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GS Paper: Agriculture and related issues

  • [pib] Release of Statistical Report on Value of Output from Agriculture and Allied Sectors, 2024

    Why in the News?

    The National Statistical Office (NSO), under the Ministry of Statistics and Programme Implementation (MoSPI), has released the ‘Statistical Report on Value of Output from Agriculture and Allied Sectors 2024’.

    Data Collection Strategies by NSO:

    • Crops are divided into 12 groups: Cereals, pulses, oilseeds, sugars, fibres, indigo, dyes and tanning material, drugs and narcotics, condiments & spices, fruits & vegetables, other crops, by-products, and kitchen garden.
    • Livestock products are divided into 7 groups: milk, meat, eggs, wool and hair, dung, silk worm cocoons & honey, and increment in livestock.

    About the National Statistical Office (NSO)

      • The NSO was established in 1950 as the Central Statistical Office (CSO) under the Ministry of Planning.
      • It was later renamed the National Sample Survey Office (NSSO) in 1970 and subsequently became the NSO in 2019.
      • Over the years, it has evolved to become the primary statistical agency in India.
    • Organizational Structure:  The NSO consists of several divisions and units responsible for different statistical functions.

    Key organizations under NSO: Central Statistical Office (CSO)

    • The CSO is a part of the NSO and focuses on macroeconomic statistics and national income accounting.
    • It is responsible for producing key economic indicators such as the Gross Domestic Product (GDP), Index of Industrial Production (IIP), Consumer Price Index (CPI), and Wholesale Price Index (WPI).

    Key Reports released by NSO:

    • Household Consumption Expenditure Survey
    • EnviStats India 2024: Environment Statistics
    • Energy Statistics India 2024
    • National Accounts Statistics 2024
    • Quarterly Estimates of GDP

    Sector-wise share of Value of Output

    Salient Features and Summary Results

    • India’s Agricultural Rankings: India ranks second worldwide in arable land, third in cereal production, and is a leading producer of groundnut, fruits, vegetables, sugarcane, tea, and jute. It is also the largest producer of milk, second in egg production, and fifth in meat production.
    • GVA Contribution: The shares of Crop, Livestock, Forestry and Fishing sub-sectors in value of output of Agriculture and allied sector were 54.3%, 30.9%, 7.9% and 6.9% respectively in 2022-23.
    • Crop Sub-sector Trends: The crop sub-sector remains the largest contributor to the Gross Value of Output (GVO) but has seen its share decline from 62.4% in 2011-12 to 54.3% in 2022-23. Fruits and vegetables’ output has significantly increased, highlighting the growing importance of horticulture.
    • Livestock Sub-sector Growth: The livestock sub-sector has seen an increase in the output of milk, meat, and eggs, indicating a steady growth in this area.
    • Forestry and Fishing: The forestry sector has diversified its output sources, and the fishing and aquaculture sector has seen significant growth, especially in Andhra Pradesh.

    State-wise Details from 2011-12 to 2022-23

    State-wise Value of Output of Crop

    • Highest Output: Uttar Pradesh leading in cereals and sugarcane production.
    • Lowest Output: Lakshadweep:

    State-wise Value of Output of Livestock

    • Highest Output:
      • Uttar Pradesh and Rajasthan together accounted for about a quarter of the livestock sub-sector’s output.
    • Lowest Output:
      • Goa: Output remained at ₹0 lakh throughout the period.
    • Key Trends:
      • Madhya Pradesh: Significant increase in livestock output, particularly in milk and meat production.
      • West Bengal: Steady growth in egg production.

    State-wise Value of Output of Forestry and Logging

    Major products: Industrial wood (68%), Fuelwood (20%), and Non-Timber Forest Products (NTFP) (12%) in 2022-23.

    • Top States in 2022-23:Maharashtra: 16.4% share, Rajasthan: 10.6% share,Uttar Pradesh: 8.7% share, Madhya Pradesh: 7.7% share and Odisha: 5.3% share.

    State-wise Value of Output of Fishing and Aquaculture

    • Highest Output: Andhra Pradesh: Share increased from 17.7% in 2011-12 to almost 40.9% in 2022-23, leading in fish and prawn farming.
    • Lowest Output: Arunachal Pradesh: Output increased from ₹0 lakh (2011-12) to ₹3 lakh (2022-23).

