The Economic Survey released  emphasized that farmers should be nudged away from growing already overproduced crops that deplete water resources and require excessive electricity consumption.

The survey also noted that these reforms will help enhance land and labor productivity in the agriculture sector. It said “they need the right policies that nudge them away from impairing their soil fertility with an unbalanced application of fertilisers and from producing already overproduced crops, which deplete India’s water resources and use up electricity excessively”.

It also highlighted the need for key policy changes to ensure stable and consistent growth in the agriculture sector. It stated that Indian farmers must be allowed to receive unimpeded price signals from the market. At the same time, mechanisms should be in place to protect deserving households from cost-of-living impacts for specific durations.

The survey highlighted that farmers require proper market mechanisms to hedge their price risks. Additionally, there is a need for policies that encourage them to move away from practices that harm soil fertility due to unbalanced fertilizer use. According to the survey, a stable agricultural growth rate of around 5 per cent, with a 20 per cent share in India’s overall Gross Value Added (GVA), could contribute 1 per cent growth to GVA.

Such growth would enable agriculture to absorb surplus labor while increasing output per worker and per hectare. The document also projected that agro-based entrepreneurship would expand further, helping India not only achieve self-sufficiency in food security but also contribute to global food supply. While various initiatives have helped India’s agriculture and allied services to grow under challenging circumstances, the good news is that there is still significant untapped growth potential.

The right set of policies across all levels of government can reduce the overproduction of cereals and address the underproduction of pulses and edible oil. Currently, the survey noted that the ‘Agriculture and Allied Activities’ sector contributes about 16 per cent to India’s GDP for the financial year 2023-24 (Provisional Estimates) at current prices. The survey emphasized that with the right policies, the sector holds exciting and limitless possibilities for growth and development.