Agriculture continues to be one of the most important sectors of the economy though its share in gross value added has gradually declined to 18 per cent in 2023-24. It continues to provide jobs to nearly 46 per cent of workforce. The average annual growth of agriculture and allied sectors was close to 4 per cent during 2011-2025. It has lagged behind the growth of Gross Value Added (GVA) which averaged 6 per cent during this period. Haryana, Punjab, Tamil Nadu and Kerala, among the major States, has workforce dependence on agriculture below 30 per cent. It has exceeded 40 per cent in most States.
KLEM data indicate that there was a decline in share of agriculture in value added, capital stock and employment in 2022-23 compared to 2011-12, though the index of total factor productivity of agriculture at 110 (with base 2011-12) was higher relative to the economy wide index of 102.
The average monthly income of agricultural households as per Situation Assessment Survey 2019 from various sources was estimated at ₹1.22 lakh per annum recording a growth of 8 per cent over 2012-2019, much below the required growth for doubling the income in five years. Various schemes/ programmes implemented by the government of India accelerate farm income. The government has substantially enhanced the budget allocation of the Department of Agriculture & Farmers Welfare (DA&FW).
In this article, we look at State-wise parameters to assess agri growth, per worker income, usage of inputs, etc., in the farming sector. We have developed an Agriculture Development Index (ADI) capturing some important parameters for this purpose.
Six factors for developing the index
We have used six parameters for developing a comprehensive index. They are household income of agriculture households as per SAS 2019, value of crops per hectare as indicated by Ministry of Statistics & Programme Implementation (MoSPI) 2022-23, cropping intensity, use of fertilizers per hectare (ha) as given by Ministry of Agriculture & Farmer Welfare for 2022-23, credit advanced per hectare as given by Reserve Bank of India and gross value added per worker engaged in agriculture as worked by using MoSPI data of GVA and employment.
Since these parameters pertain to different years, though not too distant, these have been converted to derive relative State position with respect to the average of all States. These have then been converted to an Agriculture Development Index (ADI) using near equal weights. The State-wise position (excluding Goa) in respect of each of these parameters is indicated in the Chart.
As would be seen, there are significant inter-State differences. Overall ADI is highest for Punjab at 72 closely followed by Haryana. Tamil Nadu and Andhra Pradesh are at 58, while Nagaland, Odisha, Chhattisgarh and Manipur are placed at the bottom. Inter-State position with regard to the chosen parameters is indicated below.
Average annual income of farm households as per SAS 2019 varied from a low of ₹58,470 per annum to over ₹3 lakhs for Punjab and Meghalaya. Per household annual income exceeded ₹2 lakhs in Haryana, Kerala, Mizoram and Arunachal Pradesh, while it was below ₹1 lakh for West Bengal, Bihar and Uttarakhand besides Jharkhand and Odisha.
The value of crop output per hectare varied from ₹68,029 in Rajasthan to over ₹3 lakh in Tripura with an all-States average of ₹1.39 lakh. Overall value of crops exceeded ₹2 lakh in the case of Andhra Pradesh, Sikkim, Tamil Nadu, West Bengal and Jharkhand. It was below ₹1.5 lakh in Arunachal Pradesh, Chhattisgarh, Haryana, Madhya Pradesh, Mizoram, Nagaland, Maharashtra, Punjab and Telangana.
While the overall cropping intensity was 155, it exceeded the national average in Uttarakhand (164), Himachal Pradesh (167), Sikkim (167), Uttar Pradesh 175), Haryana (185), Madhya Pradesh (190), Tripura (190), West Bengal (191) and Punjab (202).
The use of fertilizer (NPK) averaged 137 kg per hectare, it was virtually zero in Sikkim (an organic State), Arunachal Pradesh, Nagaland and Meghalaya. Punjab, Haryana and Telangana top the list in usage of fertilizer.
Credit per hectare also shows significant inter-State variations. While average outstanding credit per hectare of cropped area as on end March 2023 stood at ₹0.88 lakh, it varied from a low of ₹0.07 lakh in Nagaland to ₹4.5 lakh in Tamil Nadu.
From PLFS, per worker value added in agriculture is seen to be the highest (₹5.69 lakh) in Haryana. It is high in Punjab, Tamil Nadu, Andhra Pradesh, Tripura and Mizoram.
We observe from the above:
(a) Value of crop output per hectare does not correlate with fertilizer use per hectare, except in a few States. There’s a need for efficient use of fertilizer through soil analysis. Reducing fertilizer subsidy and increasing PM Kisan subsidy per farmer or selling at market price and subsidising through DBT are options to be considered.
(b) Except Punjab, Haryana, the North-East, Jharkand and Kerala, household income is not correlated with value of crop per hectare. Perhaps public procurement has helped. Dairying, poultry and fisheries have increased household income. Making the country a single agri market and free trade of agri products are necessary to increase income. Jharkand’s practice of growing high value vegetables, floriculture and organic farming results in high value addition but lack of marketing facilities has reduced income.
(c) Credit per hectare helps in agriculture development. But its difference across States is staggering. We need an institutional overhaul to reduce the difference.
(d) Cropping intensity across States is range bound. Neither fertilizer use nor household income seem to be affected by it. Low crop intensity in Andhra Pradesh baffles. We need to study further.
(e) Consolidation of holdings may be political economy-wise difficult. Small holdings can be made more effective by precision farming with technology application and mechanisation and with active contribution by FPOs for marketing. Linking Inter State Coops with FPOs can secure viable marketing.
We must find a way to resurrect aborted farm reforms. If States need incentivisation for reforms, the Centre must step in.
Gopalan is former Secretary, Economic Affairs, and Singhi is former Senior Economic Adviser, Ministry of Finance. Views expressed are personal
Published on January 22, 2026