    All India Item-wise Value of Output from Agriculture, Livestock, Forestry, and Fishing

    • Cereals: Paddy and wheat are the top contributors to the cereals sub-sector. Paddy output in 2022-23 was ₹220,200 crore, while wheat output was ₹137,300 crore.
    • Pulses: Gram and Arhar together accounted for nearly 59% of the pulses output. Madhya Pradesh led in pulses production with a 22% share in 2022-23.
    • Oilseeds: Groundnut and Rapeseed & Mustard are the highest contributors within the oilseeds group. Gujarat and Rajasthan are the leading states in oilseeds production.
    • Sugar Crops: Uttar Pradesh remains the largest producer of sugarcane, increasing its share from 41% in 2011-12 to 54.5% in 2022-23.
    • Livestock Products: Milk, meat, and eggs are the major contributors within the livestock sub-sector. The share of milk, meat, and eggs in the livestock sub-sector was 66.5%, 23.6%, and 3.7% respectively in 2022-23.
    • Forestry Products: The forestry sector’s output is mainly driven by industrial wood, fuelwood, and NTFP. The share of industrial wood increased to 68% in 2022-23.
    • Fishing and Aquaculture: The fishing and aquaculture sector has seen a significant increase in output, with Andhra Pradesh leading the production. The output of fishing and aquaculture increased from ₹80 thousand crore in 2011-12 to ₹195 thousand crore in 2022-23.

    PYQ:

    [2011] A state in India has the following characteristics:

    1. Its northern part is arid and semiarid.
    2. Its central part produces cotton.
    3. Cultivation of cash crops is predominant over food crops.

    Which one of the following states has all of the above characteristics?

    (a) Andhra Pradesh

    (b) Gujarat

    (c) Karnataka

    (d) Tamil Nadu

  • PM-Kisan Samman Nidhi Yojana

    Why in the News?

    The Prime Minister will release the 17th installment of the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), amounting to over ₹20,000 crore, for 92.6 million beneficiary farmers across the country.

    About the PM-KISAN Scheme

    • The PM-KISAN is a Central Sector Scheme with 100% funding from the Government of India.
    • It is being implemented by the Ministry of Agriculture and Farmer’s Welfare.
    • Launched: In February 2019.
    • Aim: To help procure various inputs to ensure proper crop health and appropriate yields, commensurate with the anticipated farm income at the end of each crop cycle.
    • Objective: To provide eligible farmers with an annual financial assistance of ₹6,000.
      • This assistance is distributed in three equal instalments of ₹2,000 each every 4 months, via Direct Benefit Transfer (DBT) into beneficiaries’ bank accounts.
    • Beneficiaries:
      • Farmer families that hold cultivable land can apply for the benefits of this plan.
      • Small and Marginal Farmers (SMFs) (a farmer who owns cultivable land up to 2 hectare as per land records of the concerned State/UT.).
      • The entire responsibility of identification of beneficiary farmer families rests with the State / UT Governments.

    Do you know?

    The PM-KISAN scheme was first conceived and implemented by the government of Telangana as the Rythu Bandhu scheme.

    Rythu Bandhu Scheme

    • It is also known as the Farmer’s Investment Support Scheme (FISS).
    • It is a welfare programme for farmers started in 2018 by the Telangana government.
    • Under the scheme, the state government provided the 58 lakh farmers in Telangana with ₹5,000 per acre of their land as a farm investment for two crops.
    • There is no ceiling on the number of acres held by a farmer.
    • So, a farmer who owns two acres of land would receive Rs 20,000 a year, whereas a farmer who owns 10 acres would receive Rs 1 lakh a year from the government.
    • This investment is made twice a year, once for the kharif harvest and once for the Rabi harvest.
    • It is the country’s first direct farmer investment support scheme where cash is paid directly to the beneficiary.

    Impact of the Scheme

    • Beneficiaries outreach: Over 11 crore farmers (with more than 3 crore women farmers) across the country have availed of the PM-Kisan scheme, indicating its widespread reach and impact.
    • Financial Support: This financial aid helps farmers meet their agricultural expenses, purchase seeds, fertilizers, and other inputs, and support their families’ livelihoods.
    • Improved Agricultural Practices: This contributes to food security and boosts the agricultural sector’s growth.
    • Poverty Alleviation: The scheme plays a crucial role in alleviating poverty among small and marginal farmers by providing them with a steady source of income just like Universal Basic Income (UBI).
    • Enhanced Livelihoods: PM-Kisan supports farmers’ livelihoods, by providing a safety net during times of agricultural distress or economic uncertainties, ensuring a better quality of life for rural communities.

    PYQ:

    [2020] Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?

    1. Working capital for maintenance of farm assets.
    2. Purchase of combine harvesters, tractors and mini trucks.
    3. Consumption requirements of farm households.
    4. Post-harvest expenses.
    5. Construction of family house and setting up of village cold storage facility.

    Select the correct answer using the code given below:

    (a) 1, 2 and 5 only

    (b) 1, 3 and 4 only

    (c) 2, 3, 4 and 5 only

    (d) 1, 2, 4 and 5

  • PM-KISAN Scheme: Boosting Farmer Welfare

    Why in the News?

    Prime Minister has approved the 17th instalment of the PM Kisan scheme. This move will benefit 9.3 crore farmers, amounting to a distribution of approximately Rs 20,000 crore.

