STATE BUDGETARY RESOURCES AND AGRICULTURAL DEVELOMENT- A Study across States

Transcription

1 STATE BUDGETARY RESOURCES AND AGRICULTURAL DEVELOMENT- A Study across States Lokesh G B Kedar Vishnu Agricultural Development and Rural Transformation Centre, Institute for Social and Economic Change, Bangalore JUNE 2011

2 PREFACE Public investment on agriculture has generated considerable debate and interest. Existing literature reveals that most of the past studies have focused on specific aspects of falling public investment amidst rising private investment in Indian agriculture. But it might or might not be the case for most of the states. Thus, it would be more useful to examine the trend and magnitude at the state level. Again, past studies are mainly concerned with capital expenditures. There is hardly any study available which deals with revenue expenditure on agriculture at state level. The present study is a modest attempt in this direction. The present study has been carried out to review the trends in state budgetary supports to agriculture under revenue account and its implication for future agricultural growth in India. The study also analysed different schemes for agriculture sector and their impacts on agricultural development implemented by the state Governments. The study was designed and planned at the Agricultural Development and Rural Transformation Centre of the Institute for Social and Economic Change, Bangalore. We had prepared the plan of the study, data needed, and questionnaire for the study. Twelve centres participated in the study names: AERC, Allahabad, UP; JNKVV, Jabalpur, Madhya Pradesh; AERC, Viswa Bharathi, Santiniketan, West Bengal; AERC, Delhi, Delhi University; ADRT Centre, Bangalore; AERC, Visakhapatnam, Andhra University; AERC, Bhagalpur, Bhagalpur University, Bihar; AERC, Punjab Agricultural University, Ludhiana; AERC, Sardar Patel University, Gujarat; AERC, GIPE, Puna, Maharashtra; AERC, Himachal Pradesh University, Shimla; AERC, Assam Agricultural University, Jorhat. These centres prepared separate studies on the lines of common study design. Totally we have covered 15 states. Initially this study was designed and formulated by Prof.R.S. Deshpande; the work later taken up by Dr. M.J.Bhende. I have taken up this study immediately after joining to this Institute. Initially Dr. U R Rajeshwari helped to formulate the tables for preparation of consolidation of state level report; the work was later taken over by the Mr. Kedar Vishnu to complete the study. Despite the delayed receipt of the state level reports, varied quality of reports and with the continuous turn - over of assistants we could complete the work. I am grateful to all those who participated in this work. ii

3 We acknowledge the contribution made by the faculty members and the staff of the participating Agro- Economic Research Centres. We must thank the AER division of the Ministry of Agriculture. Government of India for their patience in bearing with us and especially Dr. S M Jharwal, principal Advisor, Agriculture, Govt of India; Dr. R C Ray, Economic and Statistical Adviser, Ministry of Agriculture, Shri P C Bodh, Addl. Economic Adviser for their encouragement and continuous prodding the centres. In the completion of the study I received the ready cooperation from Prof. Parmod kumar, Professor and Head, ADRTC, ISEC and faculty and staff of ADRTC. Special thanks Mrs. Akhil and Mr.Devaraj for their help in preparation of this report. We are grateful to all of them for their contributions. I am grateful to all of them for their help. Date: G B Lokesh Assistant Professor Agricultural Development and Rural Transformation Centre Institute for Social and Economic Change, Bangalore iii

4 Sl. No. I Particulars PREPACE LIST OF TABLES LIST OF FIGURES LSIT OF ANNEXURE INTRODUCTION CONTENTS Page No. 1.1 Introduction Need for the Study Objectives Methodology Growth rate of Gross State Domestic Product (GSDP) Across the States Sector-wise share of GSDP Across the States 10 ii vi vii viii 1.7 Cropping Pattern Agricultural production and Productivity of Crops Across the States Land Use Pattern Across States Organisation of the study 52 II TRENDS AND PATTERN OF BUDGETARY EXPENDITURE ON AGRICULTURE 2.1 Introduction Trends in Budgetary Expenditure on Agriculture Growth of Budgetary Expenditure on Agriculture across the States Growth of Per Hectare Budgetary Expenditure on Agriculture Expenditure on Agriculture of Revenue Account as a Share of Total Budget and as a Share of Economic Services Expenditure on agriculture of Revenue Account as a Percentage of NSDP Changes in Composition of Expenditure on Agriculture Changes in the Composition of Per Hectare Expenditure on Agriculture of Revenue Account at Constant Prices iv

