CHAPTER TWO. Inter-District Performance of Agriculture in Jammu and Kashmir: Patterns and Causes

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1 CHAPTER TWO Inter-District Performance of Agriculture in Jammu and Kashmir: Patterns and Causes 2.1 Introduction This chapter tries to analyze the overall performance of agricultural sector in the State of Jammu and Kashmir. Unlike in most states of the country, Jammu and Kashmir showed dynamism in the growth process of agricultural sector (Joseph, 2004; Sharma, 2007). With growth in agriculture, one would expect significant contribution of this sector on overall growth in the economy and improvements in the living standards of the population dependent on it. In other words, agricultural growth is necessary not only for attaining overall higher growth but also for lifting up the standard of living of the masses reliant on this sector for succor. On the contrary, slow growth in agriculture is a cause of concern. It might lead to disparities between income from agriculture and non-agriculture. It may not be the case if there is a commensurate decline in population dependent on agriculture. But this is not happening in the state and the population dependent on agriculture is still significant 1. Consequently, slow growth in agriculture is putting them in distress and makes them to search for off-farm activities to support their livelihood. With this premise, this chapter examines more closely the factors of agricultural growth in the state so as to understand its implications from sustainable rural livelihood point of view. The whole period undertaken for analysis is in between 1960 and It is worth mentioning that these long term changes in the pattern of growth in agriculture and state s economy, in terms of net state domestic product (thereafter, NSDP), across sectors has been viewed in the light of turmoil 1 It is evident from the fact that 49 per cent of the total working force with 42 per cent as cultivators and seven per cent as agriculture laborers depend directly on agriculture and about 80 per cent of the total population of the state depends on agriculture for income and their livelihood (Government of Jammu and Kashmir, 2007).

2 conditions prevailing over the last two decades. For this purpose, the overall period ( ) is divided into five sub-periods; namely, initial green revolution period or pre-reform period ( ), immediate pre-reform period ( ), post-reform period ( ), immediate post-reform period ( ) and recent period ( ). The chapter is organized as follows: The next section, 2.2 is devoted to analyze changes in the pace and patterns of area, production and yield of major crops. Regional differences in terms of growth of crop groups, total cropped area, net sown area, cropping intensity and cropping patterns are also analyzed in this section. Section 2.3 examines the effect of these changes on the output growth of agriculture. To understand the factors shaping the growth of agriculture, the possible predictors are discussed in Section 2.4. Finally, the main findings of the chapter are summarized in Section Changes in Crop Performance Analysis of the data relating to changes in growth rate of major crops for the overall period ( ), and for different sub-periods are shown in Table 2.1. In terms of productivity (or yield) growth in general, it is seen that there is a deceleration in growth during the post-reform period ( ) and in the immediate pre-reform period ( ), as compared to pre-reform period ( ). However, revival has been observed in the yield of majority of the crops in the recent period ( ). For example, yield growth rate was 3.3 per cent per annum for food grains during the period 1960 to 1980 and has decelerated to (-) 0.4 per cent per annum in 1980 to 1990 and then remained at 0.4 per cent per annum in However, it has registered a significant recovery in terms of growth in the recent period ( ), which is growing at the rate of four percent per annum. Similar trend has been seen in majority of the crops grown in the state over a period of 48 years (refer Table 2.1). Note that the recovery was seen in the case of wheat and small millets apart from high-value crops (viz., oilseeds) in the recent period. The yield of wheat was growing at an impressive rate of 12.6 per cent per annum in the same period. 19

3 Further, it is also indicated in the Table 2.1 that the yield continued to be a significant contributing factor for the growth of output in the state on account of deceleration in the rate of growth in the area of majority of the crops, barring barley, during the post-reform period ( ) as compared to pre-reform period ( ). 20

4 Table 2.1: Growth (per cent per annum) of Area, Production and Yield of Major Crops in Jammu and Kashmir: to Period Growth Rate (1960 to 1980) Growth Rate ( ) Growth Rate ( ) Crops Area Production Yield Area Production Yield Area Production Yield Rice 0.9*** 4.5*** 3.6*** 0.0 (-) 0.5 (-) 0.4 (-) 0.6*** (-) Maize 1.0*** 4.2*** 3.3*** 0.9*** (-) 0.2 (-) *** 0.0 (-) 0.6* Wheat 0.7*** 3.6*** 3.0*** 2.1*** 3.6** ** 2.2* 1.7 Bajra (-) 1.5* 0.6*** 2.1** (-) 0.9 (-) 3.4 (-) ** 1.6*** Barley (-) 3.1*** (-) 3.5*** (-) 0.5 (-) 3.1*** (-) *** 2.1 (-) 1.1 Small Millets (-) 0.7 (-) 1.4 (-) 0.7 (-) 0.6 (-) 4.0** (-) 3.3* (-) 6.5*** (-) 7.2** (-) 0.7 Total Cereals 0.7*** 4.0*** 3.3*** 0.8*** 0.3 (-) ** Pulses ** 1.5** (-) 2.9*** (-) 4.2*** (-) 1.3 (-) 2.1** (-) 2.9** (-) 0.8*** Food Grains 0.6*** 3.9*** 3.3*** 0.6*** 0.2 (-) Oliseeds 2.4*** 5.2*** 2.8*** 2.7*** (-) 7.0** (-) 9.7*** (-) 0.7* (-) Period Growth Rate ( ) Growth Rate ( ) Growth Rate ( ) Crops Area Production Yield Area Production Yield Area Production Yield Rice (-) 0.8** (-) 2.3* (-) * 5.1*** 4.1*** 0.4*** 1.5*** 1.1*** Maize 1.0*** 0.3 (-) 0.7 (-) 0.9** (-) 1.6 (-) *** 1.9*** 1.2*** Wheat 0.5 (-) 1.4 (-) ** 12.6*** 1.0*** 3.2*** 2.2*** Bajra (-) 3.7** (-) 3.5** * 6.3** 2.0 (-) 0.7*** (-) 0.4*** 0.3 Barley 2.2** (-) 2.5* (-) 4.7*** (-) 1.6*** (-) 2.0*** (-) 0.4* Small Millets (-) 7.3* (-) 11.7** (-) 4.4** (-) * (-) 2.8*** (-) 3.8*** (-) 1.0*** Total Cereals 0.1 (-) 0.9 (-) *** 4.1** 0.5*** 1.9*** 1.4*** Pulses (-) 3.4*** (-) 4.6*** (-) 1.2* ** 1.2*** (-) 1.5*** (-) 1.6*** 0.0 Food Grains 0.0 (-) 0.9 (-) *** 4.0** 0.4*** 1.9*** 1.4*** Oliseeds (-) 2.1* * 1.9*** 1.6*** (-) 0.3 Source: Computed from data provided by (MoAC, Various Years) Ministry of Agriculture and Cooperation, Directorate of Economics & Statistics, Government of India. Note: (i) *** denotes significance level at 1%, ** denotes at 5% and * denotes at 10%; (ii) Area, Production and Yield from to taken from India Data base, The Economy, Annual Time Series Data, Vol. 2; (iii) onwards data downloaded from on 19/01/11. 21

