Media article

Agriculture budget: an integrated approach for growth

Padmanand V,
Chirag Jain
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The agriculture & allied sector is one of the most pivotal sectors of the Indian economy.

Finance Minister Nirmala Sitaraman will be in the spotlight once again as she presents the Union Budget 2023-24 on February 1st, 2023. The expectations of the agriculture & allied sector from this Budget are high and varied. The stakeholders within the sector are hopeful of upscaling of ongoing interventions as well as enhanced plans on integrated interventions.

The agriculture & allied sector is one of the most pivotal sectors of the Indian economy.

The sector comprises over 14 Cr farmers and provides livelihood to almost half the Indian population. Despite shocks from the pandemic, the sector registered strong growth in the recent years. As a matter of fact, over the last few years, despite the pandemic, Russia-Ukraine war and the sectoral shifts, agriculture has been the only sector to display a constant growth. Despite the supply chain disruption due to the aforementioned crises, the sector has shown strong resilience to external hindrances. This is in sync with Hon’ble Prime Minister’s vision of ‘Atmanirbhar Bharat’ or ‘Self Sufficient India’.

In the year 2021-22, the agriculture & allied sector contributed 18.8% to the Gross Value Added (GVA) of the country with a registered growth of almost 4% in the same year. Apart from this, within the Agri and Allied sectors, the growth rate for horticulture, food grains and fisheries are 6%, 5% and 10% respectively. Notable the ‘diversification’ within the sub-sectors has also been a recent trend.

Today, India is the 2nd largest producer of the of the Fruits & Vegetables, with a huge potential in the export of the same. Horticulture contributes to nearly 1/3rd of the agricultural economy, due to the rising demand for nutrition, quality foods and fruits and vegetables from all around the world.

As horticulture production in the country surpasses agriculture production, the shift towards a more integrated perspective is warranted. The increase in demand, largely propelled by urban areas, for fresh and processed foods along with growing institutional support for the digitization of agriculture sheds light on the shifting circumstances within the sector.


Nevertheless, India is yet to adequately adopt an integrated approach and penetrate global markets adequately. In many horticultural commodities are protected by customs tariffs in the tune of 40% and the country enjoys at best “second competitive advantage”. For instance, despite being the top producer of Bananas in the world, India still accounts for a mere 2% of the global market share in the banana exports. On the other hand, Ecuador, the country ranking 4th in the production of banana accounts for around 25% of world exports.

Despite all the initiatives of the Govt., a small/marginal farmer in Anantapur, Andhra Pradesh, the top banana producing district in India, is still facing the various constraints and gaps in the value chain. Event with the volume, the means and also the support of the government, farmers are struggling to secure a market for better and stable renumeration; they also suffer from the lack of quality planting material, poor quality and conformance absence of developed sea protocols, non-tariff barriers in markets abroad, infrastructure constraints etc. In order to address the problems in the value chain, there is a dire need for an integrated approach that can identify the gaps of entire value chain as well as plug the same by establishing a convergence between not only of all the relevant programmes and departments, but also a PPP approach between the government and the private sector.

The recent programmes of government of India, including the Horticulture Cluster Development Programme (CDP) is one such approach, as it leverages the geographical specialization in horticulture clusters and fosters the integrated and market-led development of horticulture focusing upon a range of value chain activities including pre-production and production, post-harvest infrastructure and value addition, as well as logistics, marketing and branding. Grant Thornton Bharat LLP has been working as the Programme Management Unit (PMU) in this specific initiative. The programme has a unique approach to strengthen the entire value chain, i.e., enabling synergies and convergence among all stakeholders. The programme’s implementation structure encourages the participation of the state government while also bringing in the private sector investment into the clusters.

Launched under the umbrella of National Horticulture Board, the programme is being implemented as a Pilot initially in 12 identified clusters and will be scaled up to cover all identified 55 clusters based on the learnings from this pilot. Upon successful implementation of the programme in all clusters, the overall outcome is envisaged by way of benefiting around 1 million farmers, leveraging a total estimated investment of Rs 10,000 crore, and enabling an increase in exports of the targeted crops by 20 percent.

Such unique and integrated programme is the need of the hour. Hence the forthcoming budget should bring in programmes which consider the entire value chain, promote participation across value chain activities, laying a foundation for the future of Indian Agriculture wherein cluster brands, clean planting material, traceability and conformance etc. will be shaping the performance of the sector.

A recent report by the United Nations posited India to become the most populous nation in the world by 2023. This increasing population especially in urban areas, is driving the increase in demand for fresh quality agriculture, horticulture, livestock and fisheries produce. The push from this increased demand has been met with record production numbers in the horticulture sector and a steady growth within horticultural exports as well.

However, to ensure that this growth is sustainable in nature, the focus of policy making needs to be forward looking. Increased focus on adoption of globally proven ideas such as the cluster-based model of cultivation, value-chain based support for advanced technology adoption and encouraging quality and conformance at the farm level are some areas in which stakeholders expect a specific focus in the upcoming Budget 2023.

This article was originally published on The Times of India.