5 2.2.7 Compound Growth Rate of Revenue Expenditure on Agriculture and Allied Activities across States 2.3 Plan Outlay on Agriculture Conclusion 163 III AGRICULTURAL DEVELOPMENT SCHEMES 3.1 Introduction Review of Centrally Sponsored Schemes Review of State Sector Schemes Across States Conclusion 193 IV NEXUS BETWEEN STATE INTERVENTION AND AGRICULTURAL DEVELOPMENT 4.1 Introduction Impact of Agricultural Expenditure on Production, NSDP and Poverty Impact of Agriculture Expenditure on Farm Sector Distress Impact of Government Schemes on Agriculture Development Conclusion 225 V SUMMARY AND CONCLUSION 228 REFERENCES 242 ANNEXURE 245 v

6 LIST OF TABLES Sl. No. Title of the Table Page No. 1.1 Agriculture and Allied sector Performance in India during Plan Periods Growth Rate of GSDP (at constant prices) of Major States in India State wise GSDP during to at Constant Prices (Rs in Crore) Sector wise share of GSDP across States (Constant Prices ) Change in the Cropping Pattern (Area as a percentage to Gross Cropped Area) across states 1.6 Compound Growth Rate of Production and Productivity of Major Crops during Pre and Post-reform Period across States Land use Pattern from All India Level (in Million Hectares) Land Use pattern across States (thousand hectares) Share of Expenditure on Agriculture and Allied Activities Trends in Expenditure on Agriculture and Allied Activities Growth Rate of Expenditure on Agriculture and Allied activities Across States (Based on Prices) Trends of Per Hectare Budgetary Expenditure (on revenue account) on Agriculture (Based on Prices) Growth Rate of Per Hectare Budgetary Expenditure on Agriculture (on Revenue Account) across States Expenditure on Agriculture of Revenue Account as Share of Total Budget and as share of Economics Services Expenditure on Agriculture of Revenue Account as a Percentage of NSDP (Constant prices of ) 2.8 Change in Composition of Expenditure in Agriculture and Allied Sectors on Revenue Account (in Per cent) Change in the Composition of per Hectare Expenditure on Agriculture and Allied Activities on Revenue Account 135 vi

7 2.10 Growth Rate of Expenditure on Agriculture and Allied Activities (at Constant Prices) Plan Outlay for Agriculture and Allied Activities across States Allocation of Fund for Oilseed Production Programme State wise Number of Persons below Poverty Line (BPL) in India Relation Between Agriculture Expenditure and Total food Grains Production, NSDP, Poverty in India, to Number of Farmer s Suicide Cases in selected States and all India 211 LIST OF FIGURE 1.1 Agriculture and Allied Activities Performance in India during Plan Periods Growth Rate of GSDP(Based on Prices) of Major States in India Per Hector Expenditure on Agriculture on Revenue Account (Based on Prices) Growth Rate of Per Hector Expenditure on Agriculture (Based on Prices Expenditure on Agriculture of Revenue Account as a Share of Total Budget Expenditure Expenditure on Agriculture of Revenue Account as a Share of Economics Services Incidence of Poverty in Major States of India 200 vii

8 ANNEXURE- LIST OF TABLES A.1.1 A.1.2 A.1.3 A.1.4 State Sector Schemes on agriculture and Allied activities in Himachal Pradesh State Sector Schemes on Agriculture and Allied activities in West Bengal State Sponsored Schemes on Agriculture and Allied activities in Karnataka State Sponsored Schemes on Agriculture and Allied activities in Uttar Pradesh A.1.5 A.1.6 A.1.7 A.1 8 State Sponsored Schemes on Agriculture and Allied activities in Maharashtra ( Rs in Lakhs) State Sponsored Schemes on Agriculture and Allied activities in Andhra Pradesh (Rs. In Lakhs) State Sponsored Schemes on Agriculture and Allied activities in Rajasthan State Sponsored Schemes on Agriculture and Allied activities in Uttaranchal (Rs in lakh) A.1.9 State Sponsored Schemes on Agriculture and Allied activities in Gujarat 253 A.1.10 A.2.1 A.2.2 State Sponsored Schemes on Agriculture and Allied activities in Punjab (Rs. In Lakhs) Centrally Sponsored schemes on agriculture on Agriculture and Allied activities in Andhra Pradesh (Rs. In Laksh) Centrally Sponsored Schemes on Agriculture and Allied activities in Karnataka A.3.1 State wise Farmer's Suicide Cases (%) in India 258 A.3.2 Percent Population Living Below Poverty Line in India 259 viii

