Economic Survey 2024: Agricultural Credit
The credit to agricultural and allied activities was in double digits during the financial year 2024, according to the Economic Survey 2023-24 tabled in Parliament on Monday.
Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2023-24, along with the statistical appendix, ahead of the Budget for 2024-25, which will be announced on Tuesday.
The Survey indicates that agricultural credit increased nearly 1.5 times, rising from Rs 13.3 lakh crore in FY21 to Rs 20.7 lakh crore in the financial year 2024.
It highlighted the role of the Kisan Credit Card (KCC) scheme in providing timely and hassle-free credit to farmers, with over 7.4 crore operative KCC accounts by the end of 2023. The survey also noted that credit disbursal to the agricultural sector continued to rise in April and May 2024, with bank credit growing by 19.7% and 21.6% YoY, respectively.
Despite this, the Survey mentioned that Gross Value Added (GVA) in the agriculture sector grew at a “slower pace,” impacted by “erratic weather patterns” and uneven monsoon distribution in 2023. “The shares of the agriculture, industry, and services sectors in overall GVA at current prices were 17.7%, 27.6%, and 54.7% respectively in FY24,” it noted.
The impact on GVA growth is reflected in the marginal decline in total foodgrain output for FY24 by 0.3%, as reported by the Ministry of Agriculture and Farmers’ Welfare (MoAFW).
The Survey also highlighted government initiatives to address crop insurance concerns, including the YES-Tech Manual, WINDS portal, and the AIDE/Sahayak app for satellite-based crop damage assessment. Door-to-door enrolment initiatives are making insurance more accessible.
Indicating a potential rise in agriculture premiums from 2024 onwards, the Survey mentioned an average real premium growth of 2.5% over the medium term, supported by improvements in insurance infrastructure such as mobile applications and remote sensing for crop loss monitoring.
Agriculture insurance is estimated to show flat growth in FY23 due to a sharp decline in premium rates during the Kharif cropping season. This decline was more than offset by increased insured land area and farmer enrolments.
“In FY23 and FY24, the agriculture sector was affected by extreme weather events, lower reservoir levels, and damaged crops, adversely impacting farm output and food prices. Consequently, food inflation based on the Consumer Food Price Index (CFPI) rose from 3.8% in FY22 to 6.6% in FY23 and further to 7.5% in FY24,” the Survey read.
The Survey emphasized that, as economies grow, the share of agriculture typically declines, which is considered normal and a sign of progress. Households with rising incomes do not proportionately consume more food, leading to a decreased share of food in their consumption expenditure, a concept known as Engel’s law.
(Also Read: Economic Survey Reveals 8.2% FY24 Growth, Resilience Amid Geopolitical Tensions)
The Economic Survey also praised the government’s efforts to support farmers through subsidies on water, electricity, and fertilizers, stating, “The former two are provided virtually free. Their incomes are not taxed. The government offers them a minimum support price (MSP) for 23 selected commodities. Monthly cash support is offered to farmers through the PM-KISAN scheme. Indian governments—national and sub-national—write off their loans.”
The Survey suggested that while earlier development models involved transitioning from farming to industrialization and value-added services, technological advancements and geopolitical shifts are challenging this conventional wisdom. It supported a “return to roots” model for farming practices and policymaking, which could generate higher value addition, boost farmers’ incomes, and create opportunities for food processing and exports.
“Trade protectionism, resource-hoarding, excess capacity and dumping, on-shoring production, and the advent of AI are narrowing the scope for growth in manufacturing and services,” it stated. It further suggested that resolving these issues could transform them into strengths and a model for other countries.
“So, governments in India spend sufficient resources to support farmers. However, a reorientation of existing and new policies could serve them better. This could restore faith in the state’s ability to steer the nation towards a better future and deliver significant socio-economic benefits,” it concluded.
(With ANI Inputs)
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