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India’s agricultural sector, which employs 42.3% of the population, is crucial to the nation’s economy. However, it faces a range of challenges that need to be addressed to ensure long-term stability, food security, and sustainable growth.

Current Performance of India’s Agricultural Sector

• Key Agricultural Metrics and Growth
  • Foodgrain Production: India produced 330.5 million metric tonnes (MT) of foodgrains in 2022-23, maintaining its position as the world’s second-largest producer.
  • Horticulture Production: A record high of 351.92 million tonnes in horticultural production was achieved, marking a 1.37% increase from the previous year.
• Market Outlook
  • India’s agricultural market is projected to reach USD 24 billion by 2025.
  • The food and grocery retail sector is ranked as the sixth-largest globally, with 70% of its sales generated from retail.
• Investment and Export Trends
  • FDI in Agriculture: From April 2000 to March 2024, the agricultural services sector attracted USD 3.08 billion in foreign direct investment, while the food processing industry garnered USD 12.58 billion.
  • Agricultural Exports: India’s agricultural and processed food exports reached USD 4.34 billion in 2024-25, including products like marine products, rice, and spices.

Key Challenges Confronting India’s Agriculture

• Climate Change and Environmental Impact:Extreme weather events, such as heatwaves and erratic rainfall, continue to impact agricultural productivity. In 2023, India experienced its second-warmest year on record, contributing to crop damage and rising food prices.

• Water Stress and Irrigation Inefficiency: Agriculture consumes the majority of India’s water resources, but irrigation efficiency is still low. The country relies heavily on flood irrigation, which leads to significant water wastage. Only 11% of agricultural land is under micro-irrigation, far below global standards.
• Land Fragmentation and Declining Farm Sizes: The average size of agricultural farms has decreased from 1.08 hectares in 2016-17 to 0.74 hectares in 2021-22, hindering the adoption of modern farming practices and mechanization.
• Market Access and Price Realization: Farmers continue to face challenges in accessing fair market prices due to the dominance of intermediaries and inadequate market infrastructure. Despite reforms like e-NAM, price gaps between farm-gate and retail prices persist, leaving farmers with a smaller share of the final price.
• Technology Adoption and Digital Divide: Although agritech is growing in India, only 30% of farmers use digital tools in agriculture, and rural digital literacy is just 25%, which limits the widespread adoption of modern farming solutions.

Addressing Structural Issues in Indian Agriculture

• Soil Health and Sustainability:The excessive use of chemical fertilizers and mono-cropping practices has led to soil degradation. Approximately 30% of agricultural land in India is experiencing degradation, impacting productivity and sustainability. Stubble burning further exacerbates this issue, worsening air quality and soil health.
• Crop Diversification Challenges:Many farmers are locked into the wheat-rice cycle due to Minimum Support Price (MSP) guarantees, limiting the cultivation of other crops like pulses and oilseeds. Although India is the largest producer of pulses, the domestic production is insufficient to meet the growing demand.
• Feminisation of Agriculture:Women make up 63% of agricultural workers but own only 11-13% of the operational land, limiting their access to resources and decision-making power. This gender disparity hampers their economic security and limits their participation in agricultural development.

Conclusion

India’s agricultural sector holds immense potential but is facing significant structural challenges that must be addressed to ensure its long-term growth and sustainability. Urgent reforms are needed to address issues like climate vulnerability, inefficient irrigation, land fragmentation, and limited market access. Additionally, fostering technology adoption, improving infrastructure, and addressing gender disparities will be crucial for improving the sector's performance and securing India’s food security needs.