9 CHAPTER I INTRODUCTION 1.1: INTRODUCTION Agriculture is the core sector providing livelihood to almost two thirds of the work force in the country. It has always been most important economic sector. The increase in postindependence agricultural production has been brought about by bringing additional area under cultivation, extension of irrigation facilities, and use of better seeds, production techniques, water management, and plant protection. Agriculture and allied sectors including forestry and logging accounted for 16.6 percent of the GDP and employed about 60 percent of the total workforce during 2007 (CIA Fact Book India, 2008). Despite a steady decline of its share in the GDP, is still the important economic sector and plays a significant role in the overall socio-economic development of India. There have been a large number of studies examining the factors that have contributed to the growth of agriculture in India. Mathur, Das and Sircar (2006), looks at trends in the growth of agricultural production in India over the last one and a half decades, identifies factors that affect agricultural growth and analyses constraints that have affected growth in the sector. All-India level and state-wise analyses highlight the role of public investment/ government expenditure on agriculture as being the crucial determinant in stepping up the rate of growth of agricultural production. Given other factors, a consistent increase in public investment to 15 per cent per annum should lead to agricultural growth of 4 per cent, which is associated with the projected growth rate in the Eleventh Plan. Sharma and Gulati (2005) found that the budget is noteworthy for its focus on creation of greater employment in rural areas through increased allocations for rural development and irrigation. It also acknowledges some of the important changes that need to be implemented in agriculture, including a policy for diversification, rationalization and restructuring of subsidies and greater decentralization. But are the fiscal allocations and the policy impetus emanating from the budget adequate to revitalize agricultural growth performance in the economy? In this regard, the budget falls short of expectations. Not much of an effort has also been made to cut the food and fertilizer subsidy and stimulate public investment in agricultural research and development. Institutional changes necessary to improve service delivery in rural areas have also not been addressed adequately. 1

10 Bhattarai and Narayanamoorthy (2003) have empirically shown that improvement in irrigation and rural literacy are the two most important factors for agricultural growth in India. C H Hanumanth Rao (2005b) compared the factors, which gave an impetus to growth of agriculture in some East Asian countries that have achieved higher agricultural growth than India. India is lagging behind them in terms of irrigation, rural electrification, and rural roads apart from land reform and redistribution measures as well as human resource development. It is suggested that public policy should focus on development of infrastructure in the relatively less developed regions, support agricultural research and extension and skill formation. Rao and Gulati (2005) showed that public sector capital formation in agriculture as a proportion of total capital formation in agriculture declined in the recent past as compared to the 1980s. The authors emphasize the need to reverse this trend and increase public investment in agriculture so as to be able to increase the growth in the sector. In , this constitutes only per cent of total agricultural investment at constant prices. The performance of agriculture during plan periods reveals that the growth rate of agriculture and allied activities was negative in third five year plan (Table 1.1). It has shown rising trend during fourth and sixth five years plan and recorded historical high of 5.7 per cent in sixth plan. But again it has started declining and reached to 2.5 per cent in the tenth plan. Similarly, overall growth rate which was 2.8 per cent in third plan increased to 6.5 per cent in tenth five year plan. It was highest in eighth plan and lowest in third five year plan. We may conclude that importance of agriculture sector in recent years has been declining in India. 2

11 Table 1.1: Agriculture and Allied sector Performance in India during Plan Periods Five Year Plan Agricultural Growth (%) (Include Allied Sector) Overall Growth (%) Third Plan ( ) Forth Plan ( ) Fifth Plan ( ) Sixth Plan ( ) Seventh Plan ( ) Annual Plan ( ) Eighth Plan ( ) Ninth Plan ( ) Tenth Plan ( ) Source: Ministry of Agriculture, Government of India Fig 1.1: Agriculture and Allied Activities Performance in India during Plan Periods Percent III Plan IV Plan V Plan VI Plan VII Plan Annual Plan VIII Plan IX Plan X Plan Agriculture Growth Rate Overall Growth Rate 3

