FEATURES, PROBLEMS AND
POLICIES OF
AGRICULTURE
Features of Indian Agriculture
1) Low Productivity
Productivity means output per hectare of land. It is extremely low in India
compared to advanced nations in the world.
Low productivity is a sign of backwardness. Since agricultural sector
generates demand for the industrial sector, backwardness of the agriculture
implies slow growth of the industry.
2) Disguised Unemployment
Disguised unemployment is a situation of hidden unemployment. It occurs
when the number of persons engaged on a piece of land is much higher than
what is actually needed. So, apparently all are employed. But, in reality, many
are unemployed. Even when some are withdrawn, total output will not fall.
Disguised unemployment is a distinct characteristic of the Indian agriculture.
This reflects backwardness and poverty.
3) Dependence on rainfall
Agriculture in India is heavily dependent on rainfall. Accordingly, crop
production is highly uncertain. Good rainfall means good crop and bad rainfall
means bad crop. Volatile farm output leads to volatile farm incomes.
Consequently, growth process fails to be stable.
4) Subsistence Farming
Farming in India is subsistence – oriented. It means the primary objective of the farmer is to secure subsistence for his family; it is not to earn
profits.
It implies that farming in India is not much commercial in nature.
Subsistence agriculture fails to generate surplus for investment. It leads to stagnation in agriculture.
5) Lack of modern inputs
Modern inputs like chemical fertilizers, insecticides and pesticides are not judiciously used. It is owing to poverty of the bulk of farming
population in India. It leads to low productivity and therefore, backwardness.
6) Small Holdings
Small holdings (or small size of a farmer’s land under cultivation) is a
characteristic feature of the Indian Agriculture. Small holdings are a
hindrance in the process of growth in two ways:
(i) mechanisation of farming (use of machines) becomes difficult and
(ii) marginal farming continues to view farming as a source of subsistence
rather than an enterprise for profit.
7) Landlord- tenant conflict
Huge areas are cultivated by the tenants who are not owners of the soil. But,
the bulk of the revenue is appropriated by the owners (the landlords). Tenants
often get the bare minimum.
Little or no surplus is left with the tenants for reinvestment. Accordingly,
agriculture tends to stagnate.
8) Backward Technology
Because, bulk of the farms in India are small in size and bulk of the
farming population is poor, use of backward technology becomes a
compulsive choice.
There is heavy reliance of cultivators on cattle- power and manpower
rather than on the modern equipment like tractors and harvester-
machines. Consequently, productivity remains low.
These features of the Indian agriculture lead to an important conclusion:
that Indian agriculture is extremely backward, despite the fact that it is of
significant importance in the Indian economy. Because a significant sector
of the economy is extremely backward, the economy as a whole continues
to battle backwardness.
Problems of Indian Agriculture
1) Lack of Permanent Means of Irrigation
Crop farming in India is heavily dependent on rainfall. Permanent means of irrigation are
extremely deficient.
Dependence on rainwater makes Indian agriculture extremely vulnerable: good rainfall
brings good harvest, while droughts cause a substantial loss of output.
2) Deficiency of Finance
Deficiency of finance is another major problem facing Indian agriculture.
For bulk of their financial needs, the small farmers depend upon non- institutional sources,
including ‘mahajans’, moneylenders and landlords. They charge very high rate of interest.
Institutional finance (referring to finance by the banking and other financial institutions) is
extremely scarce in relation to needs of the farmers.
Lack of finance hinders growth of Indian agriculture. High cost of borrowing leads to
vicious circle of poverty of the farmers.
3) Conventional Outlook
Despite innovative farm-technology and farm-management practices, Indian
farmer continues to rely on non conventional wisdom. He continues to
consider farming more as a means of subsistence and less as a business
venture.
Accordingly, he continues to focus on crops which offer him food security
rather than those which yield high profits (but are risk-prone)
The typical Indian farmer is reluctant to grow as an entrepreneur; he avoids
undertaking risks for profits.
4) Small and Scattered Holdings
Holdings in India are not only small, but scattered as well. Small holdings do
not allow the use of modern technology. Scattered holdings increase the cost
of management. This contributes to backwardness of farming and poverty of
the farmers.
5) Exploitative Agrarian Relations
Agrarian relations refer to the business relations between the landlords and
the tenants. Most landlords are ‘absentee landlords’. They seldom do
farming themselves. Relying on rental income, they tend to exploit their
tenants (who are actual tillers of the soil) by way of high rents and related
charges.
Having paid exorbitant rents to the absentee landlords, the tillers of the soil
are left with little surplus for further investment.
Accordingly, land continues to be used as a source of subsistence (or as a
means of livelihood) rather than a source of business profits.
6) Lack of Organised Marketing System
Agricultural marketing system is highly unorganized.
A vast majority of the small farmers continue to sell their output in the
local markets at reduced rates. To a large extend this is their
compulsion.
They are obliged to sell their produce to the mahajans and
moneylenders ( in the local markets) in return for the loans they raise
from these middlemen.
OR INSTITUTIONAL REFORMS
OR TECHNICAL REFORMS
Although there was a category of industries left to the private sector, the
sector was kept under state control through a system of licenses. No new
industry was allowed unless a license was obtained from the government.
This policy was used for promoting industry in backward regions; it was easier
to obtain a license if the industrial unit was established in an economically
backward area. In addition, such units were given certain concessions such as
tax benefits and electricity at a lower tariff. The purpose of this policy was to
promote regional equality.
Even an existing industry had to obtain a license for expanding output or for
diversifying production (producing a new variety of goods). This was meant
to ensure that the quantity of goods produced was not more than what the
economy required. License to expand production was given only if the
government was convinced that the economy required a larger quantity of
goods.
SMALL - SCALE INDUSTRY
A small- scale industry is presently defined as a unit having fixed
investment of less than ₹ 10 crore with a turnover of less than ₹ 50
crore. At the beginning of planning (1951), it was defined as one whose
investment did not exceed ₹ 5 lakh.
The role of small- scale industry in achieving the goals of planning was
underlined by Karve Committee (also called Village and Small- scale
Industries Committee) in 1955.
For the development of small-scale industries, they were given benefits
of lower excise duty and lower interest rates on the bank loans.
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