Tackling regional imbalance in agriculture

Abstract

To mitigate the regional gap in agricultural productivity, the policy prescription would be more and more investment in the lagged region, extension of public and private credit in remote rural areas. Development of research focusing the development of dry land area, development of technology requiring less water, less fertilizer and cheap farming and finally implementation of watershed development approach are necessary for a more balanced and sustainable agricultural development in the country. There is an acute need to pay special attention to the needs of eastern states and other rain-fed regions.

Full text

Kurukshetra February 2018
60
TACKLING REGIONAL IMBALANCES
IN AGRICULTURE
Dr. Jaspal Singh and Dr. Amrit Pal Kaur
T
he inter-state variations in agricultural
productivity in India is quite high, however,
the advanced states are facing stagnation in
growth rates of agricultural productivity while the
lagging states are keeping pace with the advanced
states by adoption and better implementation of
market reforms and farm friendly policies. Over
the period of time, it has been observed that
there is a trend of convergence among states in
terms of agricultural productivity. Different set of
policies are required for agriculturally advanced
and lagging states to mitigate the regional gap.
The lagging states should strengthen the modern
farm inputs to increase agricultural productivity,
while the advanced states should explore the
second stage of agriculture development in terms
of diversification and agro-business activities.
The agriculture sector continues to be the
backbone of Indian economy and plays a vital
role in overall development of a country. As per
the IInd advised estimates by the Central Statistics
Office (CSO), the share of agriculture and allied
sectors (including agriculture, livestock, forestry
and fishery) is estimated to be 17.3 per cent of
the Gross Value Added (GVA) during 2016-17
at 2011-12 prices. Though, with the growth of
other sectors, the overall share of agriculture in
GDP of the country has decreased. Still, it employs
nearly half of the workforce in the country.
From a net importing country, India is today
consistently producing 275.68 million tonnes
(Fourth Advance Estimates for 2016-17 by DES) of
food grains, and India is among the top producers
of several crops such as wheat, rice, pulses,
sugarcane and cotton. It is the highest producer
of milk and second highest producer of fruits and
vegetables. In 2013, India contributed 25 per cent
to the world’s pulses production, 22 per cent to
the rice production and 13 per cent to the wheat
production. It also accounted for about 25 per cent
of the total quantity of cotton produced, besides
being the second highest exporter of cotton for
the past several years.
A signicant acceleraon in growth of output
and producvity was observed in agriculture in India
since independence. However, the agricultural yield
(quanty of a crop produced per unit of land) is found
to be lower in the case of most crops, as compared
to other top producing countries such as China,
Brazil and the United States. Further, the gains from
producvity are uneven across states and regions in
the country. This study makes an aempt to examine
the performance of major Indian states in the level
of agricultural development and also disparity
prevailing across states in terms of agricultural
producvity. The study also focuses on the nature of
convergence of inter-state agricultural producvity
and idenfying the factors that are responsible
behind the producvity imbalances in India.
To mitigate the regional gap in agricultural productivity, the policy prescription would be more and more investment in the lagged
region, extension of public and private credit in remote rural areas. Development of research focusing the development of
dry land area, development of technology requiring less water, less fertilizer and cheap farming and nally implementation of
watershed development approach are necessary for a more balanced and sustainable agricultural development in the country.
There is an acute need to pay special attention to the needs of eastern states and other rain-fed regions.