12 1.2 NEED FOR THE STUDY A much disturbing aspect of Indian agriculture relates to its relatively small contribution to the country s public sector funds. Another equally, if not more, disturbing aspect of Indian agriculture relates to its rapidly growing demands on the country s public finances. Just three items of public spending on agriculture central fertilizer subsidy, electricity subsidy and irrigation subsidy account for nearly one-fourth of the increase in India s public sector deficit in recent years. The contribution of the agricultural sector to recent increases in India s public sector deficit, if other such items (e.g., credit subsidy, crop insurance losses, state fertilizer subsidies) are taken into account, will turn out to be far more daunting. The policymakers have justified agricultural subsidies on the ground of the country s poor s inability to pay market prices for food. But subsidies, by promoting inefficiencies in the use of inputs, have had the effect of raising input intensity of farm output and thereby of raising the costs of food production. This, in turn, has led to demands for more fiscal favors. What is more, the regime of subsidies has also encouraged rent-seekers to get what they can from the system, with politicians seeking high-profile new projects, not proper maintenance of existing systems, and farmers employing political pressure to get what giveaways they can, rather than organizing for improved agricultural extension services. All this has contributed to rapidly rising fiscal outgoes. The above vicious circle urgently needs to be broken; otherwise it will keep pushing India unavoidably towards a situation of rising public sector deficits a situation which may pose the following major risks, for the Indian economy: substantially higher real interest rates, crowding out of some investment, lower growth rates, debt trap, substantially higher inflation rates, and excessive external debt service burden. Agriculture being state subject in India, the primary responsibility of funding agricultural investment lies with the concerned states. The Union Government also supports agricultural investments to some extent. For instance, major portion of agricultural research components are initiated and funded by the Union Government. So the cases with investment items like special area programme, development of agricultural financial institutions, and investment towards establishment of fertilizer industries. Also the expenditures under various centrally sponsored programmes of agricultural development are funded by the Union Government. Therefore, it is important to analyze agricultural expenditure at the state level. 4

13 The regional pattern of agricultural expenditure and its association with agricultural productivity and rural poverty, hitherto, did not receive much attention. Most of the past studies have focused on specific aspects of falling public investment amidst rising private investment in Indian agriculture. The exhaustive literature and the conclusive evidences are based on the national-level investigations. But it might or might not be the case for most of the states. Thus, it would be more useful to examine the trend and magnitude at the state level. Earlier studies recognized that the non-existence of state-level agricultural investment data was the most significant constraint confronted by them and emphasized the need for compilation of an inventory of agricultural investment at the state level. The construction of a state-level time-series data on private and public sector agricultural investment was a challenging task because much of the data sources were inadequate in scope and coverage, difficult to access, uneven in quality and varied in the degree of documentation. In view of the above facts, it was felt necessary to analyze the status of budgetary support to agriculture and its impact on agricultural development in across states. The present study is a modest attempt in this direction to address following objectives: 1.3: OBJECTIVES The specific objectives of the study are as under: 1. To examine trends in budgetary allocation of resources to the agricultural sector as a whole and in the sub-sectors of agriculture across various States. 2. To document various schemes under operation across states to accelerate development of agriculture Sector. 3. To analyze the impact of these schemes on agriculture development across the States. 1.4: METHODOLOGY In this section, the concepts, the data sources and the analytical tools used to address the specific objectives are described. The Government accounts are kept in the following three parts: Part I- Consolidated fund; Part II- Contingency fund; and Part III- Public Account. In part I- Consolidated fund account, there are three main divisions, namely: 1.Revenue, 2.Capital and 3.Debt. The second division i.e., capital outlay deals with the expenditure met usually from borrowed funds with the objective, either of increasing physical assets of a 5

