Agriculture Policy Briefing

India’s Ag Growth Led More By Productivity Than Resources: USDA Report

Groundnut-field

India’s agricultural growth in the past three decades was driven more by productivity increases that greater use of resources, according to a report of the United States Department of Agriculture (USDA).

India’s agricultural growth between 1980 and 2008 averaged 3.1 percent a year and 66 percent of that growth came from higher productivity, while the rest came from greater use of resources. Productivity growth during this period averaged 2.1 percent a year.

Productivity growth was the highest in the south and west (2.7 percent and 2.2 percent respectively), followed by north and east (1.9), centre (1.7) and the northeast (1.0).

Public investments in agricultural research and higher education gave the biggest bang. Every dollar invested in agricultural research and higher education generated $18.24 worth of benefits.

The expansion of irrigation helped. It had the greatest effect on productivity in the north and west than in the rest of the country. Wells, rather than canals, ensured that area sown more than once a year increased 65 percent from 32 million hectares to 53 million ha.

Public rural education lifted productivity when schooling exceeded 4.3 years; below that it dampened growth.

Horticultural crops and animal products contributed the most to growth. Fruit and vegetable production became the norm across the country. Their share in total output increased from 13 percent to 23 percent. That of animal products rose from 26 percent to 34 percent, led mainly by increased production of buffalo milk and poultry meat. South India contributed the most to animal product output growth.

Animal product output grew faster (4.0 percent annually) than growth in crop production (2.8 percent) and was more resilient to drought. The share of milk was 81 percent, that of meat nearly 14 percent while eggs had a share of 4.9 percent. Milk production grew by an annual average of 4.2 percent between 1980 and 2008.

Cotton production grew by 1.7 percent on average between 1980 and 2002 and from then on till 2012 it rose by 8.7 percent annually. The introduction of new Bt cotton technologies may have boosted productivity. It has reduced pesticide applications, helped release female labour from cotton production and reduced poverty, despite Bt cottonseed’s higher price.

South India achieved the fastest total factor productivity growth of 2.66 percent annually. Kerala topped at 3.12 percent, followed by Andhra (3.04), West Bengal (2.92), Rajasthan (2.56), Tamil Nadu and Maharashtra (2.45), Karnataka (2.40), Gujarat (2.19), Punjab (2.08) and Haryana (2.07).

(Top photo: A groundnut field in Gondal taluka of Gujarat’s Rajkot district. By Vivian Fernandes)

For USDA report click here. 

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