Abstract
If imports of food are constrained to levels only slightly higher than at present, at least a 4 % growth rate of agricultural GDP is needed to support GDP growth rates in excess of 8 %. This can be attained with a slightly optimistic agriculture TFPG growth rate of 2 % along with a slightly optimistic development of irrigation potential to 90 million ha (Mha) (net). But in the past two decades, agricultural growth has been less than 3 %, productivity growth has been lower than 2 %, and limits on total water availability in India, competition for water from urban areas, and slow improvements in water use efficiency have reduced the irrigation growth rate and could continue to reduce it in the future. Achieving the required agricultural growth further increase the need for TFP growth. The way agriculture develops would have a profound impact on structural transformation when labor is pulled out of agriculture at a speed that depends on the labor intensity of industry and services. A turning point is reached when the labor productivity differential between the sectors starts to diminish and the share of labor in agriculture starts to decline faster than its share in output. India seems to be far away from such a point and we seem to be heading for a system of part-time farmers with substantial income coming from rural nonfarm activities. This is also leading to feminization of agriculture.
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Notes
- 1.
All these growth rates declined in the 1990s and 2000s. The decadal averages hide a deeper slump in agricultural production and productivity growth from the mid-1990s to the first half of the 2000s. A good illustration is the behavior of the annual TFP growth calculated by Fuglie (2010). While it hovered around 2 % during the 1980s, it slowed to near zero in 2001 only to rebound afterwards and to reach 3 % and above in 2006 and 2007. Growth of agriculture also accelerated to slightly above 3 % in the years since 2006, which explains the decadal growth of agriculture of 2.8 % despite the poor performance during the early 2000s. However, the growth rate is still around 1 % below the target rate of the Government of India for agriculture at 4 %.
- 2.
The poverty data with the higher poverty line resulting from the Tendulkar Committee report show similar convergence for the period 1993–1994 to 2004–2005. Preliminary estimates of the national poverty rate prepared by Ravi and cited in Ahluwahlia (2011) suggest that the national poverty rate under the new Tendulkar committee poverty line has declined further from 37.2 % in 2004–2005 to 37.2 % in 2009–2010, or at an accelerated rate of about 1 % per year. The urban-rural poverty rates for 2009–10 have not yet become available.
- 3.
Growth in rural nonfarm sector employment has occurred all over India, but has been highly uneven. It is highest in Kerala, West Bengal, and Tamil Nadu, and lowest in Chhattisgarh, Madhya Pradesh, followed by Uttarakhand, Karnataka, Gujarat, and Maharashtra (World Bank 2010; Binswanger-Mkhize and d’Souza 2011).
- 4.
India has achieved similar rates of TFP growth during the 1980s and again between 2003 and 2007; and the past growth rates of irrigation have exceeded what is needed to reach 108 Mha, though in recent years the growth rate has slowed down to 1 % per year, which can reach the 90 Mha targeted in the reference run.
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Parikh, K.S., Binswanger-Mkhize, H.P., Ghosh, P.P. (2016). Agriculture and Structural Transformation 1960–2040: Implications for Double-Digit Inclusive Growth. In: Dev, S., Babu, P. (eds) Development in India. India Studies in Business and Economics. Springer, New Delhi. https://doi.org/10.1007/978-81-322-2541-6_7
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