    About the PM-KISAN Scheme

    • The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is a Central Sector Scheme with 100% funding from the Government of India.
    • It is being implemented by the Ministry of Agriculture and Farmer’s Welfare.
    • Launched: In February 2019.
    • Aim: To help procure various inputs to ensure proper crop health and appropriate yields, commensurate with the anticipated farm income at the end of each crop cycle.
    • Objective: To provide eligible farmers with an annual financial assistance of ₹6,000.
      • This assistance is distributed in three equal instalments of ₹2,000 each every 4 months, via Direct Benefit Transfer (DBT) into the bank accounts of beneficiaries.
    • Beneficiaries:
      • Farmer families that hold cultivable land can apply for the benefits of this plan.
      • Small and Marginal Farmers (SMFs) (a farmer who owns cultivable land up to 2 hectares as per land records of the concerned State/UT.).
      • The entire responsibility of identification of beneficiary farmer families rests with the State / UT Governments.

    Significance for Farmers

    • Beneficiaries outreach: Over 11 crore farmers (with more than 3 crore women farmers) across the country have availed of the PM-Kisan scheme, indicating its widespread reach and impact.
    • Financial Support: This financial aid helps farmers meet their agricultural expenses, purchase seeds, fertilizers, and other inputs, and support their families’ livelihoods.
    • Improved Agricultural Practices: This contributes to food security and boosts the agricultural sector’s growth.
    • Poverty Alleviation: The scheme plays a crucial role in alleviating poverty among small and marginal farmers by providing them with a steady source of income just like Universal Basic Income (UBI).
    • Enhanced Livelihoods: PM-Kisan supports farmers’ livelihoods, by providing a safety net during times of agricultural distress or economic uncertainties, ensuring a better quality of life for rural communities.

    PYQ:

    [2020] Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?

    1. Working capital for maintenance of farm assets.
    2. Purchase of combine harvesters, tractors and mini trucks.
    3. Consumption requirements of farm households.
    4. Post-harvest expenses.
    5. Construction of family house and setting up of village cold storage facility.

    Select the correct answer using the code given below:

    (a) 1, 2 and 5 only

    (b) 1, 3 and 4 only

    (c) 2, 3, 4 and 5 only

    (d) 1, 2, 4 and 5

  • RobiNOweed: ICAR’s Herbicide-Tolerant Basmati Variety

    Why in the News? 

    • Indian Agricultural Research Institute (IARI) launched India’s inaugural non-GM herbicide-tolerant Basmati rice varieties for commercial farming, ensuring improved weed control, cost-effectiveness, and addressing water scarcity and methane emissions in cultivation.

    About the Indian Council of Agricultural Research (ICAR)

    • ICAR is an autonomous organisation under the Department of Agricultural Research and Education (DARE), Ministry of Agriculture and Farmers Welfare.
    • It is headquartered in New Delhi.
    • ICAR was formerly known as the Imperial Council of Agricultural Research.
    • It was established in 1929 as a registered society under the Societies Registration Act, 1860 on the basis of the report of the Royal Commission on Agriculture.

    Functions of ICAR:

    • Its primary mandate is to coordinate agricultural education and research in India and provide leadership in agriculture and allied sectors.
    • It is the apex body for coordinating, guiding and managing research and education in agriculture including horticulture, fisheries and animal sciences in the entire country.

    Structure and Organization:

    • ICAR operates under the Department of Agricultural Research and Education (DARE), Ministry of Agriculture and Farmers Welfare, Government of India.
    • It consists of a network of research institutes, national bureaus, project directorates, and agricultural universities across the country.
    • The council is governed by a Governing Body and an Executive Committee, which oversee its functioning and activities.

    Recognition and Awards:

    • ICAR confers prestigious awards, such as: the Rafi Ahmed Kidwai Award, the Borlaug Award, and the Hari Om Ashram Trust Award, to recognize excellence in agricultural research and education.

    About RobiNOweed

    • Dubbed as ‘RobiNOweed,’ these varieties are developed by ICAR-IARI and named as:
    1. Pusa Basmati 1979 and
    2. Pusa Basmati 1985
    • They are tailor-made for farmers employing the direct seeded rice (DSR) method, where weed management is crucial.

    Benefits Offered

    • Effective Weed Management: These new varieties offer an effective solution to weed issues and promote the success of the DSR method, potentially saving up to 33% of the total water requirement.
    • Water Conservation: DSR significantly reduces water usage compared to traditional flooding methods, addressing concerns of water depletion, especially in northwest India.
    • Market Impact: With IARI already holding a dominant 95% share in Basmati exports, these new varieties are expected to further boost production and export.

    Critical Assessment of Herbicide-Tolerant Varieties

    • Weed Management Alternatives: Some scientists argue against the necessity of Ht rice, advocating for eco-friendly weed management methods based on climatic factors.
    • Potential Risks: Concerns arise regarding the limited efficacy of the herbicide, its impact on genetic diversity, and the evolution of herbicide-resistant weeds.
    • Lessons from Past: Lessons from the Bt Cotton experience highlight the risks associated with overreliance on specific agricultural technologies.

    What is the Direct Seeding of Rice (DSR) technique?

