1950s	1960s	1970s	1980s	1990-91	FY 1992-97	FY 1998-2003	FY 2004-07	2007-08Q
Real GDP growth	3.6	4.0	2.9	5.6	5.3	5.7	5.2	8.7	9.0
AGL	2.7	2.5	1.3	4.4	4.0	3.7	0.9	4.9	4.9
Industry	5.8	6.2	4.4	6.4	5.7	7.0	4.1	8.3	7.4
Mfg	5.8	5.9	4.3	5.8	4.8	7.5	3.9	9.1
Services	4.2	5.2	4.0	6.3	5.9	6.4	7.8	10.2	10.8

1c. Agri GDP growth rate was subject to wide fluctuations, from   -7.2 in 2002-03 to +4.9% in 2007-08 and registered only 1.6% for 2008-09. Industry GDP ruled high for 4 years up to 2007-08, but started decelerating thereafter and recorded lowest rate of 3.9% during 2008-09.

The Standing Committee on Agriculture made very apt observations: that ‘Agricultural development has been ignored since 1990s. Fix remunerative prices for agri produce- “where hunger rules, peace can not prevail”. The prices of agricultural produce received by the farmers are lower than the prices of the same prevailing in a free market and are often less than the cost of cultivation. The focus of our development is more towards raising industrial production and recently on the service sector; this lop-sided growth of our economy is increasing the gap between the rich of the cities & poor farmers of the villages, Farmer centric policies which can only solve our food security and unemployment problem are not on the agenda of the successive governments. Employment in the agriculture sector as share of total is 52%.

As agri sector GDP fell year after year since 1950s from 48% to 17% now, per capita income of agri workforce also dwindled sharply. Studies by the planning commission and others show that while the income ratio between agri workers and non-agri work force during 1951 was 1:1.8, it got widened to 1:2.8 by 1984, it further widened to 1:5.2 by 2004 and it is estimated by the Centre for Development Economics that whereas agricultural sectoral GDP stood at nearly Rs.3 lakh crore in 2002-03, it will rise to no more than Rs.4 lakh crore (+33%) a decade later in 2011-12 at the agricultural growth rate forecast for the Eleventh Plan. Meanwhile, the combined manufacturing and services sectors would have soared from Rs. 9 lakh crore to around Rs. 20 lakh crore (+120%), further widening the gap between the relatively stagnant sectors of the economy and the boom sectors from Rs.6 lakh crore to Rs.16 lakh crore. The disparity between agri and non-agri sectoral GDP is going to increase from 1:3 in 2003 to 1:5 by 2012. The Eleventh Plan candidly confesses: “GDP per agricultural worker is currently around Rs.2,000 per month, which is only about 75% higher in real terms than in 1950 compared to a four-fold (400%) increase in overall real per capita GDP.”

There has been continuous decline in the plan outlays for Agriculture. During 6th Five Year Plan the share was5.8%; the same declined to 4.9% during 9th Plan and further down to 3.9% during the 10th Plan. The share of expenditure on Research &Education was very low at 6% of the total development expenditure on Agriculture. The growth of public expenditure has slowed down since 1990s on Research and Extension, in constant terms. In the case of extension services the growth of expenditure was highest in the sixties resulting in acceleration in the agricultural growth. Thereafter the rate slowdown is very sharp. The rate of growth of expenditure on extension services has declined three-fold since 1990s.

The Gross Capital Formation (GCF) in agriculture as a proportion to the total GDP has shown a decline from 2.9 per cent in 2001-02 to 2.5% percent in 2007-08. As Gross Fixed Capital Formation is estimated at 35% of total GDP, 18% there of being agri sector’s share in GDP, should be invested in improving agri infrasructure, This works out to more than 6% of the total GDP which means investment in agri infra should be doubled 

The share of agriculture & allied sector in total GCF after showing a marginal increase during 1999-2000 to 2001-02 has been continuously declining. It stood at 10.2 per cent in 1999-2000, increased to 11.7 per cent in 2001-02 and thereafter declined to 7 per cent in 2006-07. The decline was mainly attributed to decline in the private sector despite increase in the share of public sector. This should be at least 18% of the total GDP, being the share of agri sector in the GDP which again means that investment in agri infra like irrigation, power, rural roads, godowns etc, should be doubled.

As per above data, the banks are shown to have given agri loans amounting to a huge sum of Rs 41000 crore out of total increase in credit of Rs 63,000 crore, constituting about 2/3rd of total annual disbursals, at the fag end of the year in just one and half months (Mid Feb-March 09). As khariff and rabi seasons were over by then, it is intriguing as to what puposes such huge agri loans were disbursed in just one and half months. Definitely it is not for production purpose as both khatf and rabi lending seasons are over by then. The growth figures of increase in agri lendings to an extent of Rs 41,000 is unlikely, unless indirect advances for huge amounts are given in March and shown as agri advances which does not help in production increase anyway.

Doubling of growth in incremental credit since 2004 was perhaps achieved quantitatively but without any increase in credit to small farmers . The extent of revival of credit flow to agriculture in the 2000s would have been far less in the absence of a sharp growth in indirect finance to agriculture. About one-third of the increase in credit flow to agriculture between 2000 and 2008 was on account of the increase in indirect finance. Even this growth did not originate from a growth in the traditional components of indirect finance, such as loans for the supply of inputs, power and credit to agriculture. The sharp growth in indirect finance in the 2000s was mostly a result of changes in definitions effected since late 1990s. These changes broadly involved (a) the addition of new forms of financing commercial, export-oriented and capital-intensive agriculture; and (b) raising the credit limit of many existing forms of indirect financing. Indeed, meeting the task of doubling agricultural credit appears to have become much easier for banks as a result of these definitional changes.