Kurukshetra February 2018 61
Data Sources and Methodology:
The period of the study covers 10 years
period from 2004-05 to 2014-15. Twenty three
major states have been studied for interstate
comparisons. Mostly secondary data has been
employed in the study viz., National Account
Statistics of the Central Statistical Organisation
of the Govt. of India, Agriculture statistics At a
Glance, Directorate of Economics and Statistics,
Ministry of Agriculture and National Account
Statistics, Ministry of Statistics and Programme
Implementation, Government of India.
Agricultural productivity has been estimated
as below:
Where
NSDP – Net state domestic product from
agriculture of ith state at tthtime
NSA – Net Sown area of ith state at tthtime
For Convergence Analysis, α convergence
(measure the behavior of cross seconal dispersion
of a parcular variable overme) has been examined
in this paper.
Agriculture Producvity: Growth and Regional
Imbalances
In order to meet the food grain requirements
of the country, the agricultural producvity and its
growth needs to be sustained and further improved.
Virtually majority of land is under culvaon, so
increasing producvity per unit of land should be the
main engine of agricultural growth. However, there
exist wide variaons in the agricultural producvity
across the states. It has been observed that
Arunachal Pradesh has the highest producvity of
Rs 326917 per hectare at current prices among the
states (Table 1). Further, Andhra Pradesh (Rs 260346
per ha) was closely followed by Tamil Nadu (Rs
259921 per ha) which witnessed higher producvity
levels among states. Also, Figure 1 visualizes the
interstate agricultural producvity during 2015-16
at current prices. The map divides the states into
three categories on the basis of their agricultural
producvity levels: high (green), medium (yellow)
and low (red).
States like Punjab and Haryana have enjoyed
a pre-eminent position in productivity rankings for
many decades, especially in foodgrains falls in the
higher productivity zone (green) while they had
registered low growth rate in productivity i.e. 1.73
per cent and 3.15 per cent respectively during
the study period of 2004-05 to 2014-15. States
like J&K, Himachal Pradesh, Kerala etc. fall in the
green zone because of plantation crops and also
show low growth rates. On the contrary, the states
for instance Odisha, Madhya Pradesh and Gujarat
fall in the low productivity zone (red) (Figure 1)
had shown the higher growth rates in agricultural
ܣ݃ݎ݅ܿݑ݈ݐݑݎ݈ܽܲݎ݋݀ݑܿݐ݅ݒ݅ݐݕሺܴݏǤȀܪܽሻ ൌ ܰܵܦܲ௜௧
ܰܵܣ௜௧
Table 1: Interstate Agricultural Productivity and
Growth of productivity (2004-05 to 2014-15)
State/UT Producvity at
current prices
(Rs/ha)
Growth Rate
of Producvity
(2004-05 to
2014-15)
Andhra Pradesh 260346 3.44
Arunachal Pradesh 326917 0.72
Assam 134480 1.91
Bihar 146338 4.45
Chhasgarh 85503 4.89
Goa 266236 1.56
Gujarat 135178 5.54
Haryana 222280 3.15
Himachal Pradesh 237135 2.78
Jammu & Kashmir 242725 1.41
Jharkhand 219919 8.40
Karnataka 100319 2.74
Kerala 237843 0.23
Madhya Pradesh 110609 5.75
Maharashtra 99108 3.77
Manipur 94847 -0.77
Meghalaya 146017 1.28
Mizoram 318132 1.92
Nagaland 136792 4.34
Odisha 124111 6.12
Punjab 234529 1.73
Rajasthan 88868 3.94
Tamil Nadu 259921 3.94
Uar Pradesh 151405 2.23
Uarakhand 207069 2.69
(Source: Author’s estimation)