5 Whether the insurgency conditions prevailing in the State has adversely affected agricultural growth has been verified by comparing the growth of output and yield of crops during the immediate post-reform period ( ) with the immediate pre-reform period ( ). Analysis shows that during the insurgency period, the performance of most of the crops showed negative or marginal growth compared to other Pre- (or Post-) reform periods. It may be noted that insurgency has impacted along with other factors on agriculture and we will look into the role of these other factors in the subsequent section (see Section 2.4). Table 2.2: Trend Growth 2 of Area, Production and Yield of Fruit Crops in Jammu and Kashmir: to Crop Groups Area Production Yield Fresh Fruits 3.2*** 0.0 (-) 3.1 Dry Fruits 3.0*** 5.4*** 2.3*** Total Fruits 2.8*** 4.2*** 1.5*** Source: Digest of Statistics, Government of Jammu and Kashmir (Various Years) Note: Fresh Fruits= Apple, Pear, Apricot, Peach, Plum, Cherry, Mango, Ber, Grapes, Citrus, Olive, Aonla and Other Fresh Fruits; Dry Fruits= Walnut, Almond, Other Dry; *** denotes the Significance level of 1% The years since the mid 1990s have witnessed significant increase in the area, production and yield of fruit crops (see Table 2.2). The production of total fruits 3 has shown a significant growth of 4.2 per cent per annum during the period Both area and yield also have registered significant positive rate of growth over the same period. In the case of dry fruits, similar trends in growth have been observed whereas the picture in case of fresh fruits has been different. We have also examined the data pertaining to the value of output of major crops in the state in Table 2.3. For all crops/crop groups, the triennium averages of value output have 2 Trend growth rate has been computed by implying log-lin model (Gujarati, 2003) 3 It is to be noted that we were not able to show trends in the growth of area, production and yield of fruit crops prior to the reform period like in the case of food grains and other major crops grown in the state on account of lack of information (or for crop groups). Figures for the value of output in the state were not available for the period prior to 1980s. Therefore, we could not be able to provide growth scenario of crops in value terms since 1960s. 22

6 been worked out for , and Taking the entire period into consideration ( to ), the total agricultural and allied output in value terms increased at an annual growth rate of 2.90 per cent. Agricultural sector output has shown a marginal fall of (-) 0.01 per cent. A similar trend, namely the slow growth of the agricultural sector output being compensated by the growth in the output of the allied sectors (largely livestock, forestry and fisheries) was also observed for the two sub-periods. During this period, the highest output growth rate, 3.48 % per annum, was recorded by the wheat crop followed by the fruits and vegetables, cereals and so on. Table 2.3: Growth of Value Output (per cent per annum) for Various Crop Groups and Allied Sectors in Jammu & Kashmir: to Average Value of Output Annual Compound Growth Rate (in Rs Lakh) (%) Crops / / / Paddy Wheat Maize Cereals Pulses Oilseeds Sugar Fibres Drugs & Narcotics Fruits & Vegetables Agriculture Agriculture & Allied Source: AD, latest Accessed 17/01/10 (Various Years). It is evident from Table 2.3 that the value of crop output has grown more in the post-reform period ( to ) than in the immediate pre-reform period ( to ). For instance, it is growing at the rate of 1.48 per cent in to , after growing at 23

7 a negative rate of (-) 1.91 per cent in to It is also noticed that there is a significant recovery in the value of output in the case of fruits and vegetables and oilseeds in the post-reform period whereas; deceleration has been seen in case of wheat during the immediate pre-reform period. Before getting into the changes in the cropping pattern, it is insightful to briefly examine the trends in net and gross cropped area in the State. Net sown area in the state has registered a deceleration in its growth. It was growing at a rate of 0.3 per cent per annum during and has shown stagnation in the post-reform period ( ). It is to be noted that the growth in net sown area has decelerated to (-) 0.2 per cent per annum in the recent period ( ), as can be seen in Table 2.4. This decline might be attributed to the increase in rural habitations, topography, forestation and demand of land for non-agricultural purposes. Table 2.4: Growth and Trends in Net Sown Area, Total Cropped Area and Cropping Intensity in Jammu & Kashmir: to Average Area (in 000'hectares) Period Net Sown Area Total Cropped Area Cropping Intensity (%) Period Trend Growth rate (per cent per annum) Total Cropped Area 0.6** 0.9*** 0.3*** 0.2** *** Net Sown Area 0.3*** * 0.1 (-) *** Cropping Intensity (%) *** 0.2*** 0.2* 0.5* 0.4*** Source: Same as Table 2.1. Note: *** denotes significance level at 1%, ** denotes at 5% and * denotes at 10%. Since the scope for further extension in net sown area is limited, the only way to increase gross cropped area is through an increase in the intensity of cultivation. Table 2.4 also provides information with regard to total cropped area and cropping intensity. It is 4 On the contrary, at the all-india level, the output growth decelerated to 1.74 per cent per annum during to compared to the growth rate of 3.37 per cent per annum during to (Bhalla and Singh, 2009). 24

