Agriculture sector has ‘untapped’ potential, needs policy shift: Economic Survey
The Economic Survey 2024-25 has stressed that India’s agriculture sector has “significant untapped growth potential” despite various growth initiatives, with Chief Economic Adviser V Anantha Nageswaran too observing that it has the potential to contribute up to 1 per cent to GDP growth.
The survey however pointed out the need for three key policy shifts — establishing market mechanisms for price risk hedging, preventing excessive fertiliser use and discouraging water and power-intensive crops.
“These policy shifts will help lift agricultural output by boosting land and labour productivity in the sector,” the survey said. The agriculture sector growth averaged 5 per cent during FY17-FY23, showing resilience despite challenges,” it noted, adding in the second quarter of 2024-25, the sector grew 3.5 per cent, recovering from growth rates of 0.4-2.0 per cent in the previous four quarters.
The survey has suggested policy reforms to discourage overproduction of cereals while boosting output of pulses and edible oils, which the country currently imports to meet shortages. Farmers must be allowed to receive unimpeded price signals from the market, with separate mechanisms to protect vulnerable households, it added. The survey emphasised the growing importance of allied sectors like animal husbandry, dairying and fisheries for income diversification.
Digital technology adoption and improved market infrastructure through platforms like e-NAM were highlighted as critical focus areas.
Government schemes have shown a positive impact, with over 11 crore farmers benefiting from PM-KISAN and 23.61 lakh farmers enrolling under the PMKMY pension scheme as of October 31, 2024. The report also stressed the need for private sector investment to support small farmers and modernise storage systems, particularly in remote areas.
“India needs to develop climate-resilient crop varieties and enhance yields to increase the production of pulses, oilseeds, tomatoes and onion to ensure long-term price stability,” it emphasised.
On food inflation, the survey stressed it had remained firm. The contribution of vegetables and pulses to the overall inflation stood at 32.3 per cent in 2024-25 (April to December). When these items are excluded, the average food inflation rate for 2024-25 (April-December) was 4.3 per cent, which is 4.1 per cent lower than the overall food inflation.
It also underlined that extreme weather conditions — such as cyclones, heavy rains, floods, thunderstorms, hailstorms, and droughts — impacted vegetable production and prices. “To increase the production of pulses, oilseeds, tomato and onion, focused research is needed to develop climate-resilient crop varieties, enhancing yield and reducing crop damage,” the survey suggested.