    • Transplantation Method: In the conventional transplantation method, seeds are sown in nurseries, grown into seedlings, and then transplanted into puddled fields.
    • Direct Seeding: DSR involves directly drilling pre-germinated seeds into the field using tractor-powered machinery.
    • Simplicity and Efficiency: DSR eliminates the need for nursery preparation and transplantation, simplifying the cultivation process.
    • Resource Management: DSR offers benefits such as water savings and reduced labor requirements compared to conventional methods.
    • Higher Requirements: However, DSR requires higher seed quantities and levelled land, posing challenges for adoption.

     

    PYQ:

    [2018] With reference to the Genetically Modified mustard (GM mustard) developed in India, consider the following statements:

    1. GM mustard has the genes of a soil bacterium that give the plant the property of pest-resistance to a wide variety of pests.
    2. GM mustard has the genes that allow the plant cross-pollination and hybridization.
    3. GM mustard has been developed jointly by the IARI and Punjab Agricultural University.

    Which of the statements given above is/are correct?

    (a) 1 and 3 only

    (b) 2 only

    (c) 2 and 3 only

    (d) 1, 2 and 3

  • Why dal imports have hit a seven-year high?

    Why in the News?

    Due to food inflation during an El Niño year and an election year, the country has lost the self-sufficiency it had achieved in pulses.

    Pulse Production in India:

    • India is the largest producer (25% of global production), consumer (27% of world consumption), and importer (14%) of pulses in the world.
    • They account for 20% of India’s total area under cultivation and provide 7-10% of the total food grains in the country.
    • India’s production has increased by 50% (from 18 million tonnes to 27 million tonnes) up till 2022. However, it has not increased in step with the population growth, per capita availability of pulses has declined from 22.1 kg per person in 1951 to 16.4 kg per person in 2022.
    • Though there is surplus production of Chana, the imperfect substitution among pulses and limited international availability put pressure on the prices of some pulses.

    Recent Decline in Domestic Production:

    • Total Production: Decreased from 27.30 million tonnes (mt) in 2021-22 to 23.44 mt in 2023-24.
    • Chana (Chickpea): Production fell from 13.54 mt in 2021-22 to an estimated 12.16 mt in 2023-24.
    • Arhar/Tur (Pigeon Pea): Output decreased from 4.22 mt in 2021-22 to an estimated 3.34 mt in 2023-24.

    Significance of Pulse Production:

    • Suitable for Drought Areas: Drought-resistant and deep-rooting species of pulses can supply groundwater to companion crops when planted in the intercropping pattern. Locally adapted pulse varieties can enhance production systems in dry environments.
    • Enhances Fertility of Land: The leguminous plants of pulse also help in nitrogen fixation, thus ensuring higher soil fertility.
    • High Nutritional Value: In a country like India, where many people are poor and vegetarian, pulses are an important and affordable source of protein.
    • Low food wastage footprints: Pulses can be stored longer without losing their nutritional value and minimizing loss.

    Imports have hit a seven-year high

    Cause of the Inflation in Pulses

    • Impact of EL Nino: El Niño-induced patchy monsoon and winter rain led to a decline in domestic pulse production from 27.30 million tonnes (mt) in 2021-22 to 23.44 mt in 2023-24, as per the Agriculture Ministry’s estimates.
    • Sharp Output Falls: Both chana and Arhar/tur, the pulses with the highest inflation experienced sharp output falls. Chana production decreased from 13.54 mt in 2021-22 to 12.16 mt in 2023-24, while Arhar/tur production dropped from 4.22 mt to 3.34 mt over the same period.
    • Impact of Irregular Rainfall: Poor crops in regions like Karnataka, Maharashtra, Andhra Pradesh, and Telangana were attributed to irregular and deficient rainfall, leading to reduced planting area and lower yields.

    Effects of Inflation :

    • Increased Retail Prices: Significant annual retail inflation, particularly for pulses like Arhar/tur and chana.
    • Higher Import Costs: Surge in imports to meet domestic demand, leading to increased expenditure on foreign pulses.
    • Economic Burden: Higher prices in the open market strain household budgets, especially for low-income families who cannot rely on subsidized distribution for pulses.

    Challenges Ahead :

    • Monsoon Uncertainty: Future prices largely depend on the upcoming southwest monsoon; continued irregular weather patterns could sustain high inflation.
    • Import Dependency: Increased reliance on imports due to insufficient domestic production, especially for yellow/white peas and masoor.
    • Supply Position: Precarious domestic supply with minimal government procurement from recent crops, necessitating higher imports.

    Government initiatives as relief measures: The government has removed tariffs and quantitative restrictions by liberalizing imports on most pulses to boost supply and reduce prices like an extension of duty-free imports of Arhar/tur, urad, masoor, and desi chana till March 31, 2025.

    Conclusion: While the government has taken significant steps to mitigate the impact of high dal prices through import liberalization and policy adjustments, the actual relief to consumers will hinge on the performance of the upcoming monsoon and the global pulse market dynamics.

