Need for Increasing Agriculture’s Share of GSDP and Mitigating Rural Poverty

Agriculture and allied activities remain the backbone of Odisha’s rural economy, employing over half the state’s workforce but contributing less than one-fifth of its Gross State Domestic Product (GSDP). In FY 2023–24, the sector’s contribution stood at around ₹1.58 lakh crore, roughly 18% of the state’s GSDP. With nearly 55 lakh hectares under cultivation and a workforce exceeding 1.5 crore, agricultural productivity in Odisha continues to lag behind states like Andhra Pradesh and Tamil Nadu.

This note identifies the major reasons for low productivity and proposes a practical, three-tiered roadmap to raise the sector’s output and its share in GSDP while denting rural poverty.

Agriculture, including crops, livestock, fisheries, forestry, and agri-industries, forms the primary livelihood source for a majority of Odisha’s rural population. In 2023–24, the state’s agricultural GVA was estimated at ₹1.58 lakh crore, accounting for approximately 18% of the total GSDP of ₹8.8 lakh crore. The Net Sown Area was about 54.6 lakh hectares. The estimated productivity works out to ₹2.9 lakh per hectare—lower than the national average and significantly below high-performing states like Andhra Pradesh (₹9.3 lakh/ha) and Tamil Nadu (₹7.2 lakh/ha).

Comparing Odisha with other agriculturally progressive states offers insight into the productivity gap. Andhra Pradesh’s agricultural strength comes from diversification—fisheries, poultry, horticulture, and dairy—that add high value to the sector. Tamil Nadu’s gains stem from technology-intensive agriculture, efficient water use, and robust agri-processing. Gujarat and Madhya Pradesh benefit from irrigation coverage and market linkages. Odisha, despite fertile soils and substantial rainfall, lags in irrigation intensity, farm mechanization, and integration of allied sectors with core cropping systems.

Odisha’s continuing weak areas include:

(i)  Fragmented land holdings averaging below 1.2 hectares limit economies of scale.
(ii)Only about 36% of the cultivated area is irrigated, leaving farmers vulnerable to monsoon variability.
(iii) Limited access to credit and low adoption of mechanisation and post-harvest technology.
(iv) Weak extension services.
(v) Underdeveloped value chains in dairy, poultry, and fisheries, which contribute only modestly to GVA.
(vi)Poor integration of markets, with a small portion of produce reaching organized or digital platforms.

I have flagged areas where action needs to be taken to address these shortcomings.

• Accelerate minor irrigation to add 5 lakh hectares of assured irrigation.
• Expand farm mechanization subsidies and promote farmer-producer organizations (FPOs) for smallholder pooling.
• Promote short-duration paddy, pulses, and horticultural crops through targeted seed and input programs.
• Strengthen allied sectors—especially dairy, poultry, and inland fisheries—through cluster-based development.
• Scale up digital agri-extension and mobile soil testing for region-specific advisories.
• Facilitate rural credit flow and crop insurance coverage expansion.
• Invest in agri-processing parks and cold-chain infrastructure to retain value addition within the state.
• Reform land leasing and promote consolidation through cooperative or FPO-managed clusters.
• Integrate agriculture, forestry, and fisheries under a unified 'Rural Productivity Mission' to enhance rural GSDP share.

If implemented effectively, these measures could raise Odisha’s agri& allied GVA growth rate from 3.5% to over 6% per annum and by  2030, the state’s agricultural GVA could reach ₹2.75 lakh crore, increasing its GSDP share to around 22%. Enhanced productivity would also raise per capita rural income by 30–40%, reducing rural poverty substantially.

Annex: Agriculture & Allied Indicators (FY 2023–24)

Sources: State Economic Surveys 2023–24; PRS Budget Analyses; PLFS 2023; Directorate of Economics & Statistics, Ministry of Agriculture. NSA = Net Sown Area. All values pertain to FY 2023–24 (current prices).