The Economic Survey has warned that more than half the population is dependent on a sector whose share in the economy is shrinking, leading to a bigger urban-rural divide and threatening national food security.
"Achieving minimum agricultural growth is a prerequisite for inclusive growth, reduction of poverty levels, development of the rural economy and enhancing of farm incomes," the Survey has said.
But it offers no path-breaking solutions on how to meet the target of 4% annual agricultural growth, raising concern that the government might be running out of ideas on how to bootstrap the sector which employs close to 60% of India's workforce. In 2011-12, agriculture and allied sectors grew 2.5% and their share in the GDP fell from 14.7% in 2009-10 to 13.9% in 2011-12.
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Agriculture's share in the economy's overall gross capital formation also declined from 8.3% in 2008-9 to 7.2% in 2010-11. The Survey believes the big challenge before the government is how to address "welfare of agricultural producers and consumers simultaneously".
On one hand, it is necessary to ensure that "right quantities of food items" are there in the common man's food basket for nutritional security. On the other hand, the government has to ensure farmers are adequately compensated for the "risk" in rain-fed agriculture without straining food and fertiliser subsidy to breaking point. The Survey says rising population is fuelling demand for foodgrain, sugar and edible oil.
The urban middle class is consuming more protein such as milk, pulses, meat, and eggs, along with fruits, vegetables and processed food. Rural poor living on `100 per day from MNREGA and daily wage scheme still can't afford these expensive items, the Survey said.
Farmers are unable to meet demand because they remain hampered by low capital investment, obsolete technology, and shortage of basic inputs such as water, fertilisers, seed, and energy. But there is no attempt to offer out-of-box solutions.
Instead, the Survey argues that the current "comprehensive and coordinated efforts" to improve crop productivity, develop rural infrastructure, improve irrigation, strengthen marketing infrastructure, and supporting investment in R&D will "in time" rejuvenate agriculture and bring about inclusive growth.
Meanwhile, the Survey recommends "strategic" food imports to tide over shortages.
Wheat and rice are critical for India's food security but their share of cultivated area has declined in last 30 years, while yields are "plateauing" and require "speedy improvement".
Though it does not quantify the additional burden on government-held stocks from the forthcoming Food Security Act, ultimately the Survey tacitly accepts India will not be able to feed itself in the coming years.