Ploughing Through the Problems

India’s agricultural story is one of paradoxes. Despite employing nearly half the workforce and contributing 16 percent to GDP, the sector lags behind industry and services in growth. Once dependent on food imports, India became self-sufficient in grains thanks to the Green Revolution. But in 2024, its agriculture still struggles with stagnant productivity, declining groundwater levels, and the challenges of small landholdings. Unless policymakers address these structural issues, India’s food security and rural livelihoods will remain precarious.

Spanning 328.7 million hectares, India’s landmass is among the largest in the world, with 54.8 percent devoted to farming. Yet, productivity remains low. Between 2001-02 and 2022-23, agriculture grew at an average of 3 percent annually, while the economy expanded by 7 percent. Food grain production has risen, but except for sugarcane, India’s crop yields in 2022-23 still trailed the global average.

Despite a budgetary allocation of Rs. 3 trillion, including Rs 1.37 trillion for agricultural development and Rs. 1.67 trillion in fertilizer subsidies, government spending has not translated into proportional gains. A primary culprit is the highly fragmented nature of landholdings. As of 2015-16, 68 percent of farms were smaller than one hectare, with the average size declining from 1.23 hectares in 2005-06 to 1.08 hectares a decade later. Small farms hinder mechanization, limit economies of scale, and restrict access to quality inputs.

Recognizing the issue, policymakers have attempted solutions like Farmer Producer Organizations (FPOs), which help small farmers aggregate resources, reduce costs, and negotiate better prices. Launched in 2020, the government’s scheme to create 10,000 FPOs with Rs 6,865 crore in funding was achieved by February 2025. A study in Maharashtra found that FPO members benefited from a 22 percent improvement in price realization and a 30 percent reduction in marketing costs. However, only 20 lakh farmers have enrolled, a fraction of the 130 million farmers nationwide. Stronger state-level participation is needed to expand its reach.

Water Woes

Irrigation remains another major challenge. Of India’s net sown area, 55 percent is still rain-fed, leaving crops vulnerable to erratic monsoons. Where irrigation does exist, it is skewed—63 percent relies on groundwater extraction, while canal irrigation accounts for just 24 percent. Unchecked extraction has led to depleting water tables, particularly in Punjab, Haryana, and Maharashtra, where water-intensive crops such as rice and sugarcane dominate.

Government policies often exacerbate the problem. Free electricity and water subsidies encourage inefficient usage, benefiting politically influential states while depriving others. A study by the Central Ground Water Board projects that Punjab’s groundwater levels could plummet by 1,000 feet by 2039, a looming ecological disaster.

To counter this, the government has expanded the Per Crop More Drop scheme under the Pradhan Mantri Krishi Sinchayee Yojana, spending Rs. 50,000 crore since 2015. Its 2025-26 budget of Rs. 8,500 crore is the highest yet, benefiting 4.8 million farmers. But irrigation expansion, primarily a state responsibility, has been hampered by bureaucratic delays, corruption, and intergovernmental friction. While projects like the Bhakra Nangal and Sardar Sarovar dams transformed agriculture in Punjab and Gujarat, many initiatives remain stuck in political quicksand.

Another neglected aspect of agricultural reform is seed quality. The Doubling Farmers’ Income (DFI) committee estimates that better seeds alone could boost yields by 15 to 20 percent. Yet, the seed replacement rate—a key indicator of improved crop genetics—remains at just 40 percent for major crops. Without wider adoption of high-yield varieties, productivity gains will remain sluggish.

Modernization efforts are similarly lagging. Despite mechanization programs and technology subsidies, only large farms benefit, while smallholders continue using outdated methods. Investment in agri-tech startups and digital platforms could help bridge this gap, but adoption has been slow outside major farming states.

Political Tangle

Agricultural reform in India is often hostage to politics. Attempts to overhaul outdated policies, such as the controversial 2020 farm laws, have met with fierce resistance. While the laws aimed to liberalize agricultural markets, the government’s abrupt withdrawal following protests underscored the difficulty of reforming India’s farm sector. Yet, without bold policy changes, the sector will continue to suffer from inefficiencies that hinder its long-term viability.

India’s agricultural success has long been built on resilience. But resilience alone will not secure the future. Without tackling land fragmentation, improving irrigation, encouraging better seed adoption, and reforming subsidy regimes, the country’s farming sector risks stagnation. India needs not just higher yields but smarter policies that put the farmer, not politics, at the centre of agricultural growth.

(The author is a Chartered Accountant with a leading company in Mumbai. Views personal.)