of insurance may be even higher in the future than it is now as uncertainties stemming from climate change are expected to increase. Moreover, eliminating the credit constraint may not be sufficient to induce a farmer to make an appropriate amount of investment if the risks are not insured. Instead, the right mix of credit and insurance can result in an efficient level of investment by a farmer. Chapter 5 develops a conceptual framework to establish this point. The analysis in this chapter suggests that interlinked credit and insurance contracts not only incentivize the farmers to make an efficient amount of investment, but also improve contract enforcement and facilitate development of markets for credit and insurance by mutually reinforcing each other. The chapter also traces the evolution of crop insurance schemes in India. Special emphasis is given to the critical evaluation of the National Agricultural Insurance Scheme in light of the conceptual framework developed in the chapter.

The importance of such infrastructure as markets and irrigation for agricultural growth requires no explanation. The deployment and diffusion of GR technology and the subsequent tremendous growth in agricultural production and productivity were enabled to a large extent by irrigation infrastructure. The market plays a crucial role in the post-harvest season. One of the factors that determines returns on investment in agriculture is the price received for produce, which in turn is related to, among others, available marketing opportunities. As discussed above, these two components of infrastructure in India have undergone remarkable changes over the past few decades. Chapter 6 captures the changes in the sphere of agricultural marketing, and chapter 7 analyzes the evolution of the irrigation sector. Chapter 6 briefly reviews policies related to and performances of agricultural markets in the pre-reform period and focuses in greater detail on agricultural marketing policies in the post-reform period. In particular, it focuses on the implications for smallholders of the rapid diffusion of supermarkets. The chapter concludes with policy recommendations that draw upon lessons from other countries that share similar characteristics, particularly China and Indonesia, to prepare a roadmap for a more inclusive and competitive agricultural marketing system in India. Chapter 7 examines the trend of growth in irrigated area across sources and across states, as well as issues in the management of irrigation infrastructure. It has been found that while there has been tremendous growth in irrigated area in the country following the Green Revolution, significant spatial variations exist in this regard. The chapter also outlines various challenges, both technical and institutional, which have been confronted while developing and managing the irrigation infrastructure. Some such challenges include underutilization of created irrigation potential, reduced public investment in recent decades and participation of stakeholders in irrigation management.

Once enabling institutions and adequate infrastructure are in place, technological development can take the growth of agriculture to the next level. Given the stagnating yields of some of the major crops, a technological breakthrough in Indian agriculture is extremely desirable. However, a mere breakthrough will not suffice if the technology does not get diffused through its adoption by the farmers. Chapter 8 asks (i) who uses technology in Indian agriculture, (ii) what are the determinants of technology use in agriculture, (iii) how do farmers obtain information on modern technology and (iv) is technology use limited to specific crops. The chapter uses the National Sample Survey 70th-round data to answer these questions.

While appropriate domestic institutions and good infrastructure are of utmost importance for the growth and development of the agriculture sector, in today’s globalized world, the performance of the sector and of the people engaged therein also depends on the extent to which the sector is exposed to global competition through international trade. As discussed above, implementation of the AoA under the Uruguay round of GATT in the mid-1990s did cause some turbulence in Indian agriculture, though it created some opportunities as well. Chapter 9 attempts to understand the linkage between trade liberalization and agricultural production through the mediating impacts of trade composition changes and price movements. It presents evidence of the shifts in the crop mix in Indian agriculture along with the aggregate trade patterns pertaining to agricultural commodities. While there is evidence of increased production in the case of the major export crops, it is found that domestic prices for the majority of India’s top agricultural exports remain lower than their export prices. Thus farmers may not gain substantially, even for export crops with thriving international demand. It is therefore suggested that the institutional arrangements in the Indian agricultural marketing system that prevent farmers from obtaining remunerative prices need a long-overdue restructuring.

Chapters 10–13 discuss the challenges confronting Indian agriculture and farmers. Since the early 1990s, Indian agriculture has been in a crisis for the better part of the time, a symptom of which is the high rate of farmers’ suicide. Chapter 10 recounts the factors that went into brewing this agrarian crisis. Discussion in the chapter argues that the seeds of the crisis were in the very policy measures that earlier made the GR a resounding success. As far as farmers’ suicides are concerned, a closer examination of the data, however, reveals that the suicide rate among farmers has generally been lower than that among non-farmers, notwithstanding the fact that the suicide rate was unusually high among farmers during 1995–2004. The chapter suggests policy options for strengthening farmers’ natural resilience in order to enable them to cope better with the uncertainties they typically encounter.

Given the agrarian crisis, it is not surprising that between 2001 and 2011, 8.9 million cultivators left cultivation (Venkatanarayana and Naik, 2013). Chapter 11, using nationally representative data for the years 1993–94 and 2011–12, analyzes the age profile of working individuals and examines whether they are more or less likely to be engaged in agriculture and allied areas now as compared to the period when the Indian economy underwent the first round of economic reforms. It has been found that the likelihood of younger people being engaged in agriculture than that of older ones declined over the time period considered in the study.

One unintended outcome of the GR that became discernible as early as in the 1980s is the environmental consequences of the HYV seeds and agro-chemical–based production package. The environmental challenges have in fact assumed alarming proportions, especially in the locations where the GR was first introduced. Chapter 12 analyzes the nature and magnitude of the environmental consequences of the GR in terms of soil degradation, depletion in the ground-water table and impacts of pesticides use on human health. The chapter stresses that more calibrated policy responses are required to avoid these problems.

In the future, as in other parts of the globe, climate change is going to pose serious challenges to agriculture in India. Chapter 13 is devoted to a discussion of the impacts of climate variables on agriculture. The chapter reviews the extant literature on the impacts of climate changes on agriculture, focusing on studies that have been conducted in India. Applying non-parametric median regression technique to state-level time series data on average yield of rice and wheat, and on temperature and rainfall from 1968 to 2001, the chapter investigates the impacts of changes in these climate variables on rice and wheat yields. The results indicate that rising temperature has a significant negative impact and rising rainfall variability has a significant positive impact on the average rice yield. Furthermore, an increase in temperature variability over the crop year appears to have a significant positive impact on wheat yield.

Given the changes that Indian agriculture has undergone and the challenges the sector has faced over the past few decades as discussed in chapters 2–13, chapter 14 discusses what the way forward ought to be. Multifaceted policy interventions required to make Indian agriculture strong enough to stand up to the impending challenges of the 21st century are discussed in this chapter. The discussion suggests that policy interventions should aim at creating an enabling environment by supporting the relevant infrastructure and institutions. However, honouring farmers by ensur...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of figures
• List of tables
• List of contributors
• Preface
• 1 Introduction
• 2 Indian agriculture after the Green Revolution: an overview
• 3 Rental market of agricultural land: changing context and need for tenancy reform
• 4 Emerging factor markets in Indian agriculture: water and rental of capital goods
• 5 Implications of credit-insurance interlinked contracts: an evaluation of crop insurance schemes in India
• 6 Transition of agricultural marketing in India
• 7 Irrigation in India: the post-Green Revolution experience, challenges and strategies
• 8 Technology adoption in Indian agriculture and its determinants: an inter-state analysis
• 9 Trade liberalization and Indian agriculture
• 10 Indian agriculture through the turn of the century: gathering stress and farmers’ distress
• 11 Shift of rural work force from farm to non-farm employment: some determinants
• 12 Environmental consequences of the Green Revolution in India
• 13 Climate change and Indian agriculture: impacts on crop yield
• 14 The way forward
• Index