8 revealed that there is a marginal decline of 0.6 percentage points in the growth rate of total cropped area in the post-reform period ( ) as compared to pre-reform period. During the period and , it was growing at the rate of 0.6 per cent per annum and 0.9 per cent per annum, respectively. Significant point is that the growth in total cropped area is more in the period where the growth in cropping intensity had increased over time (see Table 2.4). This finding gives credence to the argument that the increase in total cropped area only comes through the increase in the intensity of cultivation and the net sown area ceased to be an important factor behind the increase in total cropped area in the state. Table 2.5: Trends in Share (as a percentage of Total Cropped Area) and Growth of Area under Food Grains and Non-Food Grains in Jammu and Kashmir: 1960 to Period Total Food Grains (738.2) (787.3) (842.1) (891.1) (900.4) (910.3) Total Non-Food Grains 9.71 (79.4) 9.98 (87.4) (142.6) (182.5) (199.2) (210.0) Total Cropped Area (817.6) (874.7) (984.7) (1073.6) (1099.6) (1120.3) Trend Growth Rate (per cent per annum) Period Total Food Grains 0.6*** 0.6*** *** Total Non-Food Grains 3.0*** 2.4*** 1.0*** 0.8** 1.4** 2.4*** Crops Gain in Area (%) in Loss in Area (%) in over over Within Food Rice, Barley, Cereals & Millets and Maize and Wheat Grains Pulses Condiments and Spices, Fruits Within Non-Food and Vegetables Grains Oilseeds and Fodder Crops Sugarcane and Fibre Crops Source: Same as Table 2.1. Note: (i) *** denotes significance level at 1%, ** denotes at 5% and * denotes at 10%. (ii) Food Grains include rice, maize, wheat, barley, total cereals & millets and total pulses. Non- Food Grains include condiments &spices, fruits &vegetables, sugarcane, oilseeds, fibers, fodder crops and other non-food crops. (iii) Absolute figures are shown in the parenthesis in thousand hectares 25

9 While judging the trends and changes in the cropping pattern from food grains to non-food grains, it may be noted that the percentage of area under food grains has been steadily on the decline whereas that which is under non-food grains is showing a steady increase. For instance, there is a change of nine per cent points over a period of 48 years (refer Table 2.5). However, in , the growth rate of area under non-food grains was much higher than that of food grains, and in post reform period ( ), both had increased but at lower rates; the absolute decline was much faster for food grains than for non-food grains. It is also observed that during there is a sign of recovery in the growth rate of area in both the crop groups, but the growth was more in the case of non-food grains. This indicates the possibility for much of the area added to the total cropped area growing to non-food grains during these sub-periods. In terms of percentage of area to total cropped area for high-value crops and dominated more by non-food grains than by food-grains (refer Table 2.5). The diversity in agro-climatic environment and resource endowment has created significant differences in agricultural development across regions in the State. It may be noted that cultivation operations in the state are different from those followed in other parts of the country. The agricultural year in the state starts from the 15 th of August as compared to the 1 st of June in the rest of the country. While in sub-tropical areas of Jammu division, the agricultural operations are similar to that of the neighboring areas of Punjab; in the Kashmir division they are significantly different. Ladakh being an arid zone combined with low temperature, agricultural operations are restricted to 5 to 6 months a year only. This indicates the constraints on the raising of crops in the state. The characteristics of the topography and the cropping patterns across districts given in the Table 2.6 bring out the constraints imposed by geographical and topographical specificities. 26

10 Table 2.6: Agro-Climatic Conditions and Cropping Pattern across Districts in Jammu and Kashmir. Districts Description of Agro-Climatic Factors Rainfall Topography Temperature (mms) Cropping Pattern Anantnag MHATZ to 350 C A,P,PE,PL,M,W, C,WL, AL Pulwama MHATZ 445 N.A A, AP, P,R,M,W, PL,C, WL, AL Srinagar MHATZ 697 N.A A,AP,G,R,M,WL, AL,P,PE, PL, C Budgam MHATZ 5850 N.A A, AP, P,R,M,W, PL, C, WL, AL Baramulla MHATZ 1270 N.A A, AP, P, M,W, PE,WL Kupwara MHATZ to 370 C A, AP, P, R,M, PE,PL,WL Jammu LAST to 470 C AO,M,R,M,W,JO,B,BAR, B,G,CI Udhampur MHAIZ to 420 C A,P,PE,PL,M,CI,R,M,W,BA,AO, WLB,O,WL,AL Doda MHAIZ 889 N.A A,P,AP,PE,PLC,CI,O,R,M,W,BA, WL, AL Kathua LAST to 480 C A,P,PE,R,M,W,B,R,PL,M,I,AO,WL Rajouri MHAIZ to 370 C A,P,AP,PE,PL,M,CI,R,M,W,BA,L,AL Poonch MHAIZ 1166 N.A A,P,AP,PE,P,R,M,W L,C, CI, O, WL, AL Leh CAZ C to 350 C W,BAR,A,AP,WL Kargil CAZ C to 350 C A,AP,W, WL Source: Handbook o f Agriculture, ICAR (2006) and Note: (1) LAST= Low Altitude Sub Tropical (up to 1500 m); MHAIZ= Mid to High Altitude Intermediate Zone ( m); MHATZ= Mid to High Altitude (2) A= Apple; AP= Apricot; P= Pear; PE=Peach; PL=Plum; C=Cherry; CI=Citrus WL=Walnut; AL=Almond; AO=Aonla; B=Ber; M=Mango; G=Grapes; O=Olive; R=Rice, M=Maize, W= Wheat; BA=Bajra, BAR=Barley and JO=Jowar. (3) N.A= Not Available Paddy, wheat and maize are the principal crops of the state and the acreage under cultivation generally depends on the weather conditions. Rice is the staple food of people in the Kashmir valley and wheat is the staple food in the Jammu division. The maize crop is mostly grown on dry lands. Good quality maize is grown, in general, on higher elevations. Owing to the introduction of early maturing varieties of wheat, it is cultivated at present in the Kashmir valley. Other crops cultivated in the state include pulses, oilseeds, sugarcane, vegetables and fruits. 27

