The increasing food prices can push millions of net buyers of food into deeper poverty. A lot depends on how Indian agriculture responds to this challenge and what solutions the policy makers can think up to prevent a possible farm crisis.

No country, a majority of whose population is dependent on agriculture, has been successful in reducing poverty and hunger without being successful in its agricultural sector. Many experts agree that Indian agriculture is heading towards a crisis. At least the vital economic signs of the sector indicate that this may in fact be the case. The current growth rate of the sector has remained stagnant at 2.6% for the past decade, and this certainly calls for some swift action. This is important at this juncture since about 70% of the rural population either directly or indirectly depends on agriculture for their livelihood and agriculture still continues to contribute nearly 25% of India's national income.

Several factors are responsible for this low level equilibrium of the sector. This sector has been neglected by successive governments over the past two decades. The low and inappropriate contribution of research to the development of new technologies remains a major stumbling block for further rise in productivity. The extension system that was once the pride of the nation has literally crumbled over the years. Investment in irrigation expansion has not been fully accounted for, with only 40% of the cultivable land coming under irrigation.

The increasing food prices can push millions of net buyers of food into deeper poverty. A lot depends on how Indian agriculture responds to this challenge and what solutions the policy makers can think up to prevent a possible farm crisis. Resource-poor farmers, who are largely confined to drought-prone areas with little non-farm opportunities, continue to bear a large share of rural poverty. Small and marginal farmers, who have invested in ground water resources and in high value crops, have burnt their fingers due to the low availability of groundwater and consecutive monsoon failures. Rural financial intermediaries, both formal and informal mechanisms, face a series of market failures, of which some are induced by public policies. Added to this is the current level of high food prices that can push millions of net buyers of food into deeper poverty.

The Analyst Magazine, Indian Agricultural Sector, Agricultural Crisis, Ground Water Resources, Irrigation Deportment, Rural Financial Services, Agricultural Research Systems, Gross Domestic Products, GDP, World Bank, Agricultural Extension Policy, Information and Communication Technologies, Water Management, Rural Banking System.