SWOT Analysis of Indian agriculture

Strengths of Indian agriculture: The Indian agriculture is large, competitive and well developed, offering products at low prices. The sector experiences a constant demand, as Indians have a strong preference for fresh rather than processed foods and for local spices and ingredients. Provides employment for a large Indian population, living in rural territories. Recent advances in technology and government initiatives support the development of the sector. In pursuance of the government policy to strengthen and promote IT led governance, the department of agriculture and cooperation has been taking various measures to promote the use and application of technology with the aim of making agriculture online for the use of farmers, exporters, and traders, etc. Weakness of Indian agriculture: One of the major weaknesses present for the agricultural sector in India is in the lack of government support. Unlike in East Asian countries, the shift of the labour force from agriculture to non-agriculture in India is peculiarly slow, largely attributable to rigid labour laws in both the agricultural and industrial sectors. Gliessman (1989) also highlights the need for pressing on with reforms in agriculture, in particular, trade liberalization and export promotion strategies. Becker and et al. (1992) also claim that though India spends on agriculture nearly twice as much as some East Asian economies, this level of spending on agriculture does not translate into a significantly higher sectoral performance. Inadequate road linkages also remain a major constrain for the development of wellfunctioning agricultural markets. A continuing fragmentation of land-holdings, poor maintenance of existing irrigation systems and declining soil fertility in some areas are other factors. Another weakness is based on seasonality and the fact that agricultural sector output heavily depends on the annual monsoon, as less than one-third of cropland is irrigated. The main food grain crops, for example, and some cash crops (oilseeds, cotton, jute and sugar) depend on the south-west monsoon. Opportunities of Indian agriculture: A growing population, rapid economic development, and political and social demands exceed the mandate and capabilities of any corporation in an emerging economy (Bhagwati, 1998), and India is no exception to this. A growing population has made industrial development one of the Indian government's highest policy priorities; it is an important element of economic development as it assists in raising national income at amore rapid pace. It is also a precondition for continued agricultural development. Palmer-Jones and Sen (2003) state that the government continues to play a major role in assisting farmers through agricultural credits, subsidies, price support schemes and extension services. Although there are no foods security concerns at present, better agricultural productivity will hold the key to stable growth in food production, given the

limits of the resource base. There is an opportunity for the economic growth to benefit more people only if the country raises agricultural productivity, improves its system of general education to help the millions who must leave farming, and encourages labor intensive manufacturing industries. Threats to Indian agriculture: About one-fifth of the country, 69m ha, is covered by forests and woodland, and onehalf of this area is reserved for the production of timber and other forestry products (Varshney, 1998). However, there are increasing concerns from environmentalists and local government over the rapid depletion of forest areas, ecological factors, and scarcity of natural resources. As income rises, India is becoming an increasingly important market for processed foods, especially in the cities and among young people. Aware of quality and international brands, consumers are less likely to support national products, and are more vulnerable to pay premium prices for foreign products of better quality. This represents a potential substitution to the local products, impacting the production levels of agriculture sector. Food support prices for wheat and rice have given farmers little incentive to diversify and have filled government storage facilities to overflowing, while keeping the market price of food grains artificially high. Current agricultural policy, which supports cereal production, is exceedingly expensive and will be unable to deal with the likely scenario ofa shift in consumption from cereal food towards non-cereal food. A lack of market infrastructure also hampers the movement of crops, leading to sudden shortages. India has considerable potential as an exporter of rice, cotton, many types of fruit and even flowers, but this has so far not been tapped. The introduction of high-yield crop varieties and new fertilizing and irrigation techniques over recent decades the so-called Green Revolution dramatically increased productivity in some regions. India has been self-sufficient in food since the mid-1970s, maintaining buffer stocks adequate to meet demand despite failed harvests and seasonal fluctuations (Ramakrishnan, 1993; The World Bank, 1997).

