Government intervention is crucial to protect India's agriculture sector

08 October 2019 4 min. read

PwC has continued its analysis of the Indian agricultural market, revealing in a new report that the sector is presently facing challenges such as low productivity and sub-optimum price realisation by farmers, among others. Policy intervention is crucial to tackle these challenges, according to the firm.

The latest analysis follows a PwC report released in recent weeks that called for the need to preserve micronutrients in Indian soil, not only to ensure stability within the domestic food sector, but also to remain a reliable source of produce for the global market. India is among the world’s chief suppliers of agricultural goods.

According to PwC, the pressure to feed more than a billion people within the country, coupled with the pressure to supply for the international market are putting considerable strain on the Indian soil. The fallback from deteriorating soil is not merely an Indian problem, but an international one.

The Global Agricultural Productivitiy Index

The firm has now zoomed in to the Indian agricultural sector from an economic perspective, to help identify the biggest issues facing the sector. Agriculture comprises a major share of economic production in India, which is primarily driven by monumental demand. By 2030, food grain demand in India is set to surpass 350 million tonnes. 

The government is heavily involved in supporting and subsidising agricultural production, although certain problems persist. Low productivity and poor price realisation are some, while others include a lack of market connectivity, post-harvest losses, and a number of others.

The challenges call for changes in a number of domains, ranging from financial planning to infrastructural development, all of which requires government intervention. The Government of India has recently revealed plans to double farmers’ income by as early as 2022, through a variety of targeted interventions.

Gross value added by agriculture and allied sectors at constant 2011-12 prices

The government has contextualised the interventions by designing specific policies for individual faring sub-sectors. According to PwC, these sub-sectors include agricultural inputs, agricultural logistics and storage, farm mechanisation and irrigation, agricultural finance and agricultural marketing. 

Segments such as agricultural exports, food processing, as well as investments in agri-business innovation all comprise sub-sectors in the broader economy. “These sub-sectors play a major role in strengthening the overall agriculture ecosystem of the country,’ states the report.

According to PwC, while the intentions behind the government’s initiatives are commendable, there is room for further improvement. The firm also emphasises the importance of ensuring that these policies translate into practice, which speaks to issues of efficiency and sustainability.

Export of principal agricultural commodities from India

‘It is necessary to optimise farmers’ income, strengthen market linkages, and create a more transparent marketing environment to double farmers’ income. Further, it is necessary

to strengthen India’s global position in agriculture through interventions in agricultural export promotion, increasing crop productivity, promoting agribusiness investments and creating an environment conducive to research and innovation,’ states the PwC report.

The goal of doubling farmers’ income in the next three years presents a substantial feat, given that incomes in the sector have grown by less than 40% since 2013. ‘Resource efficiency’ and ‘increasing cropping’ intensity are some of PwC’s suggestions to solve this problem.