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Growth and Structural Transformation of Agriculture in Bihar

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Growth and Structural Transformation of Agriculture in Bihar Growth and Structural Supported by Transformation of Agriculture in Bihar _______________________________________________________________ Policy Brief No. 1 | 2019 | Authors: Elumalai Kannan and Sanjib Pohit _______________________________________________________________ different phases of the agriculture roadmaps, Background laid down by the Government of Bihar as Despite the presence of rich natural follows: the first agriculture roadmap (2008– resources in Bihar, the state, until recently, 09 to 2011–12); the second agriculture remained backward in agricultural roadmap (2012–13 to 2016–17); and the third development. Although the economy of Bihar agriculture roadmap (2017–18 to 2022–23). has started growing significantly since its These roadmaps focus on the holistic bifurcation in 2000, it still remains one of the development of agriculture with an emphasis poorest states in India. Among the poorer on increasing productivity growth and states, Bihar scores very high in the under- improving farmers’ income (see Box 1). 1 development index. Its combined poverty In this context, the UK Department level was as high as 33.7 per cent, as for International Development (DFID) in compared to the national average of 21.9 per India has commissioned the National Council cent, during 2011–12. The rural poverty level of Applied Economic Research (NCAER) to was even higher at 34.1 per cent. The state undertake an agricultural sector diagnostic also has the dubious distinction of recording study in the Indian state of Bihar to identify 2 low health and educational outcomes . the economic, political, natural, and The economy of Bihar is dominated technological barriers that beset agricultural by agriculture, which contributes over a productivity and inclusive growth in Bihar quarter of the state’s income and accounts for (see Box 2). employment of about 70 per cent of the rural This policy brief has been prepared as workforce. Hence, robust growth of the a part of this study to highlight the salient agriculture sector holds the key to the features of the prevalent agricultural economic and social development of the state. situation in Bihar. Keeping this in view, the Government of Bihar has launched many initiatives for improving productivity growth in the crop and livestock sectors. These include the Structural Changes and Relative development of irrigation, strengthening the Performance of Agriculture in input supply and extension programmes, and Bihar introduction of market reforms and farm mechanisation, among others. These The bifurcation of the erstwhile initiatives are being implemented under Bihar state in 2000 resulted in the formation of a new state of Jharkhand. Following this 2 Government of Bihar (2016). Economic Survey 1 Government of India (2013). Report of the 2016-17, Finance Department, Patna. Committee for Evolving A Composite Development Index of States, Ministry of Finance, New Delhi. November 2019 1 | bifurcation of Bihar, the part endowed with rich mineral resources went to Jharkhand Figure 1: Annual Growth in Major Sectors (Per cent) while the fertile agricultural land and water 16.0 resources were left in Bihar. Thus, 14.0 12.0 agriculture holds the key to the overall 10.0 development of the Bihar economy, and 8.0 consequently policymakers have laid a lot of 6.0 4.0 emphasis on agricultural development 2.0 through implementation of various 0.0 initiatives under the agriculture roadmaps Overall Services (see Box 1) Industry Non-agriculture The average annual growth of 2001-02 to 2007-08 2008-09 to 2011-12 Agriculture & AlliedAgriculture & agriculture and allied activities during the Source: National Accounts2012-13 to Statistics 2016-17 (various2001-02 issues) to 2016-17. pre-agriculture roadmap (2001-02 to 2007- 08) was only about 2.0 per cent (Figure 1). periods. Consequently, Bihar still remains During the period of the first agriculture one of the fast growing states in India. roadmap, the growth rate accelerated to 3.1 The high economic growth, changes per cent, which was almost equal to the in consumption patterns, entry of national average agricultural growth. multinational corporations, and rising However, this high growth in agriculture urbanisation act as catalysts of could not be sustained in the long run. transformation within agriculture. Changes During the overall period 2001-02 to 2016-17, in the composition of agricultural output the average agricultural growth was only 2.0 reveal the pattern of structural changes over per cent, which was much below the time (Table 1). The contribution of corresponding national figure of 3.1 per cent. However, the industry and services sectors registered excellent growth during all the Box 1: Bihar Agriculture Roadmaps Year of Launch 2008-09 2012-13 2017-18 First Second Third Objective Rainbow