State of Indian Agriculture 2011-12

Agriculture is a critical sector of the Indian economy. Though its contribution to the overall Gross Domestic Product (GDP) of the country has fallen from about 30 percent in 1990-91 to less than 15 percent in 2011-12, a trend that is expected in the development process of any economy, agriculture yet forms the backbone of development. An average Indian still spends almost half of his/her total expenditure on food, while roughly half of India’s work force is still engaged in agriculture for its livelihood. Being both a source of livelihood and food security for a vast majority of low income, poor and vulnerable sections of society, its performance assumes greater significance in view of the proposed National Food Security Bill and the ongoing Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme.

The agriculture sector in India has undergone significant structural changes in the form of decrease in share of GDP from 30 percent in 1990-91 to 14.5 percent in 2010-11 indicating a shift from the traditional agrarian economy towards a service dominated one. This decrease in agriculture’s contribution to GDP has not been accompanied by a matching reduction in the share of agriculture in  employment. About 52% of the total workforce is still employed by the farm sector which makes more than half of the Indian population dependant on agriculture for sustenance (NSS 66th Round). However,within the rural economy, the share of income from non-farm activities has also increased.

Growth Performance of Agriculture

Overall Growth

 The growth performance of the agriculture sector has been fluctuating across the plan periods (Fig 1.3). It witnessed a growth rate of 4.8 per cent during the Eighth plan period (1992–97). However, the agrarian situation saw a downturn towards the beginning of the Ninth plan period (1997–2002) and the Tenth plan period (2002–07), when the agricultural growth rate came down to 2.5 percent and 2.4 percent respectively. This crippling growth rate of 2.4 percent in agriculture as against a robust annual average overall growth rate of 7.6 per cent for the economy during the tenth plan period was clearly a cause for concern. The trend rate of growth during the period 1992-93 to 2010-11 is 2.8 percent while the average annual rate of growth in agriculture & allied sectors-GDP during the same period is 3.2 percent.

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State of Indian Agriculture




Land use in India


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Investment Tracking System

In order to address the issue of major investment projects being delayed for a variety of reasons, the Prime Minister has approved the setting up of an Investment Tracking System to ensure speedy implementation of such projects.

 Major projects will be specially tracked to take them forward on a fast track in order to provide a fresh impetus to the economy. This was in the context of delays faced by projects on multiple fronts – security clearances, environmental clearances, other clearances, land related matters, etc. While existing rules and laws have to be followed, it was widely felt that a lot of the delay is avoidable if only there is a will to resolve matters.

2. In pursuance of this, an Investment Tracking System has been put in place whereby –

(a) National Manufacturing Competitiveness Council shall track all Public Sector projects with an investment of ` 1000 crore and above. The National Manufacturing Competitiveness Council shall submit a quarterly statement of all projects monitored and any issues identified that need resolution, either systemically or individually.

(b) The Department of Financial Services shall monitor projects with an investment of  Rs 1000 crore and above in the private sector. The Department would use data available with the banking sector for this purpose. The Department shall submit a quarterly statement of all projects monitored and issues identified that need resolution, either systemically or individually.

3. Through this mechanism, projects will be periodically reviewed for any delays and specific or systemic issues will be identified for resolution. The Department of Financial Services and the National Manufacturing Competitiveness Council will submit quarterly reports on the tracking being done by them and on identified issues to the Prime Minister’s Office. Corrective action will be taken wherever found necessary.

Depreciation of Indian Rupee 2012

The Indian Rupee has depreciated significantly against the US Dollar marking a new risk for Indian economy.Till the beginning of the financial year very few had expected Rupee to depreciate with most hinting towards either appreciation or status quo in the rupee levels.Those few who had even anticipated may not have imagined the scale of depreciation with rupee touching a new low of around Rs 56 to the US Dollar.

Union Finance Minister Pranab Mukherjee has attributed the depreciation of the rupee to a “cumulative effect” of several factors impinging on the economy, both at the global and national levels.There are multiple reasons that are responsible for the fluctuation in the value of the currency.The volatility in oil prices and uncertainty in Europe has resulted in a situation where many agents were putting their surplus in the United States-considered a “safe haven” at present.

