The Economic Survey for 2024-25 (FY25), which was tabled in Parliament on Friday, said that a consistent and stable growth of agriculture at around 5 per cent, with a 20 per cent share of overall GVA (gross value added) in the economy, would absorb surplus labour as output per worker and output per hectare rise.
It also called for making Indian farming “free, empowered, and emboldened” to move away from water-dependent crops, and expanding irrigation and investments in agriculture research to tackle climate change.
The Survey claimed that agricultural income has increased 5.23 per cent annually in the past decade, compared to 6.24 per cent for non-agricultural income and 5.80 per cent for the overall economy. It suggested policy reforms to discourage overproduction of cereals while boosting output of pulses and edible oils.
“Any increase in farmers’ income not just improves their lifestyle but also decreases the risks for the banking system as farmers are able to pay back loans on time," said Vishal Sharma, cofounder and CEO of AdvaRisk, an ICICI and Nabard-backed fintech startup.
On climate change, the Survey said that most studies have suggested that droughts and heatwaves negatively impact agricultural productivity compared to floods and cold waves in India. It is, therefore, pertinent to increase the area under irrigation and diversify towards heat- and water-resistant crops.
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Quoting a study in Indian districts for nine key crops during the kharif season, the Survey said that it found a strong link between significant rainfall shortfalls and substantial crop yield losses.
This statistical phenomenon is known as lower tail dependence, indicating that the correlation between yield losses and rainfall deficits is stronger for extreme rainfall deficiencies than for minor variations.
“Other studies have indicated that a potential 2°C rise in annual temperature and a 7 per cent increase in annual rainfall by 2099 could lead to an 8-12 per cent decline in Indian agricultural productivity,” the Survey said.
Quoting another study that examined last year the impact of drip irrigation on five horticultural crops — brinjal, tomato, banana, watermelon, and mango — in Tamil Nadu, the Survey said it found that drip irrigation enhances agricultural outcomes.
“Compared to flood irrigation, it reduces water consumption by 39-55 per cent and boosts crop yields by 33-41 per cent due to targeted water delivery. This efficiency translates to substantial economic benefits for farmers, with profit margins increasing by 52.92-114.50 per cent, depending on the crop (e.g., brinjal, mango),” the Survey said.
It devoted a full section to how extreme weather events are rising in India and the impact that they could have on the farm sector.
The Survey said that investment in research and development (R&D) — especially on climate-resistant varieties, improved agriculture practices, diversification to high-yield and climate-resilient crops, and micro-irrigation — can yield sustainable long-term benefits.
“The widespread adoption of digital technologies in agriculture will unlock further possibilities for enhancing productivity,” the Survey noted.
The right set of policies across all levels of government can reduce the overproduction of cereals and address the underproduction of pulses and edible oils, the Survey said, calling for allowing India’s farmers to receive price signals from the market unimpeded, with separate mechanisms designed to take care of the cost-of-living impact on deserving households for specified durations.