14 material character, or of reducing recurring liabilities, such as those for future pensions by payment of the capitalized value. It also includes receipts of a capital nature intended to be applied as a set off to capital expenditure. In this study, only the revenue account is considered. Capital account and loans and advances have been excluded. The scope of this study covers analysis of revenue expenditure on agriculture and allied activities such as crop husbandry, soil and water conservation, animal husbandry, dairy development, fisheries, forestry and wild life, plantations, food storage and ware housing, agricultural research and education, agricultural finance institutions, co-operation, other agricultural programmes. However, this study does not include irrigation. This study covers 15 major states i.e Assam, Andhra Pradesh, Chhattisgarh, Himachal Pradesh, Haryana, Maharashtra, Karnataka, Punjab, Uttar Pradesh, Uttarkhand, West Bengal, Rajasthan, Bihar, Gujarat, and Madhya Pradesh. The study is primarily based on data collected from Statistical Abstract of India, various volumes on Agriculture and Finance published by the Centre for Monitoring Indian Economy (CMIE). These are supplemented with the information obtained from Directorate of Economics and Statistics, Department of Agriculture and Planning Commission, State Governments. Time series data for the last 20 years beginning with 1985 to 2006 has been used. To make more meaningful we have classified the entire period into two sub-periods coinciding with the phases of economic development. These periods were: i) Period I: to , which is characterized as Pre-Reform, and ii) Period II: to , which is termed as Post-Reform period. In addition to Budgetary data, a large number of related data were collected from varies published and unpublished sources. Important datasets are on land use statistics, area, production and productivity of major crops and data on various schemes on agriculture implemented by both state as well as central governments. In order to overcome the problem of time value of money and to make comparison of expenditure over a period of time, we resented the financial data at current and constant price. The choice of deflator is critical to isolate the effect of inflation while constructing a series at constant prices. However, selection of appropriate deflator is not a simple matter and entails some conceptual difficulties. After a careful examination of various deflators we find GDP deflator more appropriate for this analysis. Thus the expenditure and state domestic product 6

15 (GSDP) series have been prepared at prices by deflating the current price series GDP deflator. We have used GDP deflator published by RBI for each state. For the detailed analysis of the data, descriptive statistics and regression techniques have been used. Before calculating the compound growth rates the whole data was converted into logs and then the following formula of compound growth rate was applied. Y=ABt For calculating the GSDP and NSDP at constant prices we used the deflating method which is given below: Expenditure at current prices Real Expenditure= * 100 Price index 1.5. GROWTH RATE OF GROSS STATE DOMESTIC PRODUCT (GSDP) ACROSS STATES The compound growth rate of Gross State Domestic Product of the states over the period to is presented in table 1.2. Growth rate of GDP in India which was 6.2 per cent in pre-reform period has reached to 6.1 per cent in post-reform period. Among all the states, growth rate of GSDP remained highest in Rajasthan, Andhra Pradesh, Maharashtra, Madhya Pradesh and Haryana during pre-reform period and on the other hand the last place was occupied by Assam, Bihar, West Bengal and Punjab. Similarly, during post-reform period Himachal Pradesh, Karnataka, Gujarat and West Bengal emerged on top in growth rate of Gross State Domestic Product while Assam, Bihar, Uttar Pradesh and Punjab emerged slow growth rate states. We found that in case of Himachal Pradesh the growth rate of GSDP (8.8 percent) has shown significant increases in post reform period on the other hand Rajasthan has shown tremendous declining in growth rate (5.7 percent) during post reform period as compare to pre-reform period. Growth rate of GSDP is below the all India level in case of Rajasthan, Andhra Pradesh, Madhya Pradesh, Haryana, UP, Bihar and Assam during post reform period. Therefore, there is an urgent need to focus to augment the growth in Assam, Bihar, and Uttar Pradesh with special development strategies. 7

16 Table 1.2: Growth Rate of GSDP (at constant prices) of Major States in India Sl. No States Pre-reform Post-reform Total 1. Rajasthan Andhra Pradesh Maharashtra Madhya Pradesh Haryana Gujarat Karnataka Uttar Pradesh Himachal Pradesh Punjab West Bengal Bihar Assam Chhattisgarh* Uttaranchal* All India Source: Ministry of Statistics and Programme Implementation, Government of India Note:*Since Chhattisgarh and Uttaranchal are new states we have calculated only total Growth rate Fig 1.2: Growth Rate of GSDP(Based on Prices) of Major States in India Growth Rate (%) Rajasthan AP Maharashtra MP Haryana Gujarat Karnataka UP All india HP Punjab WB Pre-reform ( to ) Post-reform ( to ) Bihar Assam 8