PEST ANALYSIS of Indian agriculture

Political: India is a parliamentary federal democracy with an indirectly elected president, Pratibha Patil. The economic liberalization of 1991, initiated by then Indian Prime Minister P. V. Narasimha Rao and his finance minister Manmohan Singh in response to a macroeconomic crisis did away with the Licence Raj (investment, industrial and import licensing) and ended public sector monopoly in many sectors, thereby allowing automatic approval of foreign direct investment in many sectors, including agricultural. Since then, the overall direction of liberalization has remained the same, irrespective of the ruling party at the centre, although no party has yet tried to take on powerful lobbies like the trade unions and farmers, or contentious issues like labour reforms and cutting down agricultural subsidies. The process of reducing or removing agricultural and food subsidies, which is still on going, was commenced. Tariff and non-tariff barriers to external trade were also reduced. Realizing the importance of Indian agricultural production for economic development, the central Government of India has played an active role in all aspects of agricultural development. Planning is centralized, and planned priorities, policies, and resource allocations are decided at the central level. Food and price policy also are decided by the central government. Thus, although agriculture in India is constitutionally the responsibility of the states rather than the central government, the latter plays a key role in formulating policy and providing financial resources for agriculture. The main objectives of the Government's price policy for agricultural produce, aims at ensuring remunerative prices to the growers for their produce with a view to encourage higher investment and production. Minimum support prices for major agricultural products are announced each year which are fixed after taking into account, the recommendations of the Commission for Agricultural Costs and Prices (CACP). One of the most critical obstacles of policies applications in agricultural sector is in ensuring food security -access of the population to sufficient food to meet nutritional requirements. Food security issues tend to cover not only issues related to availability and stability of food supplies but also issues of access to this supply. This last misrelated to the resources needed to procure the required quantity of food. However, these issues in India are considered to be sensitive and hence, where a large percentage of the population is dependent on agriculture need a certain degree of autonomy and flexibility in determining their domestic agricultural policies. The Economist Intelligence Unit Report (2005) also implies that the government does not fully understand its importance. These would have to be geared towards improving productivity, enhancing income levels, reducing vulnerability to market fluctuations ensuring stability of prices and so on.

Economic: India is a two-tier economy, with a cutting-edge and globally competitive knowledgedriven service sector that employs the brightest of the middle classes on the one hand, and a sprawling largely rain-fed agricultural sector that employs the majority of the vast and poorly educated labour force, on the other. The agricultural sector, with fishing and forestry, accounts for around 20% of GDP, services 53% and manufacturing 27%. Agriculture represents an important economic activity for a large population of the developing world Indias agricultural sector provides employment for about 60% of the countrys workforce and accounts for one-fifth of GDP (Meisinger,2006). Both in terms of foreign investment and number of joint- ventures / foreign collaborations, the consumer food segment has the top priority. The other attractive features of the Indian agro industry that have the capacity to lure foreigners with promising benefits are the deep sea fishing, aqua culture, milk and milk products, meat and poultry segments. The serious foreign-exchange crisis in 1990 led to a number of well-publicized economic reforms in the early1990s dealing with trade, industrial licensing, and privatization. The reforms had an impact on the agricultural sector through the central government's effort to withdraw the fertilizer subsidy and place greater emphasis on agricultural exports. The cut in the fertilizer subsidy was a result of the government's commitment to reduce New Delhis fiscal deficit by removing grants and subsidies from the budget. The government action led to a reduction in the use of chemical fertilizers and protests by farmers and opposition from political parties. The government was forced to continue the subsidies but at a somewhat lower level. Agricultural exports from India were 44 percent of total exports in FY 1960, decreasing to 27 percent in 2003(India Economic Survey, 2004). This drop in agriculture's share was somewhat misleading because agricultural products, such as cotton and jute that were exported in raw form in the 1950s have been exported as cotton yarn, fabrics, ready-made garments, coir yarn, and jute manufactures since the 1960s. The composition of agricultural and allied products for export from India changed mainly because of the continuing growth of demand in the domestic market. This demand cut into the surplus available for export despite a continuing desire, on the part of government, to shore up the constant foreign-exchange shortage. Over the period 1994-2005, the drive for market liberalization and globalization has severely imposed on the rural household economies. The traditional mode of agricultural practice has been destroyed. The government allocations on the agriculture sector constantly register a decline (The Economist Intelligence Unit Report, 2005).The recent economic system giving a free hand to multinational corporations in agriculture sector has further caused a rapid shrinkage of the traditional practices and replacement of folk crop varieties with high yielding and hybrid varieties, which escalated the cost of agricultural production while stagnating productivity. The farm credit system in Indian agriculture, evolved over decades has been instrumental in enhancing production and marketing of farm produce and stimulating capital formation in agriculture.

