Indian agriculture is already increasingly demand driven. This will accelerate in the future. It has been argued on various occasions that agricultural diversification in India is basically driven by domestic demand. The major impact of faster income growth was on domestic demand leading a process of demand diversification in a big way. Expansion and diversification of the consumption basket was basically driven by a higher growth performance since the 1980s.The agro-based items of consumption are important in the demand baskets of different income groups.
Population and Income Growth will give us the base for demand. Decadal Growth of cereal demand is 13 per cent. On the other hand growth of demand of fruits and vegetables, eggs, chicken and milk is much higher. The decadal growth figures for potatoes is twenty four per cent, thirty per cent for vegetables, forty per cent for milk, two hundred per cent for eggs and two hundred and fifty per cent for chicken.
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Recently UN studies have established through international comparisons a point we have made that India is urbanised more than what it says and its non-farm employment growth is globally comparable. The FAO bring out that in a global comparison and analysis. India is spotted in the transforming country category, with a clear historical trajectory of moving from being agricultural-based. The FAO note that according to popular statistics India is less urbanised, but they point out that: “On the other hand, what constitutes “rural” is in fact somewhat subjective and what is considered urban or rural varies considerably among countries.
In the next two decades, Indian agriculture will meet the requirements of food security and rapidly diversify itself. It will function in a rural urban continuum, with rapid developments of markets and shifting of working populations from villages to linked small towns and also from crop production to value added activities. Employment growth will be high in these activities chasing a high rate of economic growth. All this will happen if the institutional structure gives the appropriate signals in term of technology and organisational support and the necessary economic support in terms of pricing and infrastructure support. Otherwise there will be rising food prices chasing few goods and immiserisation.
(The writer is Chairman of Institute of Rural Management, Anand)