Kurukshetra February 2018
62
productivity viz., 6.12per cent; 5.75per cent and
5.54 per cent. Since most of these states adopted
and implemented various market reforms and
farm friendly policies.
Thus, it is observed from Table 1 and figure 1
that the states with higher agricultural productivity
levels in agriculture i.e. the states fall in the green
zone witnessed low growth rates, since in most
of the agriculturally advanced states, the growth
in agricultural productivity got very marginal rate
or stagnant. As agriculture sector in these states
reached at the highest capitilisation situation and
with the same set of technologies, it is difficult
to grow further. While the states in red zone with
low productivity levels have registered higher
growth rates during the study period. The scope
for improved productivity in these latter states is
substantial.
These regional variaons in agricultural
producvity are result of the inter-play of many
factors as irrigaon coverage, cropping intensity, use
of ferlizers, credit, land holding size, level of policy
support, and instuonal factors. In the study, we
have also considered Rank in Agricultural Markeng
and Farmer Friendly Reforms Index (AMFFRI) as one
of the major determinant for regional imbalances in
agriculture producvity (Chand & Singh, 2016). Table
2 shows these determining factors for inter-regional
producvity imbalances and their status in major
states of India. The regional variaon in agricultural
infrastructure and the use of agricultural inputs in
India is quite high. Punjab (98.7 per cent), Haryana
(89.1 per cent) and UP (80.2 per cent) has highest
irrigaon coverage and similarly noced greatest
cropping intensity. Other factors as ferlizer use (kg/
ha), credit (Rs/ha) and larger land holding sizes are
on higher side for the states with higher producvity
levels across India. Thus, the states that are able
to channelize these factors eciently into their
agricultural sector resulted into beer producvity
and yield rate. Further, in AMFFRI, the state of
Maharashtra achieved rst rank in implementaon of
various reforms. The state has implemented most of
the markeng reforms and it oers best environment
for 8 doing agribusiness among all the states and
UTs. Gujarat ranks second with a score of 71.5 out
of 100, closely followed by Rajasthan and Madhya
Pradesh. Agriculturally developed state of Punjab
ranks 14th with a score of 43.9. This is because of
poor implementaon of market reforms in the state.
Almost two third states/UTs could not reach even
halfway mark of reforms score. Major states like U.P.,
Punjab, West Bengal, Assam, Jharkhand, Tamil Nadu
and J&K are in this group.It is observed from the
table that the state with higher producvity levels
has beer ulizaon of agricultural inputs.
However, where performance of various
states is good in terms of adoption of market
reforms and farm friendly policies i.e with
higher Rank in AMFFRI has higher growth rates
in agricultural productivity and approaching the
advanced states.
Agricultural Growth in India: A Convergence
Analysis
Several aempts have been made in India to
explain the nature of convergence in agricultural
growth. In this paper, Alpha α convergence has been
examined. The growth of producvity is regressed
with log of inial producvity (2004-05 producvity).
As shown in Figure 2, convergence is tested by
regressing of growth rate of agriculture producvity
with log of inial agricultural producvity across
states. The result is displayed in Figure 1. Downward
slopping curve indicates a trend of convergence over
the study period among states of India in terms of
agricultural producvity. Most of the low agricultural
producvity states like Odisha, Gujarat, and Madhya
Figure 1: Interstate agricultural productivity during
2015-16 at current prices

Kurukshetra February 2018 63
Pradesh are converging with the agriculturally
advanced states of India like Arunachal Pradesh,
Punjab and Haryana over the period of me. Eorts
should be undertaken to keep up this pace since
there are greater implicaons of the persistence of
regional disparity. There is a need for measures to
promote regional balance in development in the form
of policy responses countering regional producvity
dierences.
Thus to conclude, this study makes an
attempt to examine the growth performances
of agricultural production and productivity of
major States of India and the nature and extent
of disparity in the performances of agriculture.
Table 2: Determining factors for Inter-Regional Productivity Imbalance
State/UT Irrigaon
coverage %
Cropping
intensity %
Ferlise use
(Kg/ha)
Credit (Rs/ha) Land holding
size(ha)
Rank in
AMFFRI
Andhra Pradesh 50.5 123.3 226 118883 1.08 7.4
Arunachal Pradesh 18.7 132.8 2 7594 3.51 21.1
Assam 9.2 144.4 45 13812 1.1 37.1
Bihar 68.7 145.4 220 76809 0.39 12.4
Chhasgarh 31.2 122.4 100 18110 1.36 47
Goa 24.6 122.0 49 44567 1.14 52.8
Gujarat 47.1 124.0 125 43257 2.03 70.1
Haryana 89.1 185.6 220 141379 2.25 65
Himachal Pradesh 21.0 167.0 57 93133 0.99 59.6
Jammu & Kashmir 42.8 155.3 64 36403 0.62 7.4
Jharkhand 14.3 112.2 55 26450 1.17 49.2
Karnataka 34.2 121.9 175 84462 1.55 55.5
Kerala 17.9 128.5 44 212406 0.22 10.8
Madhya Pradesh 43.3 155.1 84 33941 1.78 64.4
Maharashtra 18.2 135.3 122 36194 1.44 66.4
Manipur 18.0 100.0 42 418 1.14 7.4
Meghalaya 37.1 120.0 0 3774 1.37 14.3
Mizoram 14.5 100.0 18 6842 1.14 37
Nagaland 21.2 130.3 6 3074 6.02 33.3
Odisha 28.7 115.6 63 40793 1.04 27.9
Punjab 98.7 190.8 249 205525 3.77 43.9
Rajasthan 42.0 138.3 62 38597 3.07 69.6
Tamil Nadu 56.6 124.4 175 218339 0.8 17.7
Uar Pradesh 80.2 157.5 156 22490 0.76 45.8
Uarakhand 49.5 156.7 169 90492 0.89 25.2
(Source: Agriculture Statistics at a glance, DES, MoFWPI)
Figure 2: Convergence of inter-state Agricultural
Productivity
AP
ARU
AS
BI
CHD
CHH
DLI
GOA
GUJ
HAR HP
J&K
JHK
KA
KER
MP
MAH
MAN
MEG
MIZ
NAG
ORI
PUN
PB RAJ
TM
UP
y = -1.0009x + 14.902
R² = 0.1771
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00 10.50 11.00 11.50 12.00 12.50 13.00 13.50 14.00 14.50 15.00
Growth rate %
Log of initial productivity