Social: Since its independence in 1950s, foreign aid has made a significant contribution to the agricultural progress in rural India. Increasingly since independence, India has been sharing its agricultural technology with other developing countries. Numerous foreign scientists have received special and advanced training in India; hundreds of foreign students have attended Indian state agricultural universities. In the late 1980s and early1990s, India provided short and long-term training courses to hundreds of foreign specialists each year under a variety of programs, including the Technical Cooperation Scheme of the Colombo Plan for Cooperative Economic and Social Development in Asia and the Pacific and the Technical Cooperation Scheme of the Commonwealth of Nations Assistance Program. India is one of the oldest civilizations with a kaleidoscopic variety and rich cultural heritage. During the period of 55 years independence, it has achieved multifaceted socioeconomic progress and is now the tenth industrialized country in the world and the sixth nation to have gone into outer space to conquer nature for the benefit of the people. However, those people employed in agricultural sector, are those less educated, living in rural areas. More than 60% of the Indias population is dependent on the agriculture (Palmer-Jones and Sen, 2003). The last ten years of development in the agriculture sector in India, show that the lower government investment in agriculture and market driven system has adversely affected the livelihood of rural India. Nilekani (2006) suggest that in India a majority of the farmers come under the category of small and medium farmers and are solely dependent on the local market rather than international market. The prices of their product are determined by local variables rather than international markets, so the trade liberalization may lead to an adverse impact on the Indian agriculture sector and women may suffer. Large numbers of women are engaged in agriculture, primarily in the production and processing of food. With male-selective migration from rural areas on the increase, women are often left behind to take care of both family and the farm on their own. According to the 2001 census, 27.5 percent of cultivators in the rural areas are female, while in the case of agricultural labour, as much as 46.9 percent are women. Of the rural workforce, an overwhelmingly large proportion, i.e., 80% are employed in the agriculture sector. About 36.5% (40.6 million)work as cultivators on their own/family landholding, while about 43.4 percent (48.4 million) are engaged as hired agricultural labour (PalmerJones and Sen, 2003). It is, therefore, obvious that women play no small role in food production. In other words the mode of female participation in agricultural production varies with the land owning status to farm household. Womens roles range from managers to landless labour. Also, as globalization shifts agriculture to capital and chemical intensive system, women bear disproportionate costs of both displacement and health hazards.

Technological: The last few decades have witnessed a visible transition in the industrial landscape of India. Technology has helped society to cut across the traditional boundaries for getting converted into an emerging information society. The Government's long-term vision on Information and Communication Technology (ICT) in the Agriculture Sector aims to bring farmers, researchers, scientists and administrators together by establishing a system known as Agriculture Online for the exchange of ideas and information. A land information system has already started using geographic information systems (GIS) and remote sensing to help the farmers to plan their activities and facilitate decision-making and planning at the local level (India, 2004). Farmers can find out the chemical composition of their land through lab testing to know how fertile their land is and what should they grow to make maximum profits. Achievements of Indian agriculture supported by technology like development of High Yielding Varieties (HYV) of seeds, new hybrids of different crops, research in the area of vaccine production, varietals development through somoclonal variations, developing better quality products and transgenic in crops such as brinjal, tomato, cauliflower and cabbage have strengthened the field. In 21st century agriculture, application of modern biotechnologies like DNA finger printing, tissue culture, terminator gene technology and genetic cloning will hold the key in raising the productivity. Also considering the irrigation needs in Indian agriculture, emphasis has to be given to promote the proven cost-reducing micro-irrigation technology of drips irrigation which helps conserve water reduces fertilizer inputs and ensures higher productivity. With all the benefits that technology can provide, there is an important issue of providing sufficient and appropriate education for the labour to increase their skill sin technology application that could be beneficially used for agro sector.