11 The following discussion pertains to a more disaggregated view of variations in all these respects across districts in different agro-climatic regions and those experiencing widely different growth rates. Before embarking into discussion at district level, it is also important to highlight the inadequacies, both of coverage and quality, of available data 5. This is because an analysis of the performance of agriculture at district-level is rendered difficult by the lack of reliable and comparable data. District-wise analysis of changes in net sown area did not depict any different picture from the state as a whole, which is reported in Table 2.7 and 2.8. It is seen that all the districts of Kashmir division; namely Anantnag, Baramulla, Pulwama, Kupwara, Srinagar and Budgam have registered a negative growth in net sown area during post-reform period ( ). Moreover, similar trend is observed in the recent period ( ), except for Kupwara district in the region of Kashmir. With regard to total cropped area, most of the districts in the Kashmir region have shown negative growth which is partly explained by the low growth in cropping intensity 6, especially since the 1990s, with few exceptions. 5 The Ministry of Agriculture and Cooperation, Directorate of Economics and Statistics (DES), compiles and publishes district-wise estimates of overall land use, irrigation by source, cultivated and gross cropped area as well as crop-estimates of area, production and yields for practically all crops. Land-use, irrigation, and crop area data are mostly based on and built by aggregating data collected by village revenue officials through sample surveys. Output and yield estimates for individual crops are made at district level and involve a considerable element of judgment by officials. Moreover, getting comparable time series data analysis on all variables substantially poses problems on account of periodic changes in district boundaries (see Vaidyanathan; 2010, 2011). In the state, information was available from other sources also like the Department of Agriculture and the Financial Commissioner s Office. Despite limitations in the data advanced by the DES, it is considered the most authentic and reliable source for getting information with respect to different parameters. So, the present study tries to collect most of the information from this particular source. 6 A limitation of the cropping intensity estimate is that a few of the crops grown in the state are horticultural crops whose life span is for several years. Therefore, though such crops occupy some area for the whole year, the cropping intensity is taken as one, whereas seasonal crops grown for more than one season adds to the cropping intensity. Thus, the seasonal, or annual or perennial crop concentrations would influence the estimate of cropping intensity. Our estimate of cropping intensity does not take into account such variations. This limitation is to be kept in mind in making inter-district expansions, since in some of the districts, horticultural crops occupy an important place in the cropping pattern. 28

12 Table 2.7: Inter-District Trends in the Growth (per cent per annum) of Net Sown Area, Total Cropped Area and Cropping Intensity for Different Periods in Ladhak and Jammu Division. Period I II III IV V Overall District Growth Districts of Ladhak and Jammu Division NSA N L L N L N Leh Kargil Doda Jammu Kathua Poonch Rajouri TCA N L L N L N CI N L L N N N NSA NA L L L L L TCA NA L L L H L CI NA L N N H N NSA L L L M N L TCA L L L M L L CI L L L L L L NSA L L L L N L TCA M M N N L L CI M L N N M L NSA L N L H N L TCA M L L L L M CI L M N N H L NSA N L N N N N TCA N M L L L N CI L L M L L L NSA NA L L L L L TCA NA M L M L M CI NA L L L N L NSA L L N L N L Udhampur TCA L L N L N L CI L L L L N L Source: Computed from data provided by (MoAC, Various Years) Ministry of Agriculture and Cooperation, Directorate of Economics & Statistics, Government of India, Vol 2, District-Wise (Various Years); Digest of Statistics, Directorate of Economics and Statistics, Planning & Development Department, Government of Jammu & Kashmir (Various Issues); District-Wise Data from onwards downloaded from accessed on 19/01/11. Note: (i) NA=Not Available; N= Negative Growth Rate; L=Low Growth Rate (0-1); M= Moderate Growth Rate (1-2); H=High Growth rate (>2); NSA=Net Sown Area, TCA= Total Cropped Area and CI=Cropping Intensity; (ii) I= Initial green revolution period ( to ); II= Immediate pre-reform period ( to ); III= Post-reform period ( to ); IV= Immediate post-reform period ( to ); V= Recent period ( to ) and Overall Period ( to ). (iii) Time period for Pulwama, Kupwara, Budgam and Kargil is from to and for Rajouri is from to , because of the non- availability of Data for all the Time Periods. 29

