While the above normal monsoon last year is likely to lift agricultural growth to 4.6% in 2013-14 from 1.4% in 2012-13, the sector has witnessed a significant transformation in the 7-year period from 2004-05 to 2011-12. The real agricultural gross domestic product (GDP) per worker increased by 52% during the period 2004-05 to 2011-12, which led to a fall in rural poverty, at a pace almost three times faster during the period 2004-05 to 2011-12. In contrast, agri-GDP per worker during the period 1993-1994 to 1999-2000 grew by 21%.
This growth in agriculture during the period 2004-05 to 2011-12 was fuelled by an impressive increase of 71.5% in net fixed capital stock per worker in agriculture. And with each worker better equipped with capital, growth in per worker agri-income has increased significantly.
That's not the only silver lining. Investment in agriculture, which is a key component in the overall development of the sector, more than doubled during the 7-year period 2004-12 led by a significant rise in investment by the private sector. While public sector investment stagnated in agriculture and allied sector, private sector investment grew and currently accounts for 86% of the total investment in the sector. Investments or capital formation in agriculture as a percentage of agri-GDP, grew to around 20% in 2011-12 from around 10-12% during 1980-81 to 2003-04.
Moreover, with the integration of agriculture to global economy, India's agriculture-trade, which includes both exports and imports, grew from less than 5% of agri-GDP in 1990-91, to 18% in 2012-13, clearly indicating that the country's domestic agriculture prices cannot be insulated from global prices for long.