. Clearly, agriculture, which contributes only 15-16 per cent of GDP, cannot overturn contraction in other sectors, but along with the rural sector, it could jump-start the economy, if we fixed its ills and transformed it.
To begin with, we must reduce our preoccupation with prices and markets to first ensure that more farmers produce enough surplus to gain from higher prices and expanded markets. Despite green shoots, agriculture is ailing. Only 44 per cent of irrigable area is irrigated. Groundwater is fast depleting, soils are degraded, extension services barely function and climate change is speeding up.
Moreover, 86 per cent of our farmers cultivate two ha or less, often in fragments; 75-80 per cent borrow credit informally; 70 per cent provide only 4-5 per cent of marketed surplus in wheat and rice, even in surplus states; barely 6-12 per cent sell in mandis, and few gain from MSPs. Farm incomes are low and erratic. Millions have fallen into extreme poverty with COVID-19. In its current state, agriculture cannot lubricate our growth, let alone engine it.
livestock, fisheries and forests, which account for 26 per cent, 5.5 per cent and 8.5 per cent of GVP from agriculture, have huge underused potential. Livestock is much discussed, but what about fisheries? India is the world’s second-largest producer of aquaculture fish and employs 13.5 million people, 32 per cent being women (FAO). In 2017-18, our fisheries grew at 11.9 per cent.
Finally, we must strengthen farm and rural non-farm linkages: 61 per cent of rural incomes come from non-farm activities. A vast under-tapped potential lies in agro-processing (rural families purchase 80 per cent of the food they eat); machine tools and agro-machinery (consider Ludhiana in the 1980s); farm tourism; and health and education services. In turn, this will boost aggregate demand. Expenditure elasticities calculated by Maitreesh Ghatak et al using CMIE data indicate that a rise in incomes of the bottom 50 per cent of rural households would raise demand for many local products.