Importance of Agriculture in Indian Economy The direct contribution of the agriculture sector to national economy is reflected by its share in total GDP, its foreign exchange earnings, and its role in supplying savings and labor to other sectors. Agriculture and allied sectors like forestry and fishing accounted for 18.5 percent of total Indian Gross Domestic Product (GDP) in 2005-06 (at 1999-2000 constant prices) and employed about 58 percent of the country's workforce (CSO, 2007). It accounted for 10.95 percent of Indias exports in 2005-06 (GoI, 2007) and about 46 percent of India's geographical area is used for agricultural activity. There has been a structural transformation in the Indian economy during the past few decades. The composition of Gross Domestic Product at 1993-94 constant prices reveals that the share of agriculture including forestry and fishing has declined as growth in industrial and services sectors far outpaced agricultural sector. The share of mining, manufacturing, electricity and construction sector has increased from 21.6 percent in 1970-71 to 27 percent in 2004-05 and services sector has increased significantly from 32 percent to 52.4 percent during the same period. Despite a steady decline of its share in the GDP, agriculture is still an important sector and plays a significant role in the overall socio-economic development of the country. Therefore, fostering rapid, sustained and broad-based growth in agriculture remains key priority for the government. Consistent with the trends of economic development at national level, role of agricultural sector in the state economies is also changing rapidly. The share of agriculture in Gross State Domestic Product (GSDP) has declined significantly during the last two decades. In some States, such as Bihar, Punjab, Uttar Pradesh, Haryana, Rajasthan, and Orissa, the sector today contributes more than one-quarter of GSDP, while in some states, such as Gujarat, Kerala, Karnataka, Tamil Nadu and Maharashtra, the sector contributes less than 20 percent to GSDP. However, contribution of agriculture to GSDP has declined in almost all States between 1993-94 and 2004-05. The decline was the highest in Karnataka (16%), followed by Haryana (14.2%), and Kerala (13.7%). In Karnataka, decline was mainly due to significant increase in the share of service sector (from 37.9% in 1993-94 to 54.7% in 2004-05) mainly driven by informational technology (IT) industry. Similar is the case with Haryana the decline is due to faster development of services sector in cities around the national capital, Delhi. Despite declining share of agriculture in the economy, majority of workforce continue to depend on agricultural sector for employment and in rural areas dependence on agriculture is more as nearly 75 percent of rural population is employed in agricultural sector. However, there is disguised employment in the sector due to limited opportunities for rural non-farm employment. This disguised employment leads to lower labor and resources productivity in the sector relative to other sectors of the economy. The low labor productivity leads to higher rates of poverty in rural areas. Agriculture in India is constitutionally the responsibility of the states rather than the central government. The central government's role is in formulating policy and providing financial resources for agriculture to the states.

Conclusion for Indian agriculture

It is evident that agricultural sector represents one of the most significant sectors of the economy of India. Therefore, its prospective growth has to be one of the primary objectives of the government development plans. The current state of the agricultural sector is a cause for concern and calls for a change in the governments agricultural policy, indicating not only a greater restructuring of the public spending and more government funds, but also an integrated tolerant approach to farming, ecological concerns and future growth prospects. However, it still represents a big challenge for the industry; (though the industry has seen some policies and regulations) there is still a gap between the intent of these environmental policies and the actual development.