Agriculture, MSP and food security

Bruce Johnston and John Mellor (1961) listed five contributions of agriculture to development: it supplies food for a growing non-farm population (the product contribution); it releases labour and savings to other sectors (the factor contributions); it provides a market for manufactured goods when farm incomes rise; and it earns foreign exchange. Theodore Schultz (Transforming Traditional Agriculture, 1964) argued that traditional farmers are efficient given what they know, and that the way to raise output is to give them better inputs and the schooling to use them. John Mellor (1966) stressed that in a poor country the first condition for industrialisation is rising farm productivity, since wage goods, mostly food, limit how fast the modern sector can grow, as in Lewis’s model of Lesson 3.

In the early 1960s India relied on imported grain. The Intensive Agricultural District Programme (IADP) began in 1960–61 (UGC NET 2023), offering a package of seed, fertiliser, credit and advice to chosen districts, and from 1966–67 the government introduced high-yielding varieties (HYV) of wheat and then rice. The Green Revolution is the rise in grain output that followed. It was most successful in wheat and rice (CUET 2018) and in Punjab (CUET 2021), which is also the main wheat-producing state among the options in that question. It rested on more than seeds: the new varieties responded to fertiliser and water, so irrigation was necessary (the reason in CUET 2022), and farmers needed credit, which is why the expansion of bank branches into the countryside proved critical in the adoption of the technology (UOH 2017, Lesson 13).

Output growth since the 1980s has come mainly from higher yields rather than from a larger sown area (UOH 2011). Evenson and Gollin (2003), who measured the impact of modern varieties across developing countries from 1960 to 2000, found that modern varieties were adopted widely and raised yields, and estimated that food prices would have been considerably higher without them. The costs were also real, and the exams ask about them: the new technology created interregional disparities (it was confined to the irrigated north-west at first), intercrop disparities (wheat and rice gained over pulses and coarse grains) and a skewed consumption pattern in favour of the superior cereals (UOH 2012). The area under coarse cereals shifted to other crops and their output declined (UGC NET 2025). CUET 2022 sets the claim that the Green Revolution benefited mainly Punjab, Haryana and western Uttar Pradesh next to the statement that irrigation was necessary, and keeps both as true statements without making one the explanation of the other.

Other “revolutions” follow the colour convention that exams test: yellow for oilseeds (UOH 2013), blue for fisheries and aquaculture (UOH 2016) and white for milk, through Operation Flood from 1970. NAFED, the National Agricultural Cooperative Marketing Federation, is a cooperative organisation (CUET 2020). Cropping intensity, the gross cropped area as a percentage of the net sown area, measures how many crops a plot yields in a year: a farmer who grows kharif and rabi crops on the whole of a 2.5-acre holding has 5 acres of gross cropped area and a cropping intensity of 200 per cent (JNU 2021).

A minimum support price is a price floor. The Agricultural Prices Commission, set up in 1965 and renamed the Commission for Agricultural Costs and Prices (CACP) in 1985, recommends prices (GATE 2024) and the Government of India announces them (UOH 2013). The CACP weighs the cost of production, demand and supply, domestic and international price trends, inter-crop price parity, the terms of trade between agriculture and non-agriculture, and the effect on the price level (UOH 2012, 2019, all with the key “all of the above”). The government has said since the Union Budget of 2018–19 that it sets prices at least 1.5 times the cost of production defined as A2 + FL (paid-out costs plus the imputed value of family labour). The Food Corporation of India (set up in 1965) buys the grain, holds buffer stocks whose purpose is to stabilise prices in acute shortages (UOH 2019), and supplies the Public Distribution System.

The market for a grain shows what a support price does. Take the invented market of the calculator: supply S = 40 + 0.02p and demand D = 140 − 0.04p, in million tonnes, with p in rupees per quintal. The market price is 1,667 rupees and the quantity 73 million tonnes. If the support price is 2,000, farmers want to sell 80 million tonnes, consumers buy 60, and the government buys the 20 million tonnes difference (procurement). At 2,000 rupees a quintal, that is 40,000 crore rupees; if the government can dispose of the grain at 1,000 rupees a quintal (in subsidised distribution or by sale abroad), the net cost is 20,000 crore. Farmers gain 25,556 crore of surplus, consumers lose 22,222 crore, and the economy as a whole loses 16,667 crore, since the producers’ gain is less than the consumers’ loss plus the cost to the budget. Change the support price and the disposal price to see the results.

Amartya Sen (Poverty and Famines, 1981) argued that famines occur because people lose their entitlement to food, through falling wages or rising prices, and not only because there is less food; food security therefore means access, which is why distribution matters. India’s system has three parts: procurement at the support price, storage and movement by the FCI, and distribution through fair price shops (the order asked in CUET 2024: support prices decided; foodgrains produced; procured by the FCI; distributed).

• Revamped PDS (1992) extended the system to backward blocks; Targeted PDS (June 1997) gave heavily subsidised grain to families below the poverty line and sold at higher prices to the rest (UOH 2012). The limit of targeting is errors in the selection of beneficiaries (UOH 2017): the poor who are left out, and the non-poor who are included.
• National Food Security Act, 2013 made the entitlement a legal right for up to 75 per cent of rural and 50 per cent of urban people (UOH 2015), at 5 kg per person a month, with 35 kg per household for the poorest households.

Dated matches: Targeted PDS 1997, Revamped PDS 1992, the Right to Education Act 2009 and the National Food Security Act 2013 (UGC NET 2025, and the year of the Act again in UGC NET 2026).

In the dual-economy models of Lessons 3 and 4, development means a fall in the farm share of both output and employment, with workers moving to better-paid jobs. In India, the share of agriculture in output fell to 17.6 per cent in 2024, but its share of employment was still 42.4 per cent, so that average output per farm worker was only 41 per cent of the average for the whole economy. Korea and China show the usual path, where both fall together; India’s employment moved out slowly. Gollin, Lagakos and Waugh (2014) documented large gaps of this kind across poor countries, and the argument over whether they reflect a real gap in productivity, differences in the workers’ skills, or measurement is open. For India the practical issue is that moving workers out of farming requires non-farm jobs to be created in numbers, which is the subject of Lesson 11.

Questions on the Green Revolution, support prices and procurement, the Public Distribution System and food security. Dated production figures are not worked here; the Indian economy pages carry them with sources.