• Factors at the national level-both the fiscal deficit and the current account deficit of the country were increasing,causing the rupee to depreciate further.If we were to simply analyse the import export figures of 2011-12, then against exports of $300 bn the imports were $ 450 bn (in round figures). Thus there is a trade deficit of $150 bn. Holding on to these figures and on an estimated 235 trading days annually, it means there is a shoratge of app $ 0.64 bn ( Rs 3447 crore) per day only on import export activities. Taking other requirements into consideration, JP Morgan the financial firm has estimated that, India needs $ 340 million on each trading day in 2012, to bridge its current account deficit. Another report by the broking firm Enami Securities points out that India needs $ 800 million (nearly Rs 4300 crore) every day to bridge its trade deficit, which it rates as the highest in the world today.A decade ago, it says this figure was just $50 million.widening of the current account deficit would result in outflow of dollars from the Indian economy accentuating the depreciation in rupee.

• Because of reduction in export and increase in import, on one side the fiscal deficit has increased and on the other,current account deficit is rising. Europe was an important export destination for the country and reduction in the demand there (due to Eurozone crisis) adversely hit Indian exports.

• High Fiscal deficit means more borrowings which means demand for more dollars.More demand for dollars increases its value against rupee.

• Strengthening of Dollar - The Euro has depreciated 6.55% against the dollar in the last three months which has in turn made the dollar stronger vis-à-vis other currencies, including the rupee.With the growing demand for oil,dollar is only expected to move further upwards. Domestic oil importers have also contributed to this strengthening to meet higher oil import bills.So, FIIs have withdrawn funds from emerging markets like India and invested back in the dollar which has been strengthening.

• Withdrawal of funds by foreign institutional investors (FIIs) from domestic economy is another main reason behind rupee depreciation.After pouring hefty funds into the Indian equity market in the first three months of the year, overseas investors turned bearish in April and pulled out Rs 777 crore amid S&P lowering India’s credit outlook to negative from stable.Market experts attributed the outflow to a host of factors including government’s anti-tax avoidance rule (GAAR) proposal announced in the Budget. This has been the real dampener for several FIIs whose clients had used participatory notes to invest in the Indian stock market. The sentiment was further soured by ratings agency S&P’s move to lower India’s outlook to negative from stable, citing slow progress on its fiscal situation and deteriorating economic situation, experts added.In fact after S&P’s move, FIIs have withdrawn nearly Rs 1,300 crore from the stock market in the last three trading sessions.

• Lack of reforms is one more reason for rupee depreciation. There have been very few meaningful reforms in the last few years in Indian economy. Moreover, the policies seem to be getting increasingly populist. The government wanted to reverse this perception and announced FDI in retail but had to hold back amidst huge furor from both opposition and allies. This has further made investors negative over the Indian economy.According to Moody’s, “Since the Indian government’s political capacity to implement fiscal and structural reform is weak, depreciation is a market response".Without new reforms and innovation in the fiscal policy India is not an attractive destination for the FIIs and FDIs . 

      All these reasons together have led to sharp depreciation of the rupee.

Report to the People

 'The Report to the People', highlights the initiatives and achievements of the government in various fields including economy, agriculture, education, poverty eradication, healthcare, power generation, internal security and foreign policy.



Report to the People

Biotechnology Regulatory Authority of India Bill

The government is gearing up to regulate the research and use of organisms and products of modern bio-technology. It has prepared a draft Bill to establish Biotechnology Regulatory Authority of India ( BRAI), which will be an autonomous and statutory agency to regulate the research, transport, import, manufacture and use of organisms and products of modern bio-technology.

 The authority would consist of a chairperson, two whole-time members and two part-time members, each with expertise in life sciences and biotechnology applications in agriculture, health care, environment and general biology.

The Bill provides for setting up of inter-ministerial governing board to oversee the performance of the authority and a National Biotechnology Advisory Council of stakeholders to provide feedback on use of organisms and products of biotechnology in society.

The Bill also provides for an elaborate risk assessment process involving scientific panels of experts and representatives of concerned ministries including a special public review system for evaluation of applications before final approvals.

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Sustaining the Environment

On completing three years in office the UPA Government recently released a ‘Report To The People’. The following achievements pertain to the Ministry of Environment & Forest and in the field of sustaining the environment.

National Action Plan on Climate Change
The National Action Plan advocates a strategy that promotes, firstly, the adaptation to climate change and secondly, further enhancement of the ecological sustainability of India’s development path. The eight missions under the PM’s Council on Climate Change are the Jawaharlal Nehru National Solar Mission, the National Water Mission, the National Missions on Enhanced Energy Efficiency, Sustainable Habitat, and Strategic Knowledge for Climate Change, and the National Missions for Sustaining the Himalayan Ecosystem, a Green India and Sustainable Agriculture.