Kurukshetra February 2018
64
The growth performances have been analyzed, it
has been found that the states in central zone of
India with low productivity levels in agriculture
should strengthen the determining factors of
increase in agricultural productivity i.e. the use of
inputs like fertilizers, improved seeds, irrigation,
machinery, credit and technology back up. While
it is observed that the states in high agricultural
productivity zone (green zone) are experiencing
stagnation in growth of agricultural productivity.
For instance, the agriculture in states like Punjab,
Haryana has reached a plateau making it very
hard to make further progress under available
technologies and natural resource base.There
is a need to consider the factors that are highly
favorable for diversification towards high value
horticultural and livestock products and attribute-
based products. Turning food-processing industry
into a major export industry can also create vast
employment opportunities for workers since it is
a labour-intensive industry. Therefore for lagging
states, separate set of policies are required. On
the contrary, for advanced states, there is a need
for discrete set of interventions like diversification
in value horticultural and livestock products, agro-
buisness etc.
To migate the regional gap in agricultural
producvity, the policy prescripon would be more
and more investment in the lagged region, extension
of public and private credit in remote rural areas.
Development of research focusing the development
of dry land area, development of technology requiring
less water, less ferlizer and cheap farming and
nally implementaon of watershed development
approach are necessary for a more balanced and
sustainable agricultural development in the country.
There is an acute need to pay special aenon to the
needs of eastern states and other rain-fed regions.
References
Chand, Ramesh and Jaspal Singh (2016), “Study
Report on Agricultural Markeng and Farmer Friendly
Reforms across Indian States and UTs”, Naonal
Instuon of Transforming India, Govt. of India.
Barro, R.J. and X. Sala-i-Marn (1991),
“Convergence across States and Regions”, Brookings
Papers on Economic Acvity, I:107-182.
Barro, R.J. and X. Sala-i-Maritn (1992),
“Convergence”, Journal of Polical Economy, Vol100
(April), PP-223-251.
Barro, R.J. and X. Sala-I-Marn (1995),“Economic
Growth”, McGraw-Hill: New York.
(The author, Dr. Jaspal Singh is consultant, NITI
Aayog, New Delhi. Dr. Amrit Pal Kaur is Research
Assistant, NITI Aayog. Email ID: jaspal.singh82@
nic.in, amrit.pal44@nic.in)
South Asia Regional Center (ISARC)
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the establishment of the
Internaonal Rice Research Instute (IRRI), South Asia Regional Center (ISARC) at campus of Naonal Seed
Research and Training Center (NSRTC) in Varanasi.
Under the proposal, a Centre of Excellence in Rice Value Addion (CERVA) will be set up in Varanasi. This will
include a modern and sophiscated laboratory with capacity to determine quality and status of heavy metals
in grain and straw. The Centre will also undertake capacity building exercises for stakeholders across the rice
value chain.
This Center will be the rst internaonal Center in the eastern India and it will play a major role in harnessing
and sustaining rice producon in the region. It is expected to be a boon for food producon and skill
development in the eastern India and similar ecologies in other South Asian and African countries.
Benets from ISARC :
1. The Centre will help in ulizing the rich biodiversity of India to develop special rice variees. This will help
India to achieve higher per hectare yields and improved nutrional contents. India's food and nutrional
security issues will also be addressed.
2. The Centre will support in adopng value chain based producon system in the country. This will reduce
wastage, add value and generate higher income for the farmers.
3. The farmers in Eastern India will benet in parcular, besides those in South Asian and African
countries.