The entire growth of indirect finance to agriculture in the 2000s originated from a major expansion of loans with a credit limit of more than Rs 1 crore, and particularly, more than Rs 10 crore. In the year 2000, indirect finance with credit limit above Rs 25 crore accounted for less than one-third of the total indirect advances to agriculture. However, in 2007, indirect finance with credit limit above Rs 25 crore accounted for nearly 60% per cent of the total indirect advances to agriculture.

Credit flow to agri up to Sep 08 was only Rs 95,000 crore, which means that a huge sum of Rs 1,92,000 crore (2/3rd of the total disbursals) was disbursed in the second half of the year by which time Khariff lending season was over. Rabi acreage being less than khariff acreage, one is left to wonder as to what purposes such huge sums were given when it was not possible to account the credit flow for rabi crops. The growth figures of increase in agri lendings to an extent of Rs 1,92,000 is unlikely, unless indirect advances for huge amounts were given in the second half of the year which does not help in production increase anyway.

The government has set a target of Rs 3,25,000 crore farm credit for fiscal 2009-10, just 13% growth over the previous year figure of Rs 2,87,000 crore comprising of direct farm credit of Rs 2,60,000 crore and an indirect farm credit of Rs 65,000 crore. The direct farm credit target will comprise crop loans of Rs 2,00,000 crore with the rest being short-term loans. Bulk of the farm credit—Rs 2,28,000 crore—will come from scheduled commercial banks. Regional rural banks will provide Rs 37,000 crore and co-operative banks Rs 60,000 crore.  10 Jun 2009, ET Bureau

The increase in agri credit flow during2007-08 was 11% (Rs 25,257 crore) and in 2008-09 was 13% (Rs 32,000 crore). Increase in bank credit during the corresponding periods was 22% and 17% respectively. The targeted increase in credit flow during 2009-10 is again 13% ( Rs 38,000 crore). Increase in credit flow to agri culture during 2007-08 and 2008-09 was thus less than increase in total bank credit during the corresponding periods as narrated above. Total bank credit is estimated to increase by 20% in 2009-10,where as targeted increase in agri credit is only 13%. Thus for all the three years under reference agri credit grew/targeted at less than total bank credit growth/estimate. Keeping the need for food security in view, it is but proper and essential that the growth in agri credit should at least be equal to the growth in total bank credit. Accordingly agri credit for fiscal 2010 should be fixed at Rs 3,45,000 crore aiming at 20% increase in the current year instead of Rs 3,25,000 crore at 13%.

Percentage share of small loans of Rs 25000 declined from 50% in 1990 to mere 11% in 2007. And loans of over Rs one crore skyrocketed by more than 400% during the same period. According to RBI data, institutional credit flow to farmers registered a compound annual growth rate of 47% between 2003 and 2007, but the number of farmer accounts grew by 22% and average loan per account increased by 20%. According to the latest data, only 27% of cultivator households get formal credit. The rest, comprising mainly small & marginal farmers, have no access to credit, though their landholdings constituted nearly 80% of total holdings and 36% of area. NABARD Report]. The loaning should be extended to cover all these farmers in the next five years. By 2012,credit needs of agri sector are estimated at Rs 6 lakh crore by the study group of Planning Commission. Financial institutions should be strengthened to meet this requirement of Rs 6 lakh crore agri credit needed by farm sector by 2012. Inadequacy of farm credit continues to be one of the major bottlenecks hindering the growth in investment and growth in agriculture. The growth of direct finance to agriculture declined in 1990s (12%) as compared to 1980s (14%) and 1970s (around16%). The average share of long term credit also declined from over 38% to around 36%, adversely affecting capital formation in agriculture.

Agricultural growth is characterized by sharp fluctuations and remains vulnerable to the vagaries of nature. For three consecutive years (2005-06 to 2007-08), foodgrains production recorded an average annual increase of over 10 million tonnes. The total foodgrains production in 2007-08 was estimated at 230.78 million tonnes as against 217.3 million tonnes in 2006-07 and 208.60 million tonnes in 2005-06. As per the third advance estimates, production of foodgrains in 2008-09 is estimated to be 229.85 million tones. This is lower than the target of 233 million tonnes set out or the year as also the final estimates of 230 million tonnes for 2007-08

The total irrigation potential in the country has increased from 81million hectares in 1991- 92 to 102 million hectares up to the end of the Tenth Five Year Plan (2006-07). Of the total potential created, however only 87million hectares is actually utilized. Under AIBP, State Governments were provided Rs. 28,000 crore as Central Loan Assistance (CLA)/grant for major and medium projects up to December 31, 2008. So far 91 major and medium irrigation schemes have been completed. In 2008-09, Rs. 2,800 crore has been released for AIBP for major and medium irrigationschemes up to December 2008.

UNDER UTILISATION: A good 15 per cent of the irrigation potential in the country remains unutilised primarily because of lack of proper operation and maintenance and incomplete distribution system. The five major factors identified for the gap between the created irrigation potential and its actual utilisation were — lack of proper operation and maintenance, incomplete distribution system, non-completion of command area development, changes from the initially designed cropping pattern and diversion of irrigable land for other purposes. Non-completion of distributaries and minors was another cause for non-utilisation of available water resources for irrigation purposes as was the non-completion of field channels and on-farm development.