Forest Conservation
An amount of Rs. 848 crore was released to State Level Compensatory Afforestation Fund Management & Planning Authorities to carry out protection, conservation and regeneration of natural forests in addition to compensatory afforestation. National Green Tribunal

The National Green Tribunal (NGT) was established in October, 2010 for effective and expeditious disposal of cases relating to environmental protection and conservation of forests and other natural resources including enforcement of any legal right relating to environment and giving relief and compensation for damages to persons and property. Delhi, Bhopal, Pune, Kolkata and Chennai are the five place of sitting of the NGT.

Mission Clean Ganga
Projects worth nearly Rs. 2,600 crore have been sanctioned by the National Ganga River Basin Authority (NGRBA). These include projects for development of sewer networks, sewage treatment plants and sewage pumping stations, electric crematoria, community toilets and development of river fronts.

Several innovations have been introduced for improved implementation of projects sanctioned by the NGRBA. These include Tripartite Memoranda of Agreements, project appraisal by independent institutions, Third Party Inspection, etc. State River Conservation Authorities have been constituted in the five Ganga basin States to facilitate better coordination and implementation of conservation activities at the State level.

The Central Government has secured World Bank assistance of US$ 1 billion for the NGRBA Programme. The World Bank project will support NGRBA’s immediate objective of Mission Clean Ganga.

Tiger Conservation
A detailed report on the country level status of tigers, co-predators and prey in India was released in July, 2011. This was the second round of country level snapshot assessment. The earlier estimation made in 2006 indicated that there were 1411 tigers in the country; the current estimates show that this number has increased by about 20% to 1706.

Expert Panel On New Poverty Estimates

Expert Panel On New Poverty Estimates

The State-wise poverty lines and poverty ratio for 2009-10 have been computed following the extant Tendulkar methodology. Based on the said methodology the Planning Commission has released the estimates through a Press Note issued on 19th March, 2012. As indicated in the Press Note, the poverty ratio in the country has come down from 37.2% in 2004-05 to 29.8% in 2009-10. As a result, the number of poor persons in the country has reduced from 40.7 crore in 2004-05 to 35.5 crore in 2009-10.


The Tendulkar Committee, which submitted its Report in 2009, has incorporated adequacy of expenditure from the normative and nutritional viewpoint. It stated “while moving away from the calorie norms, the proposed poverty lines have been validated by checking the adequacy of actual private expenditure per capita near the poverty lines on food, education and health by comparing them with normative expenditures consistent with nutritional, educational and health outcomes”.


Taking note of the various points of views and perspectives expressed in the public domain with respect to the need to revisit poverty estimates and related methodologies, Government has since decided to set up an Expert Technical Group to revisit the methodology for estimation of the poverty and identification of the poor.


The Technical Group comprising of eminent economists under the Chairmanship of Dr. C. Rangarajan, Chairman, Prime Minister’s Economy Advisory Council, is as under:


1. Dr. C. Rangarajan, Chairman, Prime Minister’s  Economy Advisory Council … …. Chairman


2. Dr. Mahendra Dev, Director, Indira  Gandhi Institute of Development Research … … Member


3. Dr. K. Sundaram, formerly Delhi School of Economics … … Member


4. Dr. Mahesh Vyas, Centre for Monitoring Indian Economy … … Member



5. Dr. K.L. Datta, Ex-Adviser (Perspective Planning), Planning Commission … … Member Convener


The Terms of Reference of the Expert Technical Group have been finalized as under:


1. “To comprehensively review the existing methodology of estimation of poverty and examine whether the poverty line should be fixed solely in terms of a consumption basket or whether other criteria are also relevant, and if so, whether the two can be effectively combined to evolve a basis for estimation of poverty in rural and urban areas.


2. To examine the issue of divergence between consumption estimates based on the NSSO methodology and those emerging from the National Accounts aggregates; and to suggest a methodology for updating consumption poverty lines using the new consumer price indices launched by the CSO for rural and urban areas state-wise.


3. To review alternative methods of estimation of poverty which may be in use in other countries, including their procedural aspects; and indicate whether on this basis, a particular method can be evolved for empirical estimation of poverty in India, including procedures for updating it over time and across states;


4. To recommend how the estimates of poverty, as evolved above, should be linked to eligibility and entitlements for schemes and programmes under the Government of India”.