    Mains PYQ: 

    Q Mention the advantages of Cultivation of pulses because of which year 2016 was declared as the International year of Pulses By the United Nations. (UPSC IAS/2017)

     

    Q Food Security Bill is expected to eliminate hunger and malnutrition in India. Critically discuss various apprehensions in its effective implementation along with the concerns it has generated in WTO. (UPSC IAS/2013)

    Prelims PYQs:

    With reference to pulse production in India, consider the following statements:

    1) Black gram can be cultivated as both kharif and rahi crop.

    2) Green gram alone accounts for nearly half of pulse production.

    3) In the last three decades, while the production of Kharif pulses has increased, the production of rabi pulses has decreased.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 2 only

    (d) 1, 2 and 3

  • A vegetable triumvirate, inflation, and the takeaway

    Why in the News?

    The price fluctuations and Inflation trends in recent market underscore the necessity for Targeted Policy Interventions and a comprehensive grasp of Agricultural Supply Chains.

    The Significance of Vegetable Triumvirate (trio):

    • Tomato, Onion, and Potato (TOP) aren’t just statistical entities but essential ingredients in Indian cuisine, forming the backbone of many dishes.
    • These vegetables represent more than just a portion of the CPI basket; they embody cultural and dietary preferences deeply ingrained in Indian culinary traditions.

    Volatility and its role in shaping Inflation trends by TOP vegetables:

    Vegetable prices in India rose by approximately 15% year-on-year, indicating significant inflation in this category.

    • Highly Volatile: There was notable volatility in vegetable prices, with a sharp decrease of 0.7% in June followed by a substantial increase of 37.4% in July.
    • High Contribution to Inflation: Despite vegetables weighing only 6% in the total CPI basket, their contribution to inflation was about 30% in Feb/March 2024.
      • For example, Tomatoes having a weight of only 0.6% in the CPI basket, prices soared by 202% in July 2023, contributing to 18.1% of the total headline inflation.
      • The contribution of vegetables to headline inflation was 31.9%, with TOP (tomato, onion, and potato) contributing 17.2%, further highlighting their substantial impact on inflation trends.

    Navigating Culinary and Economic Realities (Challenges):

    • Policy Challenges: The volatility in TOP prices underscores the need for effective policy interventions, including agricultural value chain reforms and improved storage facilities to stabilize prices and support farmers.
    • Farmers’ Plight: Farmers, who are often net buyers of these crops, bear the brunt of price fluctuations, necessitating measures like Minimum Support Prices to ensure their livelihoods are protected.
    • Government Response: Despite protests and demands from farmers, policy responses have been inconsistent, relying on short-term measures like export bans rather than addressing underlying structural issues in the agricultural sector.

    Way forward:

    • Need for Value Chain Reforms: Implement reforms aimed at improving the efficiency and resilience of agricultural value chains for TOP vegetables.
    • Need Price Stabilization Mechanisms: Introduce mechanisms to stabilize prices of TOP vegetables, such as market interventions, buffer stocks, or price ceilings during periods of extreme volatility. This can help mitigate the impact of price fluctuations on consumers and farmers alike.
    • Minimum Support Prices (MSPs): Establish MSPs for TOP vegetables to provide farmers with a guaranteed floor price for their produce.

    Mains PYQ:

    Q Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments.(UPSC IAS/2019)

  • National Council for Agriculture and Rural Transformation (NCART): A New Vision for Agriculture Sector

    Why in the news?

    The Centre is contemplating the establishment of the National Council for Agriculture and Rural Transformation (NCART), envisioned as a federal body to formulate policies and programs for the agricultural sector.

    What is NCART?

    • The NCART is a proposed federal body aimed at coordinating and driving actions in the agriculture sector in India.
    • It would have representation of both the Centre and States.
    • The idea for NCART has been proposed by the Ministry of Agriculture and Farmers’ Welfare as part of its 100-day action plan for the new government.
    • It draws inspiration from the Goods and Services Tax (GST) Council.

    Terms of Reference of NCART:

    • Policy Formulation: NCART is envisioned as an overarching federal body responsible for devising policies and programs to promote agricultural and rural development.
    • Coordination: One of the key objectives of NCART is to ensure coordinated actions across various stakeholders involved in the agriculture sector, including the central government, state governments, and other relevant entities.
    • Consultative Body: NCART is expected to include representation from both the central and state governments, similar to the Goods and Services Tax (GST) Council, to ensure a consultative approach in decision-making.
    • Legal Status: While the GST Council is a constitutional body, the exact status of NCART is yet to be finalized.

    India’s Agriculture Expenses:

    • Despite agriculture being a state subject, the Centre has significantly increased budgetary allocations for the Agriculture Ministry.
    • Budgetary allocation for the Ministry of Agriculture and Farmers’ Welfare surged from Rs. 27,662.67 crore in 2013-14 to Rs. 1,25,035.79 crore in 2023-24 BE.

  • PREMIUM – Subsidies – Good or Bad for India?