13 Table 2.8: Inter-District Trends in the Growth (per cent per annum) of Net Sown Area, Total Cropped Area and Cropping Intensity for Different Periods in Kashmir Division. Period I II III IV V Overall District Growth Districts of Kashmir Division Anantnag Pulwama Baramulla Kupwara Srinagar NSA N L N L N N TCA N L N L N N CI L L L L L L NSA NA N N L N N TCA NA M N N N L CI NA M L N M L NSA N N N N N N TCA N L L L N N CI L L L L N L NSA NA L N L L L TCA NA L N N L L CI NA L L N L L NSA N N N L N N TCA N N N L N N CI L H L L L L NSA NA N N L N N Budgam TCA NA M N N N L CI NA M L N M L Source: Same as Table 2.7. Note: Same as Table 2.7. For instance, during Srinagar district has registered a high growth in cropping intensity but at the same time has shown negative growth in total cropped area. Similarly, Pulwama and Budgam have shown a moderate rate of growth in their cropping intensity in , but have registered a negative growth rate in the total cropped area. In these districts, the growth rate in net sown area is more than the growth rate in the total cropped area (also see Table 1 in Appendix C). Coming to the districts of Jammu and Ladhak division, net sown area has shown deceleration in its growth-rate in most of the districts of these regions over time. For example, out of eight districts, five districts of these regions have registered negative 30

14 rate of growth in net sown area during the recent period ( ). Cropping intensity remained low in terms of its growth in majority of the districts over a period of 48 years, which made low growth of total cropped area in the districts over the same period of time, as is evident from Table 2.9. These findings indicate that there is huge scope to increase the intensity of cultivation in the districts of Jammu and Kashmir. Like the State as a whole, increase in the cropping intensity seems to be the only way to expand the total cropped area in the state as is clearly evident from the negative growth rate in the net sown area in recent periods (vide Table 1 Appendix C). Table 2.9: Trend Growth Rate (per cent per annum) for Different Periods in Area under Food Grains and Non-Food Grains in the Districts of Jammu & Kashmir Period I II III IV V Overall I II III IV V Overall District (s) Food Grains Non-Food Grains Anantnag N L N N N N H H L H N M Pulwama NA N N N N N NA H M M M M Baramulla N N N N N N H H M M N M Kupwara NA L N N M N NA N M L N L Srinagar N N N L N N N N N M N N Budgam NA L N N N N NA H L L L M Leh N N N N H N N H L N H N Kargil NA N N L H N NA H N L N N Doda N N L H L L L M H H N H Jammu M M N N L L M M L N M L Kathua M L L L L M L H N L N M Poonch N M L L L N L L H N H H Rajouri M M L M L M H N N N N M Udhampur M L N L N L N H N N N L Source: Same as Table 2.7 Note: Same as Table 2.7 Disaggregated analysis of the growth in the area under food grains and non-food grains by districts gives further insights into the area adjustment taking place between the two groups of crops (see Table 2.10). It is seen that in the districts of Jammu division, the area under food grains increased at a low to modest rate during a period of 48 years and more so 31

15 in both the pre-reform and post-reform period. Similar trend has been observed in the case of non-food grains over the same period of time. In other words, in the districts of Jammu division, area-expansion took place in both types of crops, but more area was allotted to food grains than to non-food grains. The picture in the Kashmir division is seen to be significantly different. The trend growth rate in the area of food grains and non-food grains are also reported in Table 2 in the Appendix C. Table 2.10: District Wise Changes (percentage points) in Crops Area as a Percentage of Total Cropped Area in Jammu & Kashmir. District(s) Anantnag Pulwama Baramulla Kupwara Srinagar Budgam Leh Kargil Doda Jammu Kathua Poonch Gain in Crops Area in over Fruits & Vegetables, Oilseeds, Fodder Crops Fruits & Vegetables, Oilseeds, Fodder Crops Fruits & Vegetables, Fodder Crops Maize, Fruits & Vegetables, Cereals & Millets Fruits & Vegetables, Oilseeds, Fodder Crops Maize, Fruits & Vegetables, Oilseeds, Fodder Crops Wheat, Cereals & Millets, Fodder, Fruits & Vegetables Wheat,Cereals & Millets, Fodder, Fruits & Vegetables Maize, Fruits & Vegetables, Pulses, Oilseeds Rice, Wheat, Cereals & Millets, Oilseeds, Fodder Maize, Wheat,Cereals & Millets, Fodder Crops Wheat,Oilseeds, Fodder Crops 32 Loss in Crops Area in over Rice, Maize, Wheat, Cereals & Millets, Pulses Rice, Maize, Wheat, Cereals & Millets, Pulses Rice, Maize, Wheat, Cereals & Millets, Pulses, Oilseeds Rice, Wheat, Pulses, Oilseeds, Fodder Crops Rice, Maize, Wheat, Cereals & Millets, Pulses Rice, Wheat, Cereals & Millets, Pulses Barley, Pulses, Oilseeds Pulses Rice, Wheat, Barley, Cereals & Millets Maize, Barley, Pulses, Fruits & Vegetables Rice, Barley, Pulses, Fruits & Vegetables, Oilseeds Rice, Maize, Cereals & Millets, Pulses, Fruits & Vegetables Rice, Wheat, Cereals & Millets, Fruits & Rajouri Maize, Pulses, Oilseeds Vegetables, Fodder Maize, Wheat,Cereals & Millets, Fodder Rice, Barley, Pulses, Fruits & Vegetables, Udhampur Crops Oilseeds Source: Same as Table 2.7 Note: Time period for Pulwama, Kupwara, Budgam and Kargil is from to and for Rajouri is from to , because of the Non-Availability of Data for all the Time Periods.