17 Table 1.3: State wise GSDP during to at Constant Prices (Rs in Crore) Year AP Chhattisgarh HP Uttaranchal Assam Haryana Karnataka Maharashtra Punjab Rajasthan UP WB Gujarat MP Bihar All India NA 2799 NA NA 3160 NA NA 2968 NA NA 3424 NA NA 3635 NA NA 3753 NA NA 3948 NA NA 4068 NA Source: Compiled from Respective States Report 9

18 1.6 SECTOR-WISE SHARE OF GSDP ACROSS THE STATES (At constant prices ) The composition of the Gross State Domestic Product (GSDP) reveals that the share of the primary sector, comprising agriculture and allied sectors, has been constantly declining, the share of the secondary sector consisting of manufacturing, construction, electricity, gas and water supply segments, as well as of the tertiary sector is increasing. The tertiary sector comprises trade, transport, banking, ownership of dwellings and other services. There has been a decline in the share of the agricultural sector in the GSDP, mainly on account of the high growth of service sector. Main reasons behind the growth of services include rapid urbanization, the expansion of the private and public sector and increased demand for intermediate and final consumer services. The sector wise share of GDP in India has presented in table 1.4. At the beginning of the prereform period, during in India the share of agriculture in GDP was nearly per cent and that of secondary and tertiary sectors was per cent and per cent respectively. Over a period of time, there have been changes in the contribution of various sectors to GDP in India. In the ending of the post-reform period, in , the share of the primary sector declined to nearly per cent and that of the secondary sector increased to per cent and tertiary sector accounted for nearly per cent of the GDP. Thus, the above data reveal that during the period ( to ), while the primary sector saw a continuous declining and the tertiary sector on the other hand experienced an increase in its share in the GDP. 10

19 Table 1.4: Sector wise share of GSDP across States (Constant Prices ) Years 1.Andhra Pradesh 2.Himachal Pradesh 3.Uttaranchal 4.Rajasthan Primary Secondary Tertiary Primary Secondary Tertiary Primary Secondary Tertiary Primary Secondary Tertiary NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA Source: Compiled From Respective States Reports Contd.. 11

20 Table 1.4: Sector wise share of GSDP across States (Constant Prices ) 5.Maharastra 6.Chattisghar 7.Assam 8.Punjab Years Primary Secondary Tertiary Primary Secondary Tertiary Primary Secondary Tertiary Primary Secondary Tertiary NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA Source: Compiled From Respective States Reports Contd.. 12

21 Table 1.4: Sector wise share of GSDP across States (Constant Prices ) Years 9.Uttar Pradesh 10.Haryana 11.Karnataka 12.Gujarath Primary Secondary Tertiary Primary Secondary Tertiary Primary Secondary Tertiary Primary Secondary Tertiary NA NA NA NA NA NA Source: Compiled From Respective States Reports Contd. 13

22 Table 1.4: Sector wise share of GSDP across States (Constant Prices ) Years 13. Madhya Pradesh 14. West Bengal 15.Bihar All India Primary Secondary Tertiary Primary Secondary Tertiary Primary Secondary Tertiary Primary Secondary Tertiary Source: Compiled From Respective States Reports 14

23 In Himachal Pradesh the share of primary sector in GSDP was about 42 per cent in which decreased to 24 per cent in whereas the share of secondary sector in GSDP has increased from about 23 per cent to about 38 per cent during the study period (Table 1.4). Similarly the share of tertiary sector in GSDP has increased from 35 per cent in to 38 percent in The workforce in primary sector was more than 76 per cent in which decreased to 68 per cent in showing shifting the workforce from primary sector to other sectors but still the share of workforce in primary sector is higher as compare to other sectors. In secondary and tertiary sectors the share of workforce has increased from 8.54 and 15 per cent to 10 and per cent respectively during the study period. In Assam, the share of primary sector in GSDP was per cent in which decreased to per cent in Where the share of secondary and tertiary sector was per cent and percent during and it was increased to percent and percent during respectively (Table 1.4). In Karnataka, primary sector contributed only percent in but during it was percent and agriculture sector occupied a significant position in the state economy. The share of secondary sector was percent in It has been increasing continuously from The tertiary sector contributed a share of percent in and it has witnessed significant change during the recent years and occupies a significant position in the state economy with its continuous increasing share. Agriculture is important activity in Uttar Pradesh accounting for nearly 36 percent of GSDP in and primary sector is a dominant source of employment for people of the state. This indicates that Uttar Pradesh is predominantly an agrarian economy. The share of agriculture in state GSDP and workforce engaged in agriculture is larger than national average. The share of primary sector in Punjab came down from per cent in to per cent in and further to per cent in ; the share of tertiary sector declined marginally from per cent to per cent and then rose sharply to per cent over the same period (Table 1.4). There was a steady but relatively small increase in the share of secondary sector in the GSDP. It means that the share of the primary sector in GSDP declined by more than 12 percentage points over the study period. In a similar manner, the 15