    Why in the News? 

    Issues have been raised by the World Trade Organization (WTO) concerning Agricultural Subsidies in India. Major subsidies in India are on fertilizer, power, credit, output, seed, and export products.

    What is Subsidy?

    • The term subsidy refers to financial assistance in the form of discounts or monetary grants by the Central government to public entities or private institutions. 
    • The objective is to make the products offered by these institutions affordable for public consumption. 
    • The subsidized products are necessary for the larger public good and are a means of supporting the community’s welfare.

     

    Historical Background

    • Post-Independence Era (1947 onwards): The government introduced various subsidies to promote industrialization, agriculture, and social welfare, aiming to reduce poverty and achieve self-sufficiency in key sectors.
    • Green Revolution (1960s): During the 1960s and 1970s, Subsidies on fertilizers, seeds, and credit were provided to farmers to encourage the adoption of new agricultural technologies and boost food production.
    • Liberalization Reforms (1991):  While liberalization led to a reduction in some subsidies and a shift towards market-oriented policies, the government continued to provide support to sectors deemed crucial for social welfare and economic development.

    Types of Subsidies:

    • Food subsidy: The food subsidy’s main objective is to provide essential eatables to a large section of the population living below the poverty line in India. 
      • The major food items supplied to the BPL families (by PDS system) vary as per the region, it includes – Wheat, Rice, Sugar, Milk, Cooking oil, and more.
    • Education subsidy: The Central government extends the education subsidy to eligible students to pursue higher technical and professional education.
    • Export subsidy: To make exports attractive and lend support to the companies, the government offers export subsidies. 
    • Fertilizer subsidy: The fertilizer is provided at a fixed MRP that is below the actual price; the government pays the difference between the actual coat and the MRP.

    (Note: There are various types of subsidies but UPSC usually asks for Agriculture subsidies) 

    Subsidies in Agriculture:

    Direct Subsidies: 

    • Credit Subsidies: Subsidized credit programs offer farmers loans at lower interest rates or with relaxed repayment terms to finance agricultural activities, such as purchasing inputs, machinery, or land.
      • Ex-The Government of India provides interest subvention of 2% and Prompt Repayment Incentive of 3% to the farmers, thus making the credit available at a very subsidized rate of 4% per annum as per Kisan Credit Card.
    • Direct Income Transfers: Governments provide direct cash transfers or income support schemes to farmers to supplement their incomes, improve their financial stability, and alleviate rural poverty. Ex-PM Kisan Samman Nidhi Scheme under which support of Rs.6000/- per year 

    Indirect Subsidies 

    • Fertilizer Subsidies: Governments often provide subsidies on fertilizers to reduce the cost burden on farmers and promote fertilizer use, which enhances crop productivity. Ex- the Union Budget for the fiscal year 2024-25 (FY25) allocated ₹1.64 trillion for fertilizer subsidy.
    • Seed Subsidies: Subsidies on quality seeds help farmers access improved varieties that are disease-resistant, drought-tolerant or have higher yields. Ex- the government provides a subsidy of Rs. 1000/- per quintal or 50% of the cost.
    • Water Subsidies: Subsidized irrigation infrastructure and water supply schemes aim to improve water availability for agricultural purposes, especially in regions facing water scarcity. Ex- Pradhan Mantri Krishi Sinchai Yojana.
    • Minimum Support Prices (MSP): Governments guarantee a minimum price for certain crops to protect farmers from market price fluctuations and ensure stable income. Procurement agencies purchase crops from farmers at MSP, often for staples like wheat, rice, and pulses. Ex- the government of India sets the MSP twice a year for 24 commodities (23 crops + 1 sugarcane).
    • Crop Insurance Subsidies: Subsidies are offered on crop insurance premiums to encourage farmers to enroll in crop insurance schemes, which protect them against yield or revenue losses due to adverse weather, pests, or other risks. Ex- Pradhan Mantri Fasal Bima Yojana (PMFBY)
    • Subsidized Agricultural Machinery: Governments may subsidize the purchase of farm machinery, equipment, and tools to mechanize agricultural operations, increase efficiency, and reduce labor costs. Ex- Sub-mission On Agriculture Mechanization (SMAM scheme)

    Present issues raised by the WTO:

    • Market Distortion: The WTO contends that agricultural subsidies have the potential to disrupt global markets. For instance, subsidies like India’s Minimum Support Price (MSP) may result in the undervaluation of Indian agricultural goods on the international stage. 
    • Trade Barriers: Subsidies can create challenges for foreign producers without subsidies to compete effectively in markets where subsidized goods are sold.
    • Overproduction of certain crops: Subsidies can lead to overproduction of certain crops, which can further distort the market and lead to wastage.
    • Negative Environmental Impact: Overuse of fertilizers and water for irrigation, encouraged by subsidies, can lead to environmental degradation.
    • Inequity: The benefits of subsidies often go to larger farmers rather than small-scale farmers who need them the most.