16 These trends are indicative of two processes taking place in the state: one, certain degree of substitution between food grains and non-food grains; two, increased dependence on agriculture affecting both types of crops in some districts. For example, in Srinagar district, the area under food grains as well as under non-food grains showed negative trends, during both pre-reform and post-reform period. Similarly, in Ladhak and Kargil district, during the overall period, the area under both types of crops showed negative trends. Further, these trends corroborates by looking into the information provided in the Table 2.10 that the districts of Kashmir division have shown gain in non-food grains during the period to , as compared to the districts of Jammu division. The only exception in this regard is Kupwara district. Even the districts of Ladhak division-leh and Kargil- also showed changes in cropping pattern towards non-food grains from food grains. The disaggregated district-level trends further show that there exists a certain degree of variation in the trends among the districts in both Jammu and Kashmir divisions. The percentage changes are also reported in Table 3 in the Appendix C. The influence of the trends in area under food grains and non-food grains on changes in the cropping pattern is evident from the changes in percentage of area under non-food grains. In the districts of Jammu division, slightly more than 90 percent of the area cultivated was under food grains and the rest under non-food grains in the pre-reform period with some variations across districts in the division. By and large, this pattern has remained without significant change, during the past two decades. In Kashmir division, however, during the period of 48 years in all the districts, though there existed some degree of variation across districts, a significant upward shift in the area under non-food grains has been observed (Figure 2.1 and 2.2). The extent to which the changes in cropping patterns have accelerated agricultural growth in the state is analyzed in the section that follows. 33

17 Figure 2.1: Temporal Changes in the Percentage of Gross Cropped Area under Food Grains Across Districts of Jammu and Kashmir: to Source: Same as Table 3.7 Note: (i) Time period for Pulwama, Kupwara, Budgam and Kargil is from to and for Rajouri from to , because of the Non-Availability of Data for all the Time Periods. (ii) Jammu Division= Jammu, Udhampur, Doda, Kathua, Poonch and Rajouri; Kashmir Division= Srinagar, Pulwama, Kupwara, Budgam, Anantnag and Baramulla; Ladhak Division= Leh and Kargil. 34

18 Figure 2.2: Temporal Changes in the Percentage of Gross Cropped Area under Non-Food Grains Across Districts of Jammu and Kashmir: to Source: Same as Table 2.7 Note: (i) Time period for Pulwama, Kupwara, Budgam and Kargil is from to and for Rajouri is from to , because of the Non-Availability of Data for all the Time Periods. (ii) Jammu Division= Jammu, Udhampur, Doda, Kathua, Poonch and Rajouri; Kashmir Division= Srinagar, Pulwama, Kupwara, Budgam, Anantnag and Baramulla; Ladhak Division= Leh and Kargil. 35

19 2.3 Sectoral Growth in NSDP: Trends and Patterns The share of primary, secondary and tertiary sector, as a percentage of NSDP, during to for the state is depicted in the Figure 2.3. It is seen that the share of primary sector significantly declined to 35 per cent ( ) from 69 per cent in , which increased to 41 per cent ( ) and substantially came down to 29 per cent in On the other hand, the share of secondary sector went up to 29 per cent from 8 per cent ( to ) and then declined to 22 per cent ( ). After staggering around 26 per cent, during a period of ten years ( ), the share has declined to 19 per cent in and thereafter increased to 25 per cent in Figure 2.3: Share of Primary, Secondary and Tertiary Sector (as a percentage of NSDP) at Constant Prices in Jammu & Kashmir: to Source: Own Computation CSO (Various Years) 36

20 As far as the tertiary sector is concerned, the share as a percentage of NSDP significantly went up to 47 per cent from 23 per cent over a period of 48 years ( ), that is, it registered an increase of 24 per cent points (see Figure 2.3). The disaggregated contribution of shares in each sector is presented in the Figures 2.4, 2.5 and 2.6 for the state over a period of 48 years ( ). It is evident from Figure 2.4 that the share of agriculture remained significant in its contribution to primary sector during , which is on an average around 31 per cent. Figure 2.4: Share of Primary Sector and its Components (as a percentage of NSDP) at Constant Prices in Jammu & Kashmir: to Source: Own Computation CSO (Various Years). It is significant to note that the share of forestry and logging plummeted to two per cent in from 33 per cent ( ). This is the main reason which made the contribution of primary sector on a decline as against other sectors in the overall NSDP. Further, the share of other sectors within primary sector was not more than one per cent over the period of 48 years. In other words, the fishing and mining and quarrying contributed marginally to the primary sector as is evident from Figure

21 Coming to the secondary sector, the share of construction sector registered an increase of 12 per cent points, during It showed a decline of (-) six per cent points from and in , it maintained the same share of 16 per cent as was in (see Figure 2.5). Similar trend has been seen in manufacturing (registered and unregistered) sector over the same period of time. However, the share of electricity, gas and water supply has considerably gone up to six per cent ( ) from 0.28 per cent in and thereafter showed a decline of three per cent points in Figure 2.5: Share of Secondary Sector and its Components (as a percentage of NSDP) at Constant Prices in Jammu & Kashmir: to Source: Own Computation CSO (Various Years). The share of tertiary sector has significantly increased to 47 per cent in from 23 per cent ( ) and it remained almost the same in Increasing trend has been observed in the case of banking and insurance and transport, storage and communication over the period of 48 years. Whereas, the public administration and real estate and the ownership of dwellings and business services showed a decline of seven per cent points in the latest year ( ) as compared to , after showing an increase of 13 per cent points. Moreover, it is worth mentioning that amongst all the sub-sectors in the tertiary sector, transportation, storage and communication registered the highest increase of six per cent points over a period of 48 years (see Figure 2.6). Further, it is observed that within the 38