24 share of workforce has also declined in the primary sector during to The primary sector which accounted for more than 50 per cent workforce in , absorbed only 32 per cent workforce in The shares of secondary and tertiary sectors increased from per cent to per cent and from per cent to per cent, respectively, over the same period. The decline in share of GSDP and workforce in the primary sector was relatively much higher during the post-reform period as compared to pre-reform period. Likewise, the tertiary sector showed relatively much faster growth in the share of GSDP and workforce when compared to that in the secondary sector. The West Bengal economy is shifting away from primary sector to tertiary sector and of late the dependence on agriculture is reducing. In fact, thanks to growth in information technology and marketing services, West Bengal economy is now dominated by tertiary sector as more than half of the NSDP is now coming from this sector and it providing employment to equal proportion of work-force. The Uttaranchal sectoral analysis reveals that the primary sector contributed percent during and it has been declined to percent in The share of secondary sector, rose from percent ( ) to percent ( ). The tertiary sector contributed percent in but it has been increased to percent in The contribution of the primary sector in Chhattisgarh to GSDP which was percent in has declined to percent in The share of secondary sector to GSDP has increased from percent in to percent in The share of tertiary sector to GSDP which was percent in has increased to percent in (Table 1.4). The contribution of primary sector in Maharashtra which was percent in has declined to percent in The share of the secondary sector also declined from percent in to percent in In contrast the share of tertiary sector was percent in has increased to percent in The share of primary sector in Andhra Pradesh declined from percent to percent in The share of secondary sector increased almost steadily from percent in 16

25 to percent in The tertiary sector has shown most remarkable results increasing its share from percent to percent in (Table 1.4). In Haryana Secondary sector occupies an important place in the state economy and it has witnessed a considerable improvement in its share overtime. Its contribution has increased from per cent during to per cent during , reflecting a healthy sign of industrialization in the state (Table 1.4c). Tertiary sector which is a combination of different services like trade, transport, banking, public administration, education, health, etc. has also witnessed significant, increase in its share. Its share in the GSDP at current prices has increased from per cent in to percent in In a nutshell, composition of the GSDP of Haryana reveals that share of primary sector is continuously declining whereas the shares of secondary as well as tertiary sectors are continuously rising. It implies that state economy is shifting from agriculture to manufacturing and service sectors, which is a sign of structural change. This phenomenon has influenced proportion of workforce employed in the primary, secondary and tertiary sectors. But, decline in the share of agricultural sector in the GSDP and dependence of work force on this sector do not coincide. It was recorded significantly higher for the first indicator in comparison to the second indicator. The economy of Gujarat has undergone structural transformation during the recent decades. The share of the primary sector in the state domestic product declined from percent in to per cent in It was all the time low between 17 and 18 per cent during , and The share of secondary and tertiary sectors remained around 41 percent in GSDP during This share was percent for secondary and percent for territory sector during In Madhya Pradesh, the primary sector to GSDP which was per cent in has declined to per cent in The share of the secondary sector to GSDP has increased from per cent in to per cent in In contrast the share of tertiary sector in GSDP which was per cent in has increased to per cent in One can thus overall conclude that the service sector is the major contributor to the GSDP. In Bihar, the contribution of the primary sector to GSDP which was per 17

