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While the overall budgetary allocation towards the agricultural sector has marginally increased by 4.4% in the Union Budget 2022-23, the rate of increase is lower than the current inflation rate of 5.5%-6%.

Agriculture Orientation Index (AOI) - a bleak picture

• It was developed as part of the Goal 2 (Zero Hunger) of the 2030 Agenda for Sustainable Development in 2015.The Sustainable Development Goal (SDG) 2 emphasises an increase in investment in rural infrastructure, agricultural research and extension services, development of technology to enhance agricultural productivity and eradication of poverty in middle- and lower-income countries.
• The AOI is calculated by dividing the agriculture share of government expenditureby the agriculture value added share of GDP. In other words, it measures the ratio between government spending towards the agricultural sector and the sector’s contribution to GDP.
• India holds only the 38th rank in the world, despite being an agrarian economy wherein a huge population is dependent on the agricultural sector for its livelihood, and despite being among the largest producers of several crops produced and consumed in the world.
• The enormous spending on the agricultural sector by East Asian countries is also reflected in their higher crop yield. For example, the total cereal yield in India is only around 3,282 kilograms per hectare compared to 4,225 kg per hectare in Asia.

Comparison with China

• In China, even with an average land holding size of 0.6 hectares, which is much lower than India’s average land holding size, the performance of the sector in terms of crop yield is much higher than India.
• For example, the cereal yield is 6,296 kg per hectare, pulses yield is 1,815 kg per hectare and vegetable crops yield is 25,546 kg per hectare in China; the corresponding figures for India are 3,282 kg, 704 kg, and 15,451 kg, respectively.

Way forward

• The intensification in government spending towards the agricultural sector is the key to attain the sustainable development goals of higher agricultural growth and farm income.
• The focus on development of irrigation facilities, urban infrastructure and development of national highways must be complemented with an emphasis on the development of rural infrastructure and rural transportation facilities, along with an increase in the number of markets, as suggested by the National Commission on Farmers.
• These measures will play a crucial role in enhancing farmers’ access to markets and integrating small and marginal farmers into the agricultural supply chain to a greater extent.