    Limitations Faced by Indian Agriculture:

    • Subsidies on few crops: Subsidies like MSP, which are applicable for only a few crops, have led to cereal-centric agriculture with distorted cropping patterns, as farmers tend to grow only those crops for which they are given subsidies.
    • Benefiting only wealthy Farmers: As per the Economic Survey 2018, wealthy farmers benefited over small farmers from the farm subsidies. Thus the objective of giving subsidies is not fulfilled. This is the case frequently witnessed in Punjab and Haryana, where affluent farmers enjoy taxpayer money.
    • Fiscal deficit: Also, the subsidies lead to a substantial financial deficit and burden on the financial exchequer.
    • Cause of pollution: Subsidies for agriculture can foster the overloading of croplands, which leads to erosion and compaction of topsoil, pollution from synthetic fertilizers and pesticides, and release of greenhouse gases, among other adverse effects.

    Way Forward:

    • Diversification of Subsidies: Expand subsidy programs to cover a wider range of crops, including fruits, vegetables, pulses, and other diversified agricultural products, to promote crop diversification and mitigate the cereal-centric focus.
    • Targeted Subsidy Programs: Implement targeted subsidy schemes that prioritize support for small and marginalized farmers, ensuring that subsidies reach those who need them most and reducing the disproportionate benefit to wealthy farmers.
    • Price Stabilization Mechanisms: Develop price stabilization mechanisms beyond MSP, such as futures markets, crop insurance, and warehouse receipt systems, to mitigate price volatility and provide income security to farmers without distorting cropping patterns.

    Prelims PYQ

    In India, markets in agricultural products are regulated under the (UPSC IAS/2015)

    a) Essential Commodities Act, 1955

    b) Agricultural Produce Market Committee Act enacted by States

    c) Agricultural Produce (Grading and Marking) Act, 1937

    d) Food Products Order, 1956 and Meat and Food Products Order, 1973

    Mains PYQ 

    Q How do subsidies affect the cropping pattern, crop diversity and economy of farmers? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers? (UPSC IAS/2017) 

    Q What are the different types of agriculture subsidies given to farmers at the national and at state levels? Critically analyse the agricultural subsidy regime with reference to the distortions created by it (UPSC IAS/2013)

  • NABARD Unveils Climate Strategy 2030 for Green Financing

    Why in the news?

    The National Bank for Agriculture and Rural Development (NABARD) revealed its ‘Climate Strategy 2030’ document, aiming to address India’s need for enhanced green financing.

    Key Pillars of Climate Strategy 2030:

    • The strategy focuses on four key pillars: 
      1. Accelerating green lending across sectors, 
      2. Playing a broader market-making role, 
      3. Internal green transformation, and 
      4. Strategic resource mobilization.
    Green Financing Scenario in India

    • Despite India’s requirement of $170 billion annually for achieving sustainable development goals by 2030, the current green finance inflows remain critically insufficient.
    • As of 2019-20, India secured only about $49 billion in green financing, with a significant portion allocated to mitigation efforts, leaving minimal funds for adaptation and resilience.

     

    About NABARD:

    • It was established on July 12, 1982, based on the recommendation of the Sivaraman Committee to promote sustainable rural development and agricultural growth in India.
    • Aim:  To facilitate credit flow for the promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts, and other rural crafts.
    • It operates as a statutory body under the Reserve Bank of India (RBI) Act, 1934, with its headquarters located in Mumbai.
    • It is governed by a Board of Directors appointed by the GoI:
      • Representatives from the RBI;
      • Central and state governments; 
      • Experts from various fields related to Rural Development and Finance.

     Functions of NABARD:

    • Refinance Support: NABARD provides refinance facilities to banks and financial institutions for agricultural and rural development activities, including crop loans and rural infrastructure projects.
    • Financial Inclusion: It promotes financial inclusion by expanding banking services in rural areas, supporting SHGs, FPOs, and MFIs, and facilitating access to credit for rural communities.
    • Priority Sector Lending: NABARD plays a crucial role in channelling credit to priority sectors such as agriculture, small-scale industries, and rural infrastructure, in alignment with the Reserve Bank of India’s priority sector lending guidelines.
    • Direct Lending: It extends direct loans to institutions for specific rural development projects, such as agricultural production, rural infrastructure development, and agri-processing units.
    • Scheme Implementation: The organization administers government schemes and funds like Rural Infrastructure Development Fund (RIDF), Watershed Development Fund (WDF) to finance rural infrastructure projects and watershed development activities.
    • Credit Planning: NABARD collaborates with central and state governments, RBI, and other stakeholders to formulate credit policies and plans for agriculture and rural sectors.
    • Research and Training: NABARD promotes research and development in agriculture, supports capacity building and training programs for rural stakeholders, and facilitates technology transfer initiatives.

     

    PYQ:

    [2013] Which of the following grants/grants direct credit assistance to rural households? 