26 cent in has declined to per cent in In contrast, the share of the secondary sector to GSDP increased from per cent in to per cent in The share of tertiary sector in GSDP which was per cent in increased to per cent in (Table 1.4). It revealed that tertiary sector is the major contributor to GSDP. To summarize, the share of the Primary sector in Gross States Domestic Product as shown in Table 1.4 was the highest in Madhya Pradesh (45.9 per cent) followed by Punjab (45.7 per cent), Haryana (45.4 per cent), Uttar Pradesh (45.2 per cent), and Assam (43.6 per cent) during the year The share of Primary sector was the lowest in the states of Maharashtra (23.0 per cent), Gujarat (30.4 per cent),west Bengal (35.4 per cent). The trend has changed in the year with Uttar Pradesh (36.0 per cent) followed by Assam (34.4 per cent), Madhya Pradesh (31.8 percent) this states have registered higher share as compared to the India s share (21.7 per cent). Similarly, the share of the primary sector was the lowest in the states of Maharashtra (13.5 per cent) followed by Gujarat (20.7 per cent) than Himachal Pradesh (24.1 per cent) during Higher declining has been seen in primary sector in the states of Himachal Pradesh and Karnataka. This fall occurred because agriculture output grew more slowly than output of other economic sectors. The share of the secondary sector has stayed level at around 22 to 24 per cent during in India. Its share has started rising subsequently. The secondary sector had emerged as the largest sector in terms of its contribution to GSDP in Gujarat, Maharashtra, Himachal Pradesh, Chhattisgarh and Haryana. The secondary sector share has been increasing in the states of Himachal Pradesh and Gujarat but it has started declining in Maharashtra and West Bengal. The share of the tertiary sector in employment as well as contribution in GDP has been increasing over time. It was more than 40 per cent have registered in the states of Bihar and Maharashtra during Considering the contribution of service sector to GSDP, Maharashtra state shown higher rising trend as compare to other states. In conclusion, most of the state economies are shifting from primary to secondary and territory sectors. It also observed that the employment opportunities in service sector are 18

27 increasing in recent years. On the contrary, switch over of work force from the agriculture sector to the other sector may also indicate agriculture becomes an uneconomic venture and it calls for proper attention in the context of food security of the State. 1.7 CROPPING PATTERN The analysis of crop pattern changes at state as well as national level will focus on three main aspects. These aspects are: 1) the nature and direction of area shifts across crops and crop groups observed through time, 2) the implications of these shifts for crop diversification and balance in the inter-crop allocation of existing and additional areas brought under cultivation, and 3) the output and productivity impact of crop pattern changes. The pattern of crop changes in the various states can be seen from the table 1.5. At aggregate perspective, Indian agriculture is increasingly getting influenced more and more by economic factors. This is mainly because of irrigation expansion, infrastructure development, penetration of rural market contributed to minimising the role of non-economic factors in crop choice of even small farmers. Cropping pattern in Assam reveals that rice is the still dominating crops among the cereal as it is cultivated in three seasons viz. autumn, winter and summer in the state and followed by wheat, maize and other cereals (Table 1.5). Among the pulses, gram and tur are two major pulses grown in Assam. Among the oilseeds, rape and mustard is the dominating crop and followed by sesamum and other oil seeds such as sunflower, nizer etc. Sugarcane is also an important cash crop of Assam. But its area is decreasing due to shifting sugarcane area to small tea gardens. The shares of percentages of area to total gross cropped area under different crops showed a little bit variation during the period of observation but the percentages of area were decreasing in all the crops except the area of potato which is matter of concerned as the State is deficit in food-grains, pulses and oilseeds. In Himachal Pradesh, food grains account 85 per cent of GCA in and rest 15 per cent has been shifted to fruits and vegetables crops because of higher return from these crops (Table 1.5). The cropping pattern in Karnataka reveals that area and production of food grains is dominated. However, the important point to note is that food grains which constituted percent in showed a decline and constituted percent of the gross cropped 19

28 area in The notable feature is that the cropping pattern is shifting towards commercial crops. The share of oilseeds in Gross Cropped Area (GCA) increased from percent in to percent in But in case of cereals the share has been decreased from percent ( ) to percent in The reason is that, the share of important cereals like ragi, jowar, bajra and wheat has reported decrease in the area as a percentage of GCA. Only in case of maize, the share has increased from 1.57 percent in to 7.22 percent in (Table 1.5). Uttar Pradesh data for cropping pattern reveals that during the period of to , there was not any major change in cropping pattern (Table 1.5). Food grain accounts for largest share, accounting for percent in 1985 which remained nearly the same till Wheat is most important crop for state. Sugarcane accounted for nearly 8.5 percent for GCA in Pulses accounted for percent and total oil seed for 3.71 percent of GCA in