Revolution Focus Seed Sector Road Connectivity Food Security Organic Farming Power Sector Funds Allocated (₹ in crore) 6135.79 1.49 lakh 1.54 lakh Schemes Launched Seed Extension Scheme Seed Gram Scheme A 1500 MW Power Network Agriculture Research University Development of Organic Corridors An 11 KV Agriculture Feeder Three-layer Bihar Vegetable Processing and Distribution Cooperation Expenditure on Mid-day Meal Scheme Awards Krishi Karman Award November 2019 2 | Box 2: Contours of NCAER’s Work on Agricultural Diagnostics for Bihar The main aim of the NCAER study, which is aligned with the Bihar agriculture roadmaps laid down by the Government of Bihar (GoB), is to develop practical, evidence-based policy options for supporting sustainable growth in this sector. The purpose of the diagnostic study is to identify both the drivers of and barriers in its growth, as also other aspects such as social inclusivity, the regional dimensions of growth, and the future growth trajectory. Specifically, the key objectives of the study are to: Assess the drivers of agricultural productivity and growth in Bihar; Understand and rank the obstacles to inclusive growth; and Identify implementable policy action points to increase the agriculture sector’s productivity and promote inclusive growth to help the sector achieve a sustained path of higher growth. agriculture (crop sector) to the overall output roadmap period. Interestingly, the decline in declined from 66.3 per cent in 2002-03 to 53.6 agricultural output was offset by a per cent in 2015-16. Within agriculture, considerable rise in the contribution of the horticulture accounted for a little less than a livestock sector. Livestock rearing emerged quarter of the output, while field crops as an important activity, accounting for constituted roughly one-third of the about 34 per cent of the total output during agricultural output. The output from field 2015-16. Fishery and forestry activities also crops and horticulture registered remarkable registered commendable growth during the growth during the period of agriculture entire period of analysis. roadmaps as compared to the pre-agriculture Table 1: Changes in the Composition of Agriculture and Allied Activities (%) % Share Trend Growth Rate (%) TE 2000-01 to 2008-09 to 2000-01 to Particulars 2002-03 TE 2007-08 TE 2015-16 2007-08 2015-16 2015-16 Agriculture 66.3 56.4 53.6 -0.69 3.63 3.03 Field crops 34.7 32.4 31.0 1.53 4.29 4.00 Horticulture 31.6 24.0 22.7 -3.51 2.85 1.85 Livestock 25.4 30.3 33.8 6.39 6.22 6.16 Forestry 4.4 9.5 6.1 18.90 1.75 5.84 Fishery 4.0 3.8 6.5 2.43 9.62 8.15 Overall 100.0 100.0 100.0 2.57 4.66 4.29 Source: Authors’ compilation. Note: TE: triennium ending. Changes in Land Use, Cropping agricultural uses. The increase in fallow land Pattern and Irrigation is generally due to the lack of adequate irrigation water, labour shortage, and Bihar has highly fertile land falling waterlogging due to floods. However, the rise in the Gangetic plain. Unfortunately, in the proportion of fallow land is an issue of however, a significant part of the area is concern as there is a tendency to convert the prone to floods while at the same time, some fallow land into planation crops or non- other parts of Bihar are subject to drought. agricultural uses. Bihar has 9.4 million hectares of reported geographical area. Out of this, over 55 per Various factors such as land market cent of the land is utilised for cultivation.3. dynamics, changes in land use policy, and However, during recent years, the net sown demographic pressure affect the land use area has declined due to an increase in the pattern. As compared to other states, Bihar fallow land and the area under non- has highly fragmented landholdings and has 3 Source: Land Use Statistics, DES, Ministry of Agriculture and Farmers Welfare. November 2019 3 | experienced increasing sub-division of land hectare and reduction in the average size of over time. The partial implementation of the operated area are among the important land reforms and demographic pressure are challenges facing Bihar’s agriculture sector. responsible for this uneven distribution of The shrinking size of landholdings affects the landholdings. At the national level, marginal economic viability of farming and its capacity holdings constituted about 68.5 per cent of to support the livelihoods of farmers. The size the total holdings in 2015-16, whereas the of landholdings also influences the type of corresponding figure in Bihar was 91.2 per crops grown, adoption of technology, price cent, pointing to a high incidence of realisation, and effective bargaining in the marginalisation of landholdings in the state.4 output and input markets. Farmers in Bihar Landholdings of less than 2 hectares in size were found to have mostly used cultivable accounted for 97 per cent of the total land for growing cereals, which constituted landholdings, and this has shown an upward about 80 per cent of the total cropped area trend over time.
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