Jharkhand is one of the eastern states of India. It is a state with huge opportunities that remain unrealized. The state’s economy is predominantly agricultural, with around 80% of its population dependent directly or indirectly on agriculture for their livelihood. It is one of the poorer Indian states, which ranks low in all development indicators, despite being very rich mineral resources.
However, the state economy has undergone a tremendous acceleration since Jharkhand’s bifurcation from Bihar in the year 2000. Between 2005 and 2015, the state grew at an impressive rate, especially the agricultural sector, after Madhya Pradesh. Jharkhand’s growth has received national attention as its agricultural growth rate remains high at a time when the country is struggling to achieve even 4% growth. Yet, the rippled topo sequences of the state and its rainfed agricultural pattern have led to massive degradation of soil, diverse agricultural practices and low productivity.
The agricultural economy of the state is highly dependent on nature and characterized by low investment, low productivity, inadequate irrigation facilities and small and marginal holdings. The overall economy registered an impressive average annual growth rate of over 6% during 2000–2017, with major contributions from the booming services and secondary industrial sectors.
The economy has also undergone structural changes, with the share of the agricultural and allied sectors in the gross state income (at 2011–2012 prices) declining marginally from 16.8% in 2000–2002 to 14.8% in 2014–2016, while the service sector has grown sharply, by almost 20%. Still, the agricultural sector continues to serve as the largest source of employment in the economy. Over the past five decades, the Indian economy as a whole has undergone a structural transformation, with the share of agriculture in the gross domestic product (GDP) declining faster than its share in the workforce—but experiences at the subnational level vary (Pandey et al., 2019). This has resulted in widening income disparity between the agricultural and non-agricultural sectors. Further, the overall per capita income of the state grew at 4% per annum between 2000 and 2018, but it experienced year-on-year volatility.
The performance of the overall agricultural sector has mainly been dependent on crop production, and the output of the crop sector constitutes around 55% of the output value of the primary sector. The value of crop output has grown at an average rate of 8.31% per annum between 2000–2001 to 2016–2017. Allied activities also grew during the same period, with growth rates of 7.85%, 11.19% and 6.69% for the livestock, forestry and fisheries sectors, respectively, which are much higher than the national average. Horticulture is a significant emerging sector in Jharkhand, as it contributes around half of the total output value of the agricultural sector. It plays an important role in securing the livelihood of poor farmers, too. It provides food security and a perennial source of income to the poorest of the poor and is a dynamic tool for ensuring ecological sustainability. On the one hand, internal sources of agricultural growth include improvements in crop productivity, resource-use efficiency, diversification, technology, rural infrastructure and real prices obtained by farmers. On the other, the economic shift from farming to non-farm occupations and better terms of trade constitute external sources of growth.
Although agriculture is very important for the overall economic growth of Jharkhand and to eradicate poverty in the state (as more than 80% of its people directly or indirectly depend on agriculture for their livelihood), the issue of agricultural contribution toward economic growth and its diversification has rarely been examined in detail. The present study, covering the period 2000–2017, explores the determinants of agricultural growth in the state, along with the contributions of different variables to the growth of the agricultural sector.
The study is based on the secondary data from 2000–2001 to 2015–2016. This paper first decomposes the agricultural growth into area, price, yields (technological improvement) and diversification effects through the method of growth accounting approach. Secondly, the study employs the new classical growth model through the ordinary least square (OLS) to examine the determinants of overall agricultural growth. The findings of the study confirm that agriculture in the state mainly depends on the monsoons, due to lack of irrigation and the predominance of rainfed agriculture. Cropping patterns in Jharkhand have changed significantly since 2000 in favor of pulses, maize and oilseeds. During this time, the value of agricultural output grew at around 8% per annum, though with a considerable annual variation. There is a need to develop suitable technologies for rainfed farming, incorporating soil and water conservation, ponding and recycling to best use the limited water resources in the state, and promote short-duration oilseed crops (such as sesame, linseed and safflower) and pulses (green gram, black gram, pigeon pea and Bengal gram) suited to the region’s light, shallow soil cover. There is also a need for suitable dryland technologies for horticultural crops.
Rural roads are an important factor for economic growth and poverty reduction in India. Investment in roadworks yields the highest among economic returns for an economy. The results of the present study also support the hypothesis that road density has a significant positive effect on agricultural growth in the state. There is still wide scope to increase road density, as it is low compared to other states and the country as a whole. Likewise, the use of fertilizers in the state, measured per hectare, is still very low. It should be possible to enhance fertilizer consumption along with irrigation to further enhance productivity and production. Higher use of fertilizers per hectare and capital formation can also significantly affect agricultural growth in the state.
In addition, there is a large quantity of land left fallow and uncultivated due to insufficient irrigation facilities. Thus, there is scope to enhance agricultural production by increasing the irrigated area through micro-irrigation techniques, which could be very helpful for the state. The only means to expand the cultivated area in Jharkhand, however, is to intensify farming on the existing land. Meanwhile, the decline in the relative contribution of technology to agricultural growth should be a matter of concern. It might be due to an amalgamation of factors, such as lack of investment in agriculture in general and agricultural research in particular, inefficiencies in research that is undertaken, poor linkages between research and extension, climatic uncertainties uncertain weather pattern and so on. All these have implications for agricultural research and development (R&D) as well.
Further, the findings of the study reveal that the contribution of crop diversification to the overall growth of the agricultural sector also declined in the period 2008 to 2015. There is a need to diversify agricultural efforts in favor of high-value commodities, which can be a sustainable source of growth and can provide a cushion to agricultural growth. There is abundant labor available in the state, too, which supports agricultural diversification, since it is a labour-intensive activity. There is also a huge opportunity to enhance the production of horticultural crops, as the state of Jharkhand is well-connected to West Bengal, Bihar and Odisha, which would probably provide a market for these crops. Crop diversification could also help with the eradication of poverty, which is very high in the state. To promote sustainable growth of the agricultural sector in Jharkhand, then, governmental support is required to facilitate investment in agriculture, R&D, infrastructural improvement (especially irrigation), marketing channels and availability of credit to farmers.
Contributed By Dr. Ghanshyam Kumar Pandey, Assistant Professor of Economics – SRM University -AP.
Views expressed are personal.