    1. Regional Rural Banks
    2. National Bank for Agriculture and Rural Development
    3. Land Development Banks

    Select the correct answer using the codes given below:

    (a) 1 and 2 only 

    (b) 2 only 

    (c) 1 and 3 only

    (d) 1, 2 and 3

  • NABARD to launch ₹1000-crore Blended Fund for Agri-Startups

    What is the news –

    • The National Bank for Agriculture and Rural Development (NABARD) is set to launch a ₹1,000-crore fund to bolster technology-driven agri-startups and rural enterprises.
    • NABARD has already established a ₹750-crore fund, which will be followed by another ₹1,000 crore, to support startups in this regard.

    What are Agri-Startups?

    • Agri-startups are entrepreneurial ventures focused on innovating and revolutionizing various aspects of agriculture and allied sectors.
    • These startups leverage technology, data, and modern farming practices to address challenges in the agricultural value chain and promote sustainable farming practices.
    • They offer a wide range of products and services aimed at improving productivity, efficiency, and profitability for farmers, as well as enhancing food quality and safety for consumers.

    Key areas of innovation in agri-startups include:

    1. Precision Agriculture: Utilizing data-driven technologies such as IoT, drones, and satellite imagery for precision farming, soil health monitoring, crop monitoring, and yield optimization.
    2. Agritech Solutions: Developing innovative technologies and tools for pest and disease management, water management, greenhouse farming, and hydroponics.
    3. Farm Management Software: Providing digital platforms and mobile applications for farm management, crop planning, inventory management, and market intelligence.
    4. Agri-Marketing Platforms: Connecting farmers directly with buyers, retailers, and consumers through online marketplaces, e-commerce platforms, and farm-to-fork initiatives.
    5. Supply Chain Management: Streamlining logistics, transportation, and warehousing operations to reduce post-harvest losses, improve market access, and ensure traceability and transparency in the supply chain.
    6. Food Processing: Developing value-added products, food processing technologies, and packaging solutions to enhance the shelf life, nutritional value, and marketability of agricultural produce.

     About NABARD

     

    • NABARD was established on July 12, 1982, by an Act of Parliament to promote sustainable rural development and agricultural growth in India.
    • It operates as a statutory body under the Reserve Bank of India (RBI) Act, 1934, with its headquarters located in Mumbai, Maharashtra.
    • It was established on the recommendation of the Sivaraman Committee and has its headquarters in Mumbai.
    • Its primary mission is to facilitate credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts, and other rural crafts.
    • It is governed by a Board of Directors appointed by the GoI, with (1) representatives from the RBI, (2) central and state governments, and (3) experts in various fields related to rural development and finance.

     

    Functions of NABARD:

     

    1. Refinance Support: NABARD provides refinance facilities to banks and financial institutions for agricultural and rural development activities, including crop loans and rural infrastructure projects.
    2. Direct Lending: It extends direct loans to institutions for specific rural development projects, such as agricultural production, rural infrastructure development, and agri-processing units.
    3. Research and Training: NABARD promotes research and development in agriculture, supports capacity building and training programs for rural stakeholders, and facilitates technology transfer initiatives.
    4. Scheme Implementation: The organization administers government schemes and funds like Rural Infrastructure Development Fund (RIDF), Watershed Development Fund (WDF) to finance rural infrastructure projects and watershed development activities.
    5. Credit Planning: NABARD collaborates with central and state governments, RBI, and other stakeholders to formulate credit policies and plans for agriculture and rural sectors.
    6. Financial Inclusion: It promotes financial inclusion by expanding banking services in rural areas, supporting SHGs, FPOs, and MFIs, and facilitating access to credit for rural communities.
    7. Priority Sector Lending: NABARD plays a crucial role in channelling credit to priority sectors such as agriculture, small-scale industries, and rural infrastructure, in alignment with the Reserve Bank of India’s priority sector lending guidelines.

     

    About the Blended Fund for Agri-Startups

    • In the budget for FY23, plans for a blended capital fund were announced for ‘Sunrise Sectors’ to finance startups for agriculture and rural enterprises.
    • The fund aims to support startups facing challenges in scaling up their operations due to limited access to equity and debt instruments.
    • It also seeks to foster new linkages in the rural ecosystem, both forward and backwards.

    Other Schemes for Agri-Startups in India

     

    1. Agriculture Accelerator Fund (2023): It was announced by Finance Minister in the union budget for 2023-24, as a significant initiative designed to support agritech startups and young entrepreneurs hailing from rural areas.
    2. Innovation and Agri-Entrepreneurship Development Program (2018-19): To increase farmers’ income, GOI started this Program under the umbrella of Rashtriya Krishi Vikas Yojana (2007). Startups receive financial assistance at different stages, with Rs. 5.00 lakh at the idea/pre-seed stage and Rs. 25 lakh at the seed stage.

     

    PYQ:

    Q.Priority Sector Lending by banks in India constitutes the lending to: (2012)

    1. Agriculture
    2. Micro and small enterprises
    3. Weaker sections
    4. All of the above