22 tertiary sector, the share of trade, hotel and restaurant came down to eight per cent in after increasing up to 11 per cent ( ) and thereafter marginally improved in the latest period (9 per cent). Figure 2.6: Share of Tertiary Sector and its Components (as a percentage of NSDP) at Constant Prices in Jammu & Kashmir: to Source: Own Computation CSO (Various Years). Figure 2.7 provides information with respect to the sectorial and overall growth of States income measured in terms of NSDP for different periods since It is inferred that the growth of income in all the sectors has improved in the post-reform period as compared to both the immediate pre-reform period and the initial green revolution period barring the secondary sector. For instance, the growth of NSDP in the secondary sector had decelerated to 2.7 per cent ( to ) from 5.3 per cent ( to ) and from 8.1 per cent in to However, it is to be noted that the growth in income was worse in the immediate pre-reform period than in the initial green revolution period. It may be mentioned that some of the sub-sectors, like handicrafts, did not get affected in a serious way even at the peak of militancy due to its inherent strengths. Moreover, immediate prereform period has registered a negative rate of growth in the primary sector (-2.4 per cent) and in the per capita income, which was -0.4 per cent. 39

23 Figure 2.7: Trend Growth Rate in Agriculture, Primary, Secondary, Tertiary, Per Capita Income and All Sectors (at Constant Prices) in Different Periods for Jammu & Kashmir. Source: Own Computation CSO (Various Years). Note: Initial Green Revolution Period ( to ); Immediate Pre-reform Period ( to ); Post-reform Period ( to ); Immediate Post-reform Period ( to ); Recent Period ( to ) and Overall Period ( to ). The comparison of NSDP of Jammu and Kashmir with all Indian and its neighboring states bring to the fore the fact that the state is not only lagging behind the national level in terms of its growth in income of all the sectors together, especially 1990 onwards, but also growing at the lower rate than the neighboring states (see Table 2.11). Similar pattern of growth is followed by secondary and tertiary sector as well. Nevertheless, agricultural sector in the state has shown an impressive growth rate in all the periods except in the immediate pre-reform period. For instance, agricultural sector was growing at a rate of 3.7 per cent in the state particularly during post-reform period whereas, the growth rate was 40

24 2.9 per cent, 2.1 per cent and 2.9 per cent at an all India level, Punjab and Himachal Pradesh, respectively as is evident from Table Table 2.11: Trend Growth Rate across Sectors in terms of NSDP for Different Periods in Neighbouring States of Jammu & Kashmir and All India Period to Sectors States Jammu & Kashmir Himachal Pradesh Punjab All India Agriculture Primary Sector Secondary Sector Tertiary Sector All Sectors to Agriculture Primary Sector Secondary Sector Tertiary Sector All Sectors to Agriculture Primary Sector Secondary Sector Tertiary Sector All Sectors to Agriculture Primary Sector Secondary Sector Tertiary Sector All Sectors Source: Own Computation CSO (Various Years). However, the rate of growth in agriculture in the state has come down to 3.3 per cent in the recent period ( to ) after growing at a rate of 4.2 per cent in immediate postreform period. The relatively better performance of agriculture in recent periods in the State could be due to the shift in area under cultivation from food grains to non- food grains. To 41

25 provide statistical validity to this assertion, we made an attempt in the next section, to see the impact of various factors on the agricultural output. 2.4 Determinants of Agricultural Growth in Jammu and Kashmir As we have already seen in the previous section that the growth of agricultural sector in terms of NSDP is impressive in the state, unlike the country as a whole, especially in the liberalization era. Before getting into the determinants of agricultural growth in the state, it is worthwhile to take a look into the studies examining the factors that have contributed to the growth of agriculture in India. There is no dearth of studies in this regard and the findings of some of them are discussed here. A vast majority of the studies found that the decline in the area under cultivation, deterioration in terms of trade for agriculture, stagnation in crop intensity, decline in the supply of electricity to agriculture, slowdown in crop diversification, poor progress of irrigation and fertilizer, decline in public investment, growing cost of cultivation, volatility of crop output and the neglect of government were the main factors which led to a slowdown in agriculture at national level since (Chand and Kumar, 2004; Rao, 2005; Suri, 2006; Chand et al., 2007; Vaidyanathan, 2010). Another set of studies suggested that there is a greater need for public investment in agriculture, irrigation, credit availability, better marketing of agricultural products, research and development (R & D), education and extension services that would help revive agricultural growth (Dev, 2002; Desai, 2002; Sahu and Rajasekhar, 2005; Mathur et al., 2006). In order to analyze the factors that have an impact on the growth of agricultural output, a number of plausible relationships were examined; thereafter, a final model was selected. It was hypothesized that the level of agricultural output over time was affected by a variety of factors. The factors selected are based on the studies discussed above and it may be noted that some variables namely, government expenditure, electricity consumption in agriculture and public and private investment were left out from the analysis due to the non-availability of data. The variables included in the regression model are shown in the Table 2.12 along with their description and expected signs. Rainfall is expected to have a positive effect on the output because most of the agricultural land in the State remains non- 42

26 irrigated and irrigation is also directly or indirectly dependent on rainfall. Similarly, gross irrigated area is considered to have positive effect on output because it will induce the demand of fertilizers. Further, it is hypothesized that the area under non-food grains has positive and significant effect on output because of its higher value than non-food grains. Also, the per capita income is expected to increase investment in the cultivation of crops, which further leads to increase in output. Therefore, one can expect positive impact of per capita income on the agricultural output. Likewise, terms of trade is expected to have a positive and significant effect on the output. It is because the favorable terms of trade in agriculture gives incentives to the growers to yield more profit out of cultivation. Table 2.12: Variables included in the Regression Variable Name Variable Description Expected Sign LANSDP Net State Domestic Product in Agriculture, Measured in logs (Dependent variable) TOT Terms of Trade, Estimated by a Ratio of Agriculture GDP and Non-Agriculture GDP at Constant Positive Prices CI Cropping Intensity, Measured in [(Total Cropped Area/Net Sown Area)*100] Per cent Positive PCI Per Capita Income, Measured in Logs Positive ANFG Area under Non-Food Grains, Represented as a Percentage of Total Cropped Area Positive PACS Primary Agricultural Societies Normalized by Per Unit of Total Cropped Area (000' ha) Positive GIA Gross Irrigated Area, Measured in Percentage to Total Cropped Area Positive ARAIN Actual Rainfall refers to the Amount of Rain Received in a Year and is Measured as a Percentage of Long Run Average Rainfall Positive We have assumed linear relationship among variables to see their effect on agricultural output. In terms of NSDP, the following functional relationship for the period to has been estimated. Log NSDP in Agriculture (LANSDP) = f (TOT, CI, PCI, ANFG, PACS, GIA, ARAIN, µ, t) {Where, µ= error term, f= function and t=time trend} 43

27 Prior to the regression analysis, we have also attempted to see the pace of various factors affecting agricultural output in the corresponding period for which the growth rates were estimated and are presented in the Table Table 2.13: Trend Growth rate in Terms of Trade, Per Capita Income, Gross Irrigated Area, Area under Non-food Grains, Annual Rainfall, Primary Agricultural Credit Societies and Cropping Intensity for Different periods and overall Period in J&K. Variable (s) Terms of trade (TOT) (-) 0.2*** (-) 0.5 (-) 0.7** (-) 0.2 (-) 2.6** (-) 0.6*** Per Capita Income (PCI) 1.6*** (-) *** 1.9*** 3.6*** 1.3*** Gross Irrigated Area (GIA) 1.1*** ** 0.4*** Area under Non-Food Grains(ANFG) 2.4*** 1.5*** 0.7*** 0.6** 0.9** 1.7*** Annual Rainfall (ARAIN) (-) 1.0 (-) 4.2* 8.8*** 0.5 Primary Agricultural Credit Societies (PACS) 0.8 (-) 2.2* (-) 2.8*** (-) 5.1*** (-) 0.3 (-) 1.7*** Cropping Intensity (CI) *** 0.2*** 0.2* 0.5* 0.4*** Source: Own Computation from data provided by CSO, Ministry of Agriculture and Cooperation, Directorate of Economics and Statistics, Government of India (Various Years). Note: (i) Initial Green Revolution Period ( to ); Maturing Green Revolution Period or Immediate Pre-reform Period ( to ); Post-reform Period ( to ); Immediate Post-reform Period ( to ); Recent Period ( to ) and Overall Period ( to ). (ii) *** denotes significant at 1% and ** represents significant at 5% and * shows significant at 10%. The Table 2.13 shows that as compared to the initial green revolution period ( ) and the immediate pre-reform period ( ), there was a deceleration in the growth of almost all the variables in the post-reform period ( ). The only exception in this regard is the per capita income. For instance, it was growing at the rate of 2.2 per cent per annum as compared to 1.6 per cent per annum in and (-) 0.4 per cent per annum in , respectively. Subsequently, the per capita income maintains a similar pattern of growth in the state. Furthermore, terms of trade and primary agricultural credit societies registered negative rate of growth in most of the periods (refer Table 2.13). Nevertheless, as compared to the immediate post-reform period ( ), there is an improvement in the growth of 44

28 all the factors during barring primary agricultural credit societies and terms of trade in agriculture. Initially, it is seen that out of all the predictors used in the model, the terms of trade, the per capita income, the area under non-food grains and the primary agricultural credit societies turned out to be statistically significant, but the variables are serially correlated as indicated by the value of Durbin-Watson test statistic that is, 1.21 (refer Table 4 in the Appendix C). To surmount this problem, an auto regressive term for order 1, AR (1) was included in the model as a predictor. However, robustness has been checked for the model and the ordinary least square estimates are presented in the Table After introducing AR (1) term in the model, all the variables turned out to be statistically significant with level ranging from one per cent to ten per cent, barring rainfall, as indicated by the t-values. The per capita income showed the most significant impact on output; one percentage increase in per capita income resulted in 1.07 per cent increase in NSDP of agriculture. In the same way, most of the predictors have shown an expected sign. Nonetheless, PACS has been turned out to be negatively significant, which is not an expected result. 7 It is worthwhile to mention that, apart from the short run impact, this chapter also attempts to compute the long-run impact of factors on the output growth (see Table 2.14) 8. Note that the previous year output in agriculture had its impact on the current output as reflected in the value of the lagged variable. The value of adjusted coefficient (R 2 ) shows that the model explains 99 per cent of the variation in LANSDP. The model is adequate as shown by the Lagrangian Multiplier (LM) -F test for auto correlation 9 and the Breush-Pagan test for heteroscedasticity. 7 One possible explanation may be the non-availability of adequate credit in the state. It is seen from a study (by Narayanamoorthy and Kalamkar, 2005) that the agricultural credit availability per hectare of net sown area is very low in the state, that is, Rs. 438 as compared to the national average of Rs Long-run impact has been computed by the following formula: β i ' s, where β ( i s = coefficients of 1 γ ) the predictors (i=1 to 7) and γ= coefficient of AR (1) term (for details see Pillai, 2001). 9 When the regression includes lagged dependent variables, then the Durbin-Watsan d-statistic is not valid as a test for auto correlated residuals. In this case, LM